Consumer Choice

Definition

Consumer choice refers to the decision-making process individuals go through when selecting goods or services to purchase based on their preferences and budget constraints.

Analogy

Imagine you have a limited amount of money to spend at a candy store. You would consider your favorite candies, their prices, and how much satisfaction you would get from each one before making your final choices. That's consumer choice in action!

Related terms

Utility: Utility represents the satisfaction or happiness an individual derives from consuming a good or service. It is subjective and varies from person to person.

Budget Constraint: A budget constraint refers to the limit on consumption choices imposed by an individual's income and the prices of goods and services available in the market.

Indifference Curve: An indifference curve shows all possible combinations of two goods that provide equal levels of utility or satisfaction for an individual. It helps analyze consumer preferences and trade-offs between different goods.