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Managers should be aware of the consumer-choice process when estimating the demand for the firms’ products, forecasting future demand, and making advertising decisions.
Consumer Preferences
From all the goods or services available to them, buyers choose a combination of items we call a market basket. Consumption of the bundle of goods in a market basket brings satisfaction to the buyer. Buyers choose between different bundles of goods, different market baskets, on the basis of the satisfaction they are expected to bring. A model of consumer's as buyers is based on three assumptions.
1. Axiom of Completeness
Given two market baskets, A and B, a consumer will know whether she prefers A to B (written as A » B), does not prefers A to B (A « B) or is indifferent between them (A I B)...
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