Theory of Economics

Theory of economics

Economics is defined as the science which study human behavior with relationship between ends and scarce mean which have alternative uses.
Consumer behavior

These are factors that determine the rational idea of the consumer. The study of consumers helps firms and organizations improve their marketing strategies by understanding issues such as how
• The psychology of how consumers think, feel, reason, and select between different alternatives (e.g., brands, products, and retailers);
• The psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media);
• The behavior of consumers while shopping or making other marketing decisions.
Reference of scarcity to the economy

1. It create an urgent needs for development of entrepreneur initiative and expansion in suiting business operation.
2. It leads to the need of efficient technological development being developed in an economy.
3. Scarcity among the fundamental apparatus in the evolution of the economy.
4. It creates the opportunities; hence, it involves human and the resources within their reach.

Choice

Choice on decision making is focused on the thought of mechanism such as ration, recognition and combination.
It is because the ability to recognize the type of choice made by an individual reflects on the input and outcome from the society.

References of choice in the economy

1. It assist economy in designing an idea solution in addressing challenges relating to economy development.
2. It provides greater insight into what politician and mediocrate behave otherwise
3. Choice appeals to the economist and philosophy of social development.
   Concept of utility
   This deals with the satisfaction a consumer derived from a commodity at a particular moment in time.

Types of utility

1. Form utility
2. Place utility
3. Time utility

Categories involves

1. Total utility
2. Marginal utility
3. Average utility.

Theory of indifferent curves

The indifferent curves is a diagram representing an individual consumer.
It investigates the different combination of bundle or two commodities which leaves total utility of consumer unchanged.

Theory of indifferent maping

The theory of indifferent mapping is made up of a set of indifferent curves made up together showing different level of total utility derived from different combination of two commodities by the consumer.
The further the indifferent curve is from the point of origin, the higher the level of satisfaction derived from various combination on the curve by the consumer.

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