Overview
Consumer utility maximization is a fundamental concept in economics that explains how individuals make choices to achieve the highest satisfaction from their limited resources. By understanding utility, budget constraints, and preferences, consumers can make informed decisions that align with their ...
Key Terms
Example: Eating a delicious meal provides high utility.
Example: If you have $50, your budget constraint limits your choices to items that total $50.
Example: An indifference curve might show combinations of apples and oranges that give the same satisfaction.
Example: The first slice of pizza may give you high marginal utility, but the fifth slice may give you less.
Example: Buying 3 apples and 2 oranges might be your optimal bundle.
Example: The more cookies you eat, the less satisfaction you get from each additional cookie.