Chapter 21: Theory of Consumer Choice - Utility Maximization

In this video I discuss the theory of consumer choice. It covers the budget constraint, indifference curves, utility maximization, the derivation of the demand curve, and the income and substitution effect. Budget constraint 1:50 Consumer utility 27:17 Jeremy Bentham and the Auto-icon 27:52 Indifference curves 30:50 The consumer's utility maximization problem 47:10 The marginal rate of substitution 51:00 How does the consumer respond to a change in income? 52:24 Normal goods 53:45 Inferior goods 55:48 How does the consumer respond to a change in price? 58:10 Derivation of the demand curve 1:01:20 The income and substitution effects 1:08:05 Giffen goods 1:15:45 Backwards bending labor supply curve 1:23:00 Dr. Azevedo Department of Economics University of Central Missouri