1. Utility Maximization Lesson 3.51

2. Utility as Satisfaction Utility and Consumption – Utility is an imaginary measure of satisfaction. Principle of Diminishing Marginal Utility – Marginal Utility What is the satisfaction of consuming the next item? – Marginal Utility Curve

3. Figure 51.1 Cassie’s Total Utility and Marginal Utility Ray and Anderson: Krugman’s Economics for AP, First Edition Copyright © 2011 by Worth Publishers

4. Budgets and Optimal Consumption Budget Constraints and Budget Lines – Budget Constraint – Consumption Possibilities – Budget Line The Optimal Consumption Bundle

5. Figure 51.2 The Budget Line Ray and Anderson: Krugman’s Economics for AP, First Edition Copyright © 2011 by Worth Publishers

6. Figure 51.3 Optimal Consumption Bundle Ray and Anderson: Krugman’s Economics for AP, First Edition Copyright © 2011 by Worth Publishers

7. Spending the Marginal Dollar Marginal Utility per Dollar Optimal Consumption