Determining Consumer Behavior

DeterminingConsumer Behavior

Economistsuse different ways to assess consumer behavior. The use differentapproaches to arrive at sound conclusions that are consistent withthe prevailing market conditions. Some of the common methods they useare budget lines and indifference curves. Most of the times,consumers have useful information on which goods to buy and theinformation they have is most beneficial to the economists. Theirbuying behavior may explain why they opt to buy some goods from theothers or why they have to follow a stipulated budget when makingpurchases (Hubbard &amp O’brien, 2015).

Understandingconsumer behavior is, therefore, a complex and dynamic process thatinvolves many facets. Economists amalgamate various models to reach avalid conclusion and hence make sound decisions. The indifferencecurve is the graphical representation showing the diminishingpreference for one good in favor of another close substitute.Consumers apply this method to compensate for the diminishingutility. For example, at the upper right of the curve, the customergets a higher utility than on the lower bottom side of the curvewhere there is a low utility (Boadway, 2012). However, wheneconomists use the method in the isolation of outer considerations,it cannot give correct information on the goods that consumers willpossibly purchase.

Budgetconstraint lines highlight the affordable goods hat fall within andalong the line and the ones that a customer cannot afford but maypurchase with an increase in consumption bundles. These fall outsidethe line. Mostly, they fall within a select category that could bebought within the customer’s budget (Hubbard &amp O’Brien,2015).When used together, the intersection of the tangent of thebudgets line and the indifference curve will b the correctrepresentation n of the consumption bundle within the consumers’budget. The combination of the methods is, therefore, a valid way ofdescribing consumers’ buying behavior.


Boadway,R. (2012). A Theory of Fairness and Social Welfare. Journalof Economic Literature,50(2),517-521.

Hubbard,G. &amp O’Brien (2015). Microeconomics.Pearson: New York.

Sredl,K., &amp Soukup, A. (2011). Consumer’s Behaviour on Food Markets.AgriculturalEconomics,57(3),140-144.