Introduction to Microeconomics: Theory of Consumer Behaviour Video Lecture | NCERT Video Summary: Class 6 to Class 12 (English) - UPSC

Ans. The theory of consumer behavior in microeconomics explains how individuals make decisions regarding the allocation of their limited resources to different goods and services. It focuses on understanding consumer preferences, choices, and the factors that influence their decision-making process.

Ans. The theory of consumer behavior has a significant impact on the economy as it helps in understanding and predicting consumer demand for goods and services. This information is crucial for businesses to make production and pricing decisions, which ultimately affects the overall supply and demand dynamics in the market.

Ans. The theory of consumer behavior is based on several key assumptions, including: - Rationality: Consumers are assumed to make rational decisions based on their preferences and available information. - Preferences: Consumers have well-defined preferences and can rank different goods and services. - Budget constraint: Consumers have limited income and face a budget constraint, which determines their purchasing power. - Utility maximization: Consumers aim to maximize their overall satisfaction or utility from the goods and services they consume.

Ans. The theory of consumer behavior explains consumer choices through the concept of utility maximization. Consumers aim to allocate their limited resources in a way that maximizes their overall satisfaction or utility. They make choices based on their preferences, budget constraints, and the prices of goods and services. The theory also considers factors such as income, substitution effect, and income effect to analyze consumer behavior in response to changes in prices or income.

Ans. The theory of consumer behavior has certain limitations, including: - Unrealistic assumptions: The theory assumes that consumers are perfectly rational, have complete information, and make decisions independently. In reality, consumers may not always behave in a fully rational manner and may be influenced by external factors. - Ignoring social and psychological factors: The theory focuses primarily on individual preferences and does not consider social or psychological factors that may influence consumer choices. - Lack of consideration for interdependencies: The theory assumes that consumer choices are independent of each other, ignoring potential interdependencies and network effects. - Limited scope: The theory primarily focuses on individual consumer behavior and may not fully capture the complexities of group or aggregate behavior.