Also known as consumer choice, this term refers to the study of how and why people spend their money based on their preferences, and how they maximise the utility of their purchases while working within budget restraints. Some of the basic ideas of consumer theory state firstly that people try to make rational decisions which bring them the greatest utility; secondly, that people will always make multiple shopping trips, one not sufficing; and thirdly, that the more you use a product, the less you want it.
Consumer theory helps businesses predict which of their products is going to sell the best, and helps economists predict how the economy is going to change and develop. Businesses may use it to predict what the demand curve of a product is going to be, meaning they can figure out quantities. Consumption also generally contributes a lot to a country’s GDP, meaning economists use it as a part of their analysis of the economy.
Standing in contrast to macroeconomics, microeconomics looks at the choices made by economic actors - be they people, firms, or whole industries - and how they affect the allocation of scarce resources. Primarily, this involves investigation into why goods and services assume different values and understanding how changing economic conditions can alter the decision-making of economic actors.
No Deal Brexit and the Effect on Europe
The Brexit clock is now deafening, and the British political and media establishments seem utterly consumed by its inexorable ticking. In the public realm, little else is considered, even less discussed. And yet, despite this obsession, with just 42 days before Britain departs the European Union, negotiations for a withdrawal agreement remain in deadlock, and the hopes of breakthrough seem to be fading. At the core of the dispute is the Irish backstop and, by proxy, participation in a customs union.
A demand curve shows the relationship between an item’s price and the quantity of the item demanded, either by an individual or by all participants in the market. Demand curves are downward-sloping for most items as greater quantities are demanded at lower prices.