ECS2601
ASSIGNMENT 1 SEMESTER 1 2025
UNIQUE NO. 655050
DUE DATE: 2 APRIL 2025
, ECS2601
Assignment 1 Semester 1 2025
Unique Number : 655050
Due Date: 2 April 2025
Intermediate Microeconomics
Question 1
Five Key Factors Influencing Consumer Choices in Microeconomics
Consumer decision-making is a fundamental aspect of microeconomics, as it
determines the demand for goods and services in the market. Various factors influence
how consumers allocate their limited resources to satisfy their wants and needs.
1. Income and Budget Constraints
One of the most important determinants of consumer choice is income. Consumers
must make purchasing decisions based on their available income and financial
limitations. Income influences the ability to afford goods and services, which in turn
affects consumption patterns.
Disposable Income: The amount of money a consumer has left after paying
taxes and necessary expenses determines their purchasing power. A higher
disposable income allows consumers to spend more freely on luxury goods,
while lower income levels force individuals to focus on necessities such as food,
housing, and healthcare.
Budget Constraints: Consumers operate within a budget, meaning they must
make trade-offs when choosing between different products. If a consumer’s
income is limited, they must prioritize goods that provide the most utility. This
concept is often represented through budget lines in microeconomic models,
illustrating the combination of goods a consumer can afford.
ASSIGNMENT 1 SEMESTER 1 2025
UNIQUE NO. 655050
DUE DATE: 2 APRIL 2025
, ECS2601
Assignment 1 Semester 1 2025
Unique Number : 655050
Due Date: 2 April 2025
Intermediate Microeconomics
Question 1
Five Key Factors Influencing Consumer Choices in Microeconomics
Consumer decision-making is a fundamental aspect of microeconomics, as it
determines the demand for goods and services in the market. Various factors influence
how consumers allocate their limited resources to satisfy their wants and needs.
1. Income and Budget Constraints
One of the most important determinants of consumer choice is income. Consumers
must make purchasing decisions based on their available income and financial
limitations. Income influences the ability to afford goods and services, which in turn
affects consumption patterns.
Disposable Income: The amount of money a consumer has left after paying
taxes and necessary expenses determines their purchasing power. A higher
disposable income allows consumers to spend more freely on luxury goods,
while lower income levels force individuals to focus on necessities such as food,
housing, and healthcare.
Budget Constraints: Consumers operate within a budget, meaning they must
make trade-offs when choosing between different products. If a consumer’s
income is limited, they must prioritize goods that provide the most utility. This
concept is often represented through budget lines in microeconomic models,
illustrating the combination of goods a consumer can afford.
