UMD
ECON 200 -
Chapter 21: The Theory of Consumer Choice
School name
University of Maryland, College Park
Pages 1
Unformatted text preview:
View Full Document
Chapter 21 The Theory of Consumer Choice The Budget Constraint What the Consumer Can Afford people consume less when their income is constrained income Suppose the consumer has an income of 1 000 and spends it all on pizza 10 and pepsi 2 Point A consumer spends all income on pizza and none on pepsi Point B consumer spends all income on pepsi and none on pizza Point C consumer spends equal amount on each right in between A and B Budget constraint line that shows consumption bundles that the consumer can afford Budget constraint shows trade off between pizza and pepsi Slope off budget constraint meaures the rate at which the consumer can trade one good for the other
View Full Document
Unlocking...