The behavior of a certain consumer varies from one person to another.

1. THE
CONSUMERS
BEHAVIOR
SHIPPI LAFUENTE
KRISTIAN JUDE CHAVEZ
POLO ROSEMARIE

2. The Concept of Choice and Utility
Utility- denotes satisfaction.
- a subjective pleasure that an
individual can derived from consuming a
good or service.

3. “The consumer prefers the best
bundle of goods that he can
afford.”
Factors that make an individual decide what
bundle of goods to consume:
• Tastes
• Preferences
• Income
• Prices

4. Can we Measure Satisfaction or Utility?
Cardinal Ranking of Preferences- attaches
specific numbers to different levels of
satisfaction.
1. Price of goods
2. Quantity of goods
Taste and Preferences
“Individual has a distinctive way of choosing what
is best for him/her in gaining satisfaction”.

5. The Law of Diminishing Marginal Utility
It states that as an individual consumes
more units of commodity per unit of time,
his/her total utility increases, reaches its
maximum, and starts to decrease.

6. Example:
Pork Lechon is one of your favorite Filipino
food. Your breakfast of pork lechon gives you a
magnificent meal. Your lunch of the same meal
doesn’t give the same tasty experience.
Meaning the extra satisfaction or your marginal
utility is already diminishing. Your dinner with
pork gives you less and less utility.

7. PORK LECHON
(Qx)
Total Utility
(TU)
Marginal Utility
(MU)
0 0
17.5
1 17.5
13.5
2 31
10.5
3 41.5
8.5
4 50
4
5 54
0
6 54
-9
7 45
Total Utility and Marginal Data for Consuming Pork Lechon

8. Total Utility
As more of pork
lechon is consumed,
total utility increases,
yet its saturation point
is reached, and starts
to decline.
Marginal Utility
At the same time
Marginal Utility
continues to decline.

9. The Consumer’s Equilibrium
Consumer’s will attempt to maximize total utility from
spending their income.
• Utility
• Income
Mathematically expressed as;
MUx = MUy
Px Py
Subject to the following: (checking)
PxQx+PyQy+….=M(income)

10. Quantit
y
1 2 3 4 5 6 7 8 9 10
MUx 96 93 88 80 76 60 52 48 45 50
MUy 73 68 60 58 50 40 35 30 27 20
Maximation of Marginal Utility
Where: Price of Mux=10 pesos Budget= 100
pesos
Price of Muy= 5pesos
Solution: Checking:
60=30 PxQx+PyQy+…=M
10 5 P10(6)+P5(8)= 100
6=6 the equilibrium is attained…