The Theory of Consumer Choice

The Theory of Consumer Choice explains how individuals decide what to buy based on their preferences, income, and the prices of goods and services. It assumes consumers aim to maximize their satisfaction or happiness within their budget constraints. They choose combinations of products that provide the most benefit without exceeding what they can afford, often balancing trade-offs between different options. This theory helps us understand consumption patterns and how changes in prices or income influence what people buy. Essentially, it models rational decision-making to explain consumer behavior in everyday life.