Satisfaction of consumer and his willingness to buy

The concept of utility:

The satisfaction that people derives from their consumption activites

Utility can be measured using ‘utils’

There are of two there are :

1)Cardinal Utility:

Those things which are quantitative to measure(numbers)

Example: sita gets 20 utils of satisfactions from apples

2)Ordinal Utility:

Its is more easier as it facilitates easy completion ,in this we prefer ranking

Example: ram gets more satisfaction by eating orange than apples

Assumptions:

a)taste and preference are fixed and play a large role in decision making

b)people allocate their income to maximize their satisfaction

example: i and my friend suddenly went to movie without planning

Utility Characteristics :

• ·         principle of diminishing marginal utility:

           Example: In US OSCAR awards many celebrities wear new style of dress .withinfew days imitation will come and it works for some days because everyone wearing that satisfaction level decreases

• ·         Utility diminishes over time :

             The shorter the time period the more quickly marginal utility diminishes

             Example: mobiles in the market , emerging new trends easily diminishes

• ·         Consumers are not identical:

            The rate at which marginal utility diminishes on individual tastes and preferences and differs across consumers