Consumer Optimum?

Can someone explain this...an example would be great..

Answer:
Means the consumer has maximized his budget totally. This has three main variables. Income, Utility, and indifference.
Income: Total Household income.
Utility: Bills you must pay. example: electric, food, gas
Indifference: Things you want. golf clubs, clothes, movie

There are many models on the net to show how price, income, consumption, etc., can change your consumer optimum. The idea being to increase your indifference level by lowering your utility or increasing your income.

I hope that helps, it is the basic version.
In economics, consumer ptimum is defined as the particular allocation of the consumers income budgetted for expenditure in a given period among various items of consumption, that would maximize the satisfaction or the utility of the consumer. In other words, any change from the optimum allocation of household budget to increase the consumption of one item at the expense of another item would lead to a fall in the satisfaction or utility of the consumers. Optimum allocation gives the greatest satisfaction. Clearly, the optimum will vary from consumer to consumer depending on the tastes and preferences, the income limit and the prices of different consumer goods.

The answers post by the user, for information only, FunQA.com does not guarantee the right.



More Questions and Answers:
  • Why can't "third world" countries develop? Their citizens are surely NOT retarded.?
  • If you had a choice to move to any english speaking country other then the U.S what whould it be? and why?
  • Name products that do well during periods of high demand, and good economic times?
  • Minimum wage?
  • What should Macedonian government do to achieve fast growth of Macedonian GDP?
  • How does FREE TRADE affect 3rd world countries?
  • Can you create a discriminant function for when to buy in bulk?
  • How can income-expenditure framework determine the effect of perosnal savings on the economy?
  • How does fiscal policy affect the exchange rate and the trade balance?