Consumer Choices (Economics)

Recall cards on how consumers choose. The utility framework: total utility and marginal utility, marginal utility per dollar, and the utility-maximizing rule that sets the marginal utility per dollar equal across all goods (MU1/P1 = MU2/P2). How the budget constraint shifts when income changes and rotates when a price changes, and how a price change splits into a substitution effect and an income effect that together trace out the demand curve. Finally, behavioral economics: loss aversion and the Kahneman and Tversky finding, self-control problems, mental accounting, and how default enrollment shapes retirement saving.