ANALYSIS OF CONSUMER

BEHAVIOUR
ORDINAL UTILITY
APPROACH
BY INDIFFERENCE CURVE
 INDIFFERENCE CURVE
• It may be defined as the locus of
points each representing the
different combination of two
substitute goods, which yield the
same utility or level of
satisfaction to the consumer
• Also known as the ISO – utility
curve or equal utility curve
• It depend on consumer choice &
preference
consum x y utility
er
A 25 3 U
B 15 5 U
C 8 9 U
D 4 17 U
E 2 30 U
FOUR BASIC PROPERTIES

NEGATIVELY CONVEX TO
SLOPED THE ORIGIN

NON INTER. UPPER CURVE

SHOWS HIGHER
&
LEVEL OF
NON TANGIN. SATISFACTION
 DEMAND FUNCTION
• Demand for the commodity arises
from the consumer willingness &
ability to purchase the commdity
• Quantity demanded of a
commodity is not only the function
of PRICE
• BUT also income, price of related
goods ,taste of consumer, price
expectation & all other factors.
 Dx =f[Px,Py,Pz,B,A,E,T,U]
• Dx= demand for item X
• PX = Price of item X
• Py = price of substitute
• Pz = price of complements
• B = Income of consumer
• E = Price expectation of the user
• T = Taste or preferrence of user
• U = All other factors