Optimal purchase decision: which dominates what

Conventional theory of demand postulates that demand is derived from utility maximizing behaviour of an individual consumer. It is so postulated as the theory presumes that the consumer is motivated to maximize his utility. Thus the utility maximizing exercise has occupied an important place in the theory of demand. But utility is a subjective concept and it is neither measurable nor observable. It is not a pragmatic hypothesis to postulate that demand is derived through utility maximizing exercise as utility is derived after consumption. Purchase decision is taken prior to consumption. Actually purchase decision is guided by interplay of Ability and Preference. While dealing with equilibrium purchase decision of an individual consumer, the theory of consumer’s behaviour must incorporate the specific characteristic feature of the product as well as the complex interplay of Ability and Preference. . In the opinion of present author consumer’s equilibrium purchase decision is the outcome of the complex interplay of Ability and Preference incorporating the specific characteristic feature of the product. Therefore equilibrium purchase behaviour of an individual consumer is claimed to be better explained in terms of concentration of maximum Preference per unit of Ability. This present paper seeks to analyze a purchase decision in the light of such interplay. Section-I deals with introductory background. Section-II is devoted to analyze equilibrium of the consumer. Section-III deals with comparative static properties and section-IV concentrates on conclusion.