ABSTRACT
This chapter explores consumption by making use of the fundamental concepts that characterise all economic analyses: exchange, value and opportunity costs. It also examines the potential pitfalls and two extensions of demand theory: intertemporal choices and the measure of happiness. The discerning reader should thus be on guard and avoid being deceived by the seeming simplicity of this popular analytical tool. Despite the analytical difficulties involved, however, it shows the fundamental elements that drive economic action value and opportunity costs also apply to peoples decisions about how to distribute their consumption budgets over time. Economics is a way of thinking that sheds light on how people choose and exchange. It can greatly benefit from factual observation, since economics is a social science and thus focuses on the real world. Yet, economics is not a way of measuring and is definitely a poor substitute for subjective judgement.
