Consumer Essay

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Term of customer utility total and marginal During its life the consumer must satisfy the hunger, thirst, needs for clothing, that is to satisfy a wide variety of their needs. It is known that almost unquenchable human needs, as always, there are limitations to their full satisfaction, for example, limited consumer income. But despite this, the consumer is aimed at meeting their needs, getting the maximum utility from the purchased goods and services it, focusing on the available income, personal preferences, taking into account the prices of those goods or services. Firms seeks way to maximize profits in the course of economic activity, taking into account the demand for products created by them, the prices of inputs. Hence the need for a cost-effective choice that is "effective use of limited resources or production management in order to achieve maximum satisfaction of material needs.” The Utility Function Economic analysis of consumer behavior begins with a utility function. This function defines what determines the consumer’s level of well-being, however that term may be construed. The analyst typically does not specify a functional form for the utility function, except for purposes of illustration. In general, the utility function may be written as follows: U = f(X1, X2, …, XN; S1, S2, …, SM). In this equation, U is a measure of “utility” and X’s and S’s are goods or services (“goods” hereafter). We may specify two classes of goods, “material” goods, the X goods, (bread, butter, clothing, entertainment) and “spiritual” goods, the S goods, (love of one’s family, love of one’s God, love of one’s country). Economics focuses primarily, though not exclusively, on the X goods. Characteristics of a Utility Function In general, an acceptable utility function must satisfy three conditions: it must be complete (that is, a utility level must be

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