05+Utility

A beginning diagram is shown below.



The initial diagram is an indifference map for two goods, Y and X. Each good has a per unit price of $1, and the consumer budget is $5. Add a new layer. To the graph add the Budget Line, then label the point of utility maximization. Explain why you have selected this point. Upload the completed diagram to this Wiki page, then in the explanation field explain what you have diagrammed.

||
 * Num || Name || Diagram ||  ||
 * 1 || Sally Smith

The budget line shows all combinations of X and Y given their prices and budget. The vertical axis is 5 or the amount of Y you can buy with a $5 dollar budget if Y is $1. The horizontal axis is 5 or the about of X you can buy with a $5 dollar budget if X is $1. The point of maximum utility is X=2 and Y=3. This point represents where indifference curve I3 is tangent to the budget line or the amount of X and Y you are willing and able to buy. ||  || ||
 * 2 || John Doe

The budget line is (0,5) (5,0). Consumer utility is maximized at this point because it reflects equilibrium when consuming this combination because any affordable changes would reduce utility. ||  ||
 * 3 ||  ||   ||   ||
 * 4 ||  ||   ||   ||
 * 5 ||  ||   ||   ||
 * 6 ||  ||   ||   ||
 * 7 ||  ||   ||   ||
 * 8 ||  ||   ||   ||
 * 9 ||  ||   ||   ||
 * 10 ||  ||   ||   ||
 * 11 ||  ||   ||   ||
 * 12 ||  ||   ||   ||
 * 13 ||  ||   ||   ||
 * 14 ||  ||   ||   ||
 * 15 ||  ||   ||   ||
 * 16 ||  ||   ||   ||
 * 17 ||  ||   ||   ||
 * 18 ||  ||   ||   ||
 * 19 ||  ||   ||   ||
 * 20 ||  ||   ||   ||
 * 21 ||  ||   ||   ||
 * 22 ||  ||   ||   ||
 * 23 ||  ||   ||   ||
 * 24 ||  ||   ||   ||
 * 25 ||  ||   ||   ||
 * 26 ||  ||   ||   ||
 * 27 ||  ||   ||   ||
 * 28 ||  ||   ||   ||
 * 29 ||  ||   ||   ||