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#4-3-the-investment-opportunity-set #cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-5-consumer-equilibrium #study-session-4
This is a constrained (by the resources available to pay for consumption) optimization problem that every consumer must solve: Choose the bundle of goods and services that gets us as high on our ranking as possible, while not exceeding our budget.
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5. CONSUMER EQUILIBRIUM: MAXIMIZING UTILITY SUBJECT TO THE BUDGET CONSTRAINT
erful if we could all consume as much of everything as we wanted, but unfortunately, most of us are constrained by income and prices. We now superimpose the budget constraint onto the preference map to model the actual choice of our consumer. <span>This is a constrained (by the resources available to pay for consumption) optimization problem that every consumer must solve: Choose the bundle of goods and services that gets us as high on our ranking as possible, while not exceeding our budget. 5.1. Determining the Consumer’s Equilibrium Bundle of Goods In general, the consumer’s constrained optimization problem consists of maximizing utility,


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