Figure 7.3 Utility Maximization and an Individual’s Demand Curve Mary Andrews’s demand curve for apples, d, can be derived by determining the quantities of apples she will buy at each price Those quantities are determined by the application of the marginal decision rule to utility maximization At a price of $2 per pound, Ms Andrews maximizes utility by purchasing pounds of apples per month When the price of apples falls to $1 per pound, the quantity of apples at which she maximizes utility increases to 12 pounds per month It is through a consumer’s reaction to different prices that we trace the consumer’s demand curve for a good When the price of apples was $2 per pound, Ms Andrews maximized her utility by purchasing pounds of apples, as illustrated in Figure 7.3 "Utility Maximization and an Individual’s Demand Curve" When the price of apples fell, she increased the quantity of apples she purchased to 12 pounds Heads Up! Notice that, in this example, Ms Andrews maximizes utility where not only the ratios of marginal utilities to price are equal, but also the marginal Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 368