Thus, as the price of housing rises, the budget constraint rotates clockwise and the quantity consumed of

housing falls, ceteris paribus(meaning, with all other things being the same). We graph this relationship—the
price of housing rising from P0 to P1 to P2 to P3, while the quantity of housing demanded falls from Q0 to Q1 to
Q2 to Q3—on the demand curve in Figure 6.5 (b). The vertical dashed lines stretching between the top and
bottom of Figure 6.5 show that the quantity of housing demanded at each point is the same in both (a) and (b).

We ultimately determine the shape of a demand curve by the underlying choices about maximizing utility

subject to a budget constraint. While economists may not be able to measure “utils,” they can certainly

measure price and quantity demanded.

Applications in Government and Business

The budget constraint framework for making utility-maximizing choices offers a reminder that people can
{"total_pages": 597, "batch_upload": true, "file_type": ".pdf", "moddate": "2022-12-07T14:23:05-06:00", "creationdate": "2022-12-07T14:15:44-06:00", "uploaded_via": "batch_uploader", "file_size_mb": 26.99, "file_name": "Microeconomics3e.pdf", "title": "Principles of Microeconomics 3e", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "producer": "Prince 14.2 (www.princexml.com)", "upload_timestamp": "2026-02-07T15:24:38.309401", "creator": "PDFMiner"}