Significance of Necessaries, Comforts and Luxuries:
The categorization of goods and services to necessaries, comforts &luxuries are only associative in their concept. They are not fixed concepts. What is ‘comfort’, to one might be a ‘necessity’ to the other and a ‘luxury’ to the third man. A motorcar is essential for a businessman and a doctor. It is a luxury for student. What is essential for a man in town might be a luxury for a villager. Such classifications based on the income of a person, his social status, his preferences and tastes.Concept of Utility: Marshallian Approach:
There are two fundamental approaches to the study of consumer demand theory. The primary approach is the utility approach. It includes the utilization of measurable (i.e., cardinal) utility to study consumer behavior. Marshall is the main exponent of the utility approach to the theory of demand. It is termed as cardinal utility analysis or marginal utility analysis or Marshallian utility analysis. The second approach is the indifference curve approach that employs the idea of comparable utility (i.e., ordinal utility). J.R.Hicks and R.G.D.Allen introduced the unresponsiveness curve approach.
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