1. Consumption and the Consumer Society
Chapter Nine:
Consumption and the Consumer Society

2. Economic Theory and Consumption

3. Figure 9.1: The Budget Line
The budget line shows the combination of goods that a consumer can buy with a given income.

4. Figure 9.2: Effect of an Increase in Income
With an increase in income the budget line shifts out in a parallel manner. The consumer can now buy more of either good, or more of both goods.

5. Figure 9.3: Effect of a Fall in a Price
With a decrease in the price of one good, the budget line rotates out to indicate that the consumer can afford more of that good (or of both goods).

6. Table 9.1: Quong’s Utility from Chocolate Bars

7. Figure 9.4: Quong’s Utility Function for Chocolate Bars
Utility rises steeply for the first few chocolate bars and then more slowly as Quong gets sated.

8. Consumption in Historical and International Context

9. Figure 9.5: Revolving Debt in the United States, 1968-2012, Adjusted for Inflation
Revolving debt rose steeply from the late 1960’s up until the Great Recession starting in The Great Recession resulted in many households reducing debt as spending declined and credit became less available.

10. Consumption in a Social Context

11. Figure 9.6: Global Advertising Expenditures, by Country/Region, 2011
One-third of global advertising expenditures are made in the United States.
Source: Advertising Age, December 5, 2011.

12. Consumption in an Environmental Context

13. Figure 9.7: Ecological Footprint per Capita, Select Countries, 2007
The ecological impacts of consumption are relatively high in the United States, with a per-capita impact about twice as high as most European countries and four times as high as China.
Source: Global Footprint Network,

14. Appendix: A Formal Theory of Consumer Behavior

15. Figure 9.8: The Budget Line and Its Slope
The slope of the consumer’s budget line is –Px / Py.

16. Figure 9.9: An Indifference Curve
An indifference curve shows all combinations of goods that give the consumer the same level of utility. Its slope is –MUx /MUy.

17. Figure 9.10: Different Levels of Utility
Moving above and to the right, indifference curves represent higher levels of utility.

18. Figure 9.11: Utility Maximization
The consumer’s utility is maximized by choosing a consumption point on the highest achievable indifference curve. This happens at point A.

19. Figure 9.12: Response to a Change in Price
If the price of good X falls, the consumer will be able to reach a higher utility level.