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Optimal Choice

Author: Kate Eskra

Source: Image of Budget Constraint Graph created by Kate Eskra, Image of Preference Map created by Kate Eskra

Video Transcript
Terms to Know
Budget Constraint

The graphical depiction of consumer income relative to the price of goods available. Where the budget constraint touches the highest indifference curve available, the consumer is defined to be optimizing consumption.

Optimal Choice

Goods and services purchased by a consumer that provides the highest level of utility possible.

Utility Maximization

Achieving the highest amount of satisfaction given a consumer's budget constraint.