Unformatted text preview: suits your needs and desires. In this chapter we develop the theory that describes how consumers make de-cisions about what to buy. So far throughout this book, we have summarized con-sumers’ decisions with the demand curve. As we discussed in Chapters 4 through 7, the demand curve for a good reflects consumers’ willingness to pay for it. When the price of a good rises, consumers are willing to pay for fewer units, so the quan-tity demanded falls. We now look more deeply at the decisions that lie behind the demand curve. The theory of consumer choice presented in this chapter provides T H E T H E O R Y O F C O N S U M E R C H O I C E 463...
View Full Document
- Spring '10
- substitution ef fect, income ef fect