the full range of possible consumption choices to predict how consumption responds to changes in prices or

incomes. After reading this chapter, consult the appendix Indifference Curves to learn more about

representing utility and choice through indifference curves.

6.1 Consumption Choices

LEARNING OBJECTIVES

By the end of this section, you will be able to:

• Calculate total utility

• Propose decisions that maximize utility

• Explain marginal utility and the significance of diminishing marginal utility

Information on the consumption choices of Americans is available from the Consumer Expenditure Survey

carried out by the U.S. Bureau of Labor Statistics. Table 6.1 shows spending patterns for the average U.S.

household. The first row shows income and, after taxes and personal savings are subtracted, it shows that, in

2015, the average U.S. household spent $48,109 on consumption. The table then breaks down consumption
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