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Production of Goods and Services (PDF)

Added on - 02 Jan 2021

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Discussion of certain terms
Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................11. Discussion of certain terms................................................................................................12. Behavioural economics and evaluation of the reasons behind irrational behaviour ofconsumers...............................................................................................................................4CONCLUSION................................................................................................................................5REFERENCES................................................................................................................................6
INTRODUCTIONThe main objective of a business is production of goods and services and their ultimateconsumption by consumers. Every organisation wants its consumer to be satisfied with itsproducts or services. For this, a business is required to study the consumer behaviour, carry outcertain procedures to understand their need, demand, changes in tastes, preferences and habits.The consumers on the other hand are also provided with various different choices of the sameproduct and with a change in their per capita income their spending power gets affected. In thepresent report, all factors which affect consumer's demand and behaviour is discussed arediscussed, as all this will have a significant impact on the organisation and its operations.MAIN BODY1. Discussion of certain termsConsumer's indifference curve: Indifference curve is a graphical representation whichdepicts a situation in which a user is indifferent about different quantities of two products. Thismeans that consumers have no preferences of choice for a combination of certain products overanother sequence on the same curve(Nishimura and Ozaki, 2017). The different combination onthe curve reflects that various combination of goods and services that yields the same utility to aconsumer. When a consumer faces a budget constrain, he/she will choose a basket which willmaximise their total utility. The four assumption implicit in indifferent analysis:Completeness: In this assumption the consumer is provided with a choice between onlytwo bundles of combination only and they have to prefer one over another.Transitivity:The illogical and uncertain behaviour of consumer is not taken intoconsideration.Consistency:It is assumed that constrains and preference of consumers and market willremain same and will not change in the future. This assumption is not aspract aspreference, choice availability and constrain change with time.Preference for more:The liking of buyers are assumed to be more inclined towardsgood than less of it or consumer will choose less bad than more of it.1
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