The Income Effect

The effect of a change in the consumer’s income on his total satisfaction is known as income effect. A consumer will be able to enjoy more or less satisfaction when his income increases or decreases assuming that the prices of goods he purchases remain constant. Every increase in income brings him down to a lower […]

UTILITY THEORY

CHOICE AND UTILITY THEORY Whenever sets of alternatives are open to us at the same point of time, we often make choices. Provided we are all rational beings, it can be said that, behind all activities, our basic motive is to maximize the total level of satisfaction. Whatever we choose in our daily life depends […]