Consumer Utility Function
Consumer choice means that full information and the possibility to arrange goods in an increasing order of priority, have been set by the market for decision-making on selecting bundles of goods and services by the consumer. This is rational choice behaviour. In the context of market mechanism, choices of the set of available alternatives require information on relative prices of the goods in the consumer choice set, given preferences for the goods and income to be fully spent in given proportions of the consumption bundle. Price relatives are prices of one good relative to another. Variations in relative prices of the goods in the commodity bundle signify the degree to which one good can be substituted in certain amounts by other goods.
KeywordsUtility Function Demand Curve Marginal Rate Market Equilibrium Relative Prex
Unable to display preview. Download preview PDF.