The economic model of consumer behavior explains how consumers make purchasing decisions based on rational analysis to maximize their satisfaction or utility within their budget constraints. Key points of this model include:

• Rational Decision-Making: Consumers are assumed to be rational actors who compare prices and quality, aiming to get the best value for their money

• Utility Maximization: Consumers seek to allocate their limited income efficiently to maximize their overall satisfaction from goods and services, following the law of diminishing marginal utility—each additional unit of a product provides less added satisfaction

• Influencing Factors: Consumer choices are influenced by income levels (income effect), availability of substitute products (substitution effect), and price changes (price effect). For example, higher income generally increases purchasing power, while cheaper substitutes may reduce demand for a product

• Assumptions: The model assumes consumers have complete information about products and prices, consistent preferences, and exhibit homogeneous buying patterns across the market

• Marketing Implications: Businesses can use this model by focusing on competitive pricing, emphasizing value propositions, offering discounts or bundles, and providing clear product information to appeal to cost-conscious consumers

• Limitations: The model is criticized for oversimplifying consumer behavior by ignoring psychological, emotional, and social influences that also affect buying decisions

In summary, the economic model views consumer behavior as a rational process where individuals aim to maximize satisfaction from their purchases while staying within their financial limits, primarily driven by price, income, and utility considerations