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| Both sides previous revision Previous revision Next revision | Previous revision | ||
| kb:utility [2022-01-06 19:25] – jaeyoung | kb:utility [2024-04-30 04:03] (current) – external edit 127.0.0.1 | ||
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| Diminishing marginal utility implies that indifference curves are non-concave relative to the origin. | Diminishing marginal utility implies that indifference curves are non-concave relative to the origin. | ||
| - | ====== Budget constraints | + | ===== Budget constraints ===== |
| Assume that the amount a consumer can spend is equal to their income. | Assume that the amount a consumer can spend is equal to their income. | ||
| Line 77: | Line 77: | ||
| A change in prices will cause the slope and intercepts to change. A change in the budget will cause the intercepts to change, but not the slope. | A change in prices will cause the slope and intercepts to change. A change in the budget will cause the intercepts to change, but not the slope. | ||
| - | ===== Constrained choices | + | ==== Constrained choices ==== |
| Consumers will achieve the most utility given the constraint of their budget. Graphically, | Consumers will achieve the most utility given the constraint of their budget. Graphically, | ||
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| ===== Paternalism ===== | ===== Paternalism ===== | ||
| - | + | Paternalism is the government imposing its preferences on consumers. | |