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Demand Analysis

Economists have developed several techniques of analyzing demand. sEconometrician’s hane tested some of the propositions underlying the economics theory of demand as developed by the economists. Of late, in the name of psychological economics, the behavioral scientists have attempted expiation as wells psychometric measure of consumer’s behavior. In this section, taking care of all these developments, we intend to refer briefly to:

Marginal Utility approach

It is a traditional approach used by Marshall and Jevons to explain the consumer behavior. Consumers demand item of goods/ service, because they feel utility for them. The utils (utility-content) indicated ‘value-inns-use’ and they command price in the market; the price paid indicates the ‘value-in-exchange’.

Indifference curve Analysis

This approach has been developed by the economists like Hicks and Allen to Overcome some of the above limitation. Assuming ordinal measurement of utility and relatedness of goofs and relaxing the assumption of constant marginal utility of money, the technique of indifference analysis has been developed.

Revealed Preference Approach

Indifferent curve analysis is a powerful tool, but beyond a point it cannot be stretched. Today, the businessmen have to understand the buyer’s behavior from the standpoint of more of psychology than of economics. The economist’s themselves have realized this limitation.