Question

What assumption is made when considering the theory of consumer behavior

Answer 1

• Consumer tries to maximize utility from consumption of goods and services
• They are Rational.
• They are consistent about their likes,dislikes and preferences

Total utility:-

• Is the total amount of satisfaction derived from consumption of goods and services.

Marginal utility is derived from the last unit of consumption.

Diminishing marginaly utility:-

As consumption goes up marginal utility decreases.

Thus both total utility and marginal utility have negative relationship.