Week 5 exposes students to subjects that are intended to whet their appetites for further study in economics. Students will use the theory of consumer choice and the impact of the concepts of asymmetric information, political economy, and behavior economics, to describe how consumers make economic decisions.
Scenario: You have been asked to assist your organization's marketing department to better understand how consumers make economic decisions.
Write a 1,050-word analysis including the following:
The impact the theory of consumer choice has on:
Higher interest rates
The role asymmetric information has in many economic transactions.
The Condorcet Paradox and Arrow's Impossibility Theorem in the political economy.
People are not rational in behavior economics.
Cite a minimum of three peer-reviewed sources not including your textbook.
Purpose of Assignment
Week 5 exposes students to subjects that are intended to whet their appetites for further study in economics. Students will use the theory of consumer choice and the impact of the concepts of a...
THEORY OF CONSUMER BEHAVIOUR
In any type of economy, the wants and needs of the consumers form the pivotal point that has got the characteristic of determining most of the operational decisions that the people have to make as they seek to satisfy the many needs that the consumers have in their lives. The consumer wants are far reaching, and are associated with a wide range if characteristics. For example, the human needs are so many that not all f them can be fulfilled by the consumer at one given time. Moreover, the wants keep on changing; they require economic resources to be fulfilled, among many other characteristics that are associated with the various forms of human needs. Moreover, the consumers are rational beings; which means that they prefer a greater value of utility as opposed to a lower value of utility as a result of the usage of the commodities that the firms in the economy have to provide. Thus, the marketing department of any organization is charged with the role of understanding the detail the various characteristic of the want that their target market has got. This is meant to make sure that they develop commodities that will satisfy their needs; and moreover, make sure that when the other organizations offering the same commodities are factored in, there is a competitive advantage that is associated with the products that he organization has to offer. Many studies come in handy in order to help an organization understand the consumer behavior; which later forms the basis upon which the various decisions by the organization are made. For example, in most circumstances, when the price of a commodity is reduced; keeping all the other factors constant, there will be the result of the demand for the commodity increasing.