Achange in the prices of good changes the slope of the budget line and a change in a consumer's
income shifts the budget line.
Utility is the benefit that someone gets from consuming goods and services.
Marginal utility = utility of current benefit / previous benefit number
Aconsumer spends the entire budget because more consumption brings more utility and only those
choices that exhaust income can maximize utility.
Marginal utility: total utility that results from consuming one more unit of a good.
Marginal utility = MARGINAL utility/price of the good
equalizes marginal utility per dollar for all goods
Spending all income = equalizes the marginal utility per dollar for all goods
Marginal utility of the second time/price of the good eg. DVDs. DVD is $20, $60 to spend. 50 is
marginal utility. 50/20 = 2.5
To find maximizing utility, find the combo that is equal for both goods