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Q. Economic model of consumer behaviour?
Economic model: Economic model of consumer actions is one-dimensional. This denotes that buying decisions of a person are governed by the concept of utility. Being a rational man he will create his purchase decisions with the intention of maximizing the utility.
Benefits
Economic model is on the basis of certain predictions of buying behaviour
(a) price effect-lesser the price of the product superfluous will be the quantity purchased
(b) Lesser the price of the substitute product slighter will be the quantity of the original product bought (substitution effect)
(c) More the purchasing power extra will be the quantity purchased (income effect).
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