In this way, the logical foundations of demand curves—which show a connection between prices and quantity

demanded—are based on the underlying idea of individuals seeking utility. Figure 6.5 (a) shows a budget

constraint with a choice between housing and “everything else.” (Putting “everything else” on the vertical axis

can be a useful approach in some cases, especially when the focus of the analysis is on one particular good.)
We label the preferred choice on the original budget constraint that provides the highest possible utility M0.
The other three budget constraints represent successively higher prices for housing of P1, P2, and P3. As the
budget constraint rotates in, and in, and in again, we label the utility-maximizing choices M1, M2, and M3, and
the quantity demanded of housing falls from Q0 to Q1 to Q2 to Q3.

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6.2 • How Changes in Income and Prices Affect Consumption Choices 149
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