theory of consumer behaviour
theory of consumer behaviourthe body of theory concerned with how individual consumers allocate their income in buying GOODS and SERVICES. A basic assumption made by the theory is that consumers seek to maximize the UTILITY, or satisfaction to be derived from spending a fixed amount of income. The theory provides an explanation of why DEMAND CURVES slope downwards. See CONSUMER EQUILIBRIUM, DIMINISHING MARGINAL UTILITY, PRICE EFFECT, INCOME EFFECT, SUBSTITUTION EFFECT, REVEALED REFERENCE, ECONOMIC MAN.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005