Asked by
Christina Nguyen
on Nov 25, 2024
Verified
A consumer maximizes total utility when she or he purchases the combination of the two products at which her or his budget line is tangent to an indifference curve.
Total Utility
The total satisfaction or benefit received by consuming a product or service.
Budget Line
A graphical representation showing all possible combinations of two goods or services that a consumer can afford with their income, given the prices of the goods.
Indifference Curve
A graph showing different bundles of goods between which a consumer is indifferent, indicating the same level of satisfaction.
- Acquire knowledge on how utility is increased through the choice of optimal product combinations within the confines of a budget.
- Discuss the interrelation of total utility, marginal utility, and the balanced state of a consumer.
Verified Answer
DC
Learning Objectives
- Acquire knowledge on how utility is increased through the choice of optimal product combinations within the confines of a budget.
- Discuss the interrelation of total utility, marginal utility, and the balanced state of a consumer.