Consumer Behavior and Choices

Summary 

Consumer behavior and choices is a theory in the branch of microeconomics that seeks to identify the relation between consumer preferences to their consumption expenditures and the consumer demand curves. The theory identifies how individuals in the society make decisions on how to spend their money. It takes into consideration the preferences and budget constraints. Some of the restrains that individual consumers face include their income and the prices of products and services (Goodwin, Nelson, Ackerman, & Weisskopf, 2008). This theory has been an effective measure of better understanding the consumer’s quest to maximize utility despite the limitations on expenditure. The practice of consumption is completely separate from production as there are two distinct economic agents that are involved. One the one hand, the consumption is influenced by the activity of the individual who decides on the factors he or she will purchase according to his or her desires (Goodwin et al., 2008). On the other hand, production is influences by an actor who may create goods or services that he himself may not consume. In light of this, production and consumption are influenced by different motivations and capabilities. In a case where a limited number of financial resources are available for an individual, the combinations of purchases are distinct to the decisions made by the consumer. For $200 an individual may identify the need to purchase four pairs of shoes at $50 each or two pairs of shoes at $50 and five shirts at $20 each. In each case, it is evident that it can be difficult to predict the choices that a buyer may make. However, the use of consumer theory can help give an accurate answer to the spending of money (Goodwin et al., 2008). There are challenges that are associated with the practical formula where the consumer is not always rational and may occasionally be indifferent to the available choices. Other decisions may be difficult to make due to the fact that consumers are unfamiliar with them. 

Reflective Statement 

The impact of consumer choice and behavior theory is one of the most important microeconomic theories. It provides significant insight to the development of knowledge about the consumer and his or her behavior in making purchases. The consumer choice theory is an important aspect whereby the economists are able to utilize the model in creating higher levels of sales in the company (Zalega, 2014). The organization can be able to utilize this theory to understand the relationship of the economical times and its influence in ensuring that all of its products are attractive to the market. In this case, the customers will prioritize them over any other good available. In reference to the consumer, the consumer choice theory is an integral factor to the development of a clear analysis of an individual’s behavior (Zalega, 2014). The indifferent changes to the curves and budget constraints have significant impact on the behavior that the consumer will demonstrate. For instance, the consumer will identify an increase in price of a preferred good as reason enough to make opt for the alternatives (Zalega, 2014). The buyer will not make a purchase of an expensive good when a cheaper and more available alternative is available. It is important that the individual utilize this theory to improve and maintain financial health. Demand and supply play an integral role in the use of financial resources. The increase of demand may lead to a sudden surge in te price of a good which may demand higher expenses for the consumer (Zalega, 2014). In this case, the consumer utilizes the consumer choice theory as a measure of developing techniques to save up money for the future. Rather than spend all the available resources in the moment, the consumer will opt to spare just enough to spend at a later date and prevent getting into debt. 

References 

Goodwin, N., Nelson, J. A., Ackerman, F., & Weisskopf, T. (2008). Consumption and the consumer society. Global Development and Environment Institute , 1-26. 

Zalega, T. (2014). Consumer and Consumer Behaviour in the Neoclassical and Behavioural Economic Approach. Konsumpcja i Rozwój, 4 (9)), 64-79.