Theory of demand, Microeconomics

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THEORY OF DEMAND:

The  consumer behaviour under indifferencecurve approach where it is assumed that the consumer possesses a utilityfunction. The next most important theory that deals with consumer behaviouris the theory of revealed preference. This theory allows prediction of theconsumer's behaviour without specification of an explicit utility function,provided that she conforms to some simple axioms. In addition, the existenceand nature of her utility function can be deduced from her observed choicesamong commodity bundles. 

we move on to more realistic aspect of consumerbehaviour namely consumer choice involving risk, where there is probabilityof every event. Finally, we present the indirect utility function and its relatedtheorems.  


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