Economics 11 - Chapter 4 Reading Notes

Economics 11 - Chapter 4 Reading Notes - Economics 11...

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Economics 11 – Chapter 4 Reading Notes Theory of Choice/Consumer Choice Theory Assumptions of this theory: There is not real pattern for the way consumers behave People do not behave randomly (bound to have some sort of budget restraint) Optimization Principle To maximize utility, given a fixed amount of income to spend, an individual will buy those quantities of goods that exhaust his or her total income. Because there is no other use for income, to leave any unspent would be to fail to maximize utility
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