In economic analysis, the principle governing consumer behavior relates to the general behavior of a consumer in distributing a limited personal income amongst an infinite variety of goods and services available.
It assumed the following:
The consumer will so arrange expenditure that the relative marginal utility of all the goods consumed will be in the same proportion to their relative price;
A fall in the price of a good or service, other thing being equal will increase consumption of it, while a rise in its price will have the opposite effect; and
A rise in real income will normally result in an increased consumption of goods and services, a fall in real income having the opposite effect.