This document defines key concepts related to consumption, consumer behavior, and economics. It explains that consumption involves individuals' final purchase of goods and services, and is also called consumer spending. The consumption function expresses consumer spending in terms of determinants like income and wealth. It distinguishes between different types of goods and services, wealth and income, real and money income, and key economic theories like the law of diminishing marginal utility and indifference curve theory.

1. BY
Sakthivel.R

2. 
Consumption is defined as the final
purchase of goods and services by
individuals.
And this is also called as consumer
spending.
CONSUMPTION

3. 
The consumption function is a
function that expresses consumer
spending in terms of its determinants,
such as income and accumulated
wealth.
CONSUMPTION FUNCTION

4. 
GOODS:
Any tangible commodity that
satisfies human want is said to be a good.
Example: air
SERVICES:
Any intangible thing that satisfies
human want is called a service.
Example: service of a doctor.
GOODS AND SERVICES

5. 
FREE GOODS:
A free good is a good that is not scarce, and
therefore available without limits.
Example: air
ECONOMIC GOODS:
A consumable item that is useful to people but
scarce in relation to its demand, so that human
effort is required to obtain it.
Example: rice
FREE GOODS AND ECONOMIC GOODS

6. 
PRODUCER GOODS:
The goods that satisfy the wants of the
consumer directly are called producer
goods.
 CONSUMER GOODS:
They are tangible goods that are
purchased for direct consumption to satisfy
a human need or want
PRODUCER GOODS AND CONSUMER
GOODS

7. 
PERISHABLE GOODS:
The goods that has a short life and decay
quickly are called perishable goods.
Example: vegetables
DURABLE GOODS:A durable good is a
consumer good with an extended life
expectancy.
Example: car
PERISHABLE GOODS AND DURABLE GOODS

8. 
SUBSTITUTE GOODS:
Two goods are said to be substitutes if
one among them can be used instead of the
other.
Example: tea and coffee
COMPLEMENTARY GOODS:
Two goods are said to be complementary
if both are needed to satisfy the same want.
SUBSTITUTE GOODS AND
COMPLEMENTARY GOODS

9. 
WEALTH:
 It is an economic good which is easily
transferable.
It must be a material good.
A non material good cannot form a wealth.
INCOME:
Remuneration paid to the different factors
of production.
WEALTH AND INCOME

10. 
REAL INCOME:
If the income is expressed in terms of
commodity then it is said to be real income.
MONEY INCOME:
If the income is expressed in terms of
money then it is called money income.
REAL INCOME AND MONEY INCOME

11. 
Economic value is the measure of
benefit provided by a good or service
to an economic agent.
It is generally measured relative to
units of currency.
VALUE

12. 
When value is expressed as money in
exchange is called price.
`the payments like rent, wages,
interest are also a kind of price that we
may pay to land, labour, capital
respectively.
PRICE

13. 
Market is a place where the sellers of a
particular good or service can meet with the
buyers of that goods and service where
there is potential for a transaction to take
place.
MARKET

14. 
This theory explains that how consumers
buy different goods and services.
Theories included in consumer behaviour :
1.utility theory
2.indifference preference theory
THEORY OF CONSUMER
BEHAVIOUR

15. 
As successive quantity of good is
consumed, the utility we derive diminishes.
According to Alfred Marshall “the
additional benefit which a person derives
from a given increase of his stock.”
LAW OF DIMINISHING MARGINAL
UTILITY

16. 
This was brought forth by an economist
vilfredo pareto.
In this analysis the consumer analysis is
described in terms of consumer preferences
of various combination of goods.
INDIFFERENCE PREFERENCE
THEORY

17. 
An indifference is a locus of points of
which represents a combination of goods
and services that will give equal level of
satisfaction to the consumer
INDIFFERENCE CURVE

18. 
A budget line shows the combination
of goods that can be purchased at a
given level of income.
BUDGET LINE

19. 
Consumer equilibrium refers to the
combination of goods that gives the highest
level of satisfaction to a consumer that is
within his purchasing power.
CONSUMER EQUILIBRIUM