Transportation

Healthcare

Entertainment

Education

Personal insurance and pensions

6.1 • Consumption Choices 139

$2,505

$16,557

$1,700

$7,677

$3,157

$2,504

$1,074

$5,357

All else: alcohol, tobacco, reading, personal care, cash contributions, miscellaneous $3,356

TABLE 6.1 U.S. Consumption Choices in 2015 (Source: http://www.bls.gov/cex/csxann13.pdf)

Total Utility and Diminishing Marginal Utility

To understand how a household will make its choices, economists look at what consumers can afford, as

shown in a budget constraint (or budget line), and the total utility or satisfaction derived from those choices.

In a budget constraint line, the quantity of one good is on the horizontal axis and the quantity of the other good

on the vertical axis. The budget constraint line shows the various combinations of two goods that are

affordable given consumer income. Consider José's situation, shown in Figure 6.2. José likes to collect T-shirts

and watch movies.
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