Theory of consumer choice

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This course is a part of AP®︎ Microeconomics, a 11-course Topic series from Khan Academy.

This unit builds our understanding of the basic postulates underlying consumer choice: utility, the law of diminishing marginal utility and utility-maximizing conditions, and their application in consumer decision-making and in explaining the law of demand. By examining the demand side of the product market, we learn how incomes, prices, and tastes affect consumer purchases. Here it is important that we understand how to derive an individual’s demand curve, how individual and market demand curves are related, and how the income and substitution effects explain the shape of the demand curve

This course contains 2 segments:

Total utility and marginal utility

In this tutorial we look at the utility of getting one more of something and put numbers to it. We then use this to construct a budget line and think about indifference curves.

Income and substitution effects