5.17 : בחירת הצרכן II

Consumer choice involves finding an optimal bundle that maximizes consumer satisfaction.

The three indifference curves give Neil varying satisfaction levels. He gets the least satisfaction from IC1 and the highest from IC3.

The budget line, BL, represents Neil's monthly budget.

Bundles on IC3, like bundle F, are unaffordable for Neil.

Bundles on or below the BL are feasible because Neil can afford them. It means he can only purchase bundles from IC1 or IC2.

If Neil buys Bundle D, which is on IC1, he will not reach his maximum satisfaction. He can shift some money from buying Good Y to buying Good X. This allows him to move to Bundle A on IC2, which gives him more satisfaction.

Likewise, buying Bundle C will yield less satisfaction. Again, he will reallocate funds and move them to Bundle A.

This shows that Neil gets maximum satisfaction by purchasing Bundle A.

It follows that the bundle that provides the maximum satisfaction is at the point where the highest indifference curve touches the budget line.