Description
In this tool you can step into Max's shoes and determine his utility-maximizing level of consumption. The tool illustrates Max's budget line and, if you wish, his indifference curve. If you don't know what an indifference curve is, or don't want to see them, just turn off the check box marked "show indifference curve."
There are three inputs to the model: the price of O-Burgers, the price
of O-Nuggets, and income. You can change the prices of O-Burgers and O-Nuggets
from $1 to $5 in 50¢ increments, and you can change Max's income from
$2 to $20 in $1 increments. You can change any or all of these inputs and
see what effect this has on Max's budget constraint (and his levels of
consumption, if you have indifference curves activated.) Every time you
move a slider, the graph will update to reflect your changes. The graph
will also display the curves from your
previous slider settings.
The table at the lower right of the screen will also display your settings. It will show the Price of O-Burgers, the Price of O-Nuggets, and Max's income each time you make a change. If you have indifference curves activated, the table will also indicate Max's utility-maximizing quantities of O-Burgers and O-Nuggets.
Instructions
1. Adjust the price sliders for O-Burgers and/or O-Nuggets.
2. Adjust the income slider to increase or decrease the amount of money Max can spend.
3. Turn on or off display of indifference curves.
Notes
There will be times when the quantities of X and/or Y in the table
will not be integers. While this seems impossible in a literal sense (Marge
won't sell you 3.5 burgers!) it does make sense within the context of the
model. In theory, Max could maximize his utility with some fractional quantity
of a product; in the real world, Max would have to settle for a nearby
integer solution.
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