Microeconomic Business Product Consuming

Question: Describe about the Microeconomic Business for Product Consuming. Answer: 1: Assuming that the thought process was rational, the purchasing was done where the utility from consuming the product was at par with the price of the product. The recent purchasing done was of a product from clothing category. The questions that have been answered before making the transaction was: A. whether the demand for the good and supply of it, are at equilibrium, and B. whether the equilibrium price was feasible. The purchase was done according to the demand and supply concept to ensure the given price is one that comes from the equilibrium. The utility theory was also incorporated. According to Wang (2016), the mix of these two makes the decision rational. Because of this, the cloth that has been bought has given highest marginal utility. 2: The diminishing marginal utility describes that as more of a good is consumed, after a certain amount of consumption the utility achieved from the consumption will start to decrease. During the case of a budget cut as a consumer tries to maximize her utility, she will cut the items in the budget with lowest marginal utility. This way she will try to maximize her utility. On the other hand, the Washington monument strategy advocates of cutting the good from the budget which has highest marginal utility. As stated by Hugh-Jones (2014), here is the difference between the choices in economics and politics. As this behaviour represents irrationality, the choice seems misleading. The difference lies between these two is the hidden political agenda in Washington monument strategy. References: Hugh-Jones, D. (2014). Why do crises go to waste? Fiscal austerity and public service reform. Public Choice, 158(1-2), 209-220. Wang, S. (2016). Microeconomic Theory (Book). Browser Download This Paper.