AP Micro 1.6 | Marginal Analysis and Consumer Choice:
In this video I talk about Marginal Cost-Benefit Analysis and the Consumer Choice Problem, also known as the Utility Maximization Problem. I also talk about why the solution to the Consumer Choice Problem happens when the Marginal Rate of Substitution (MRS) is equal to the ratio of the prices.
Timestamps:
0:00 - Intro
0:38 - Meaning of "Marginal"
1:45 - Diminishing Marginal Utility
3:28 - Consumer Choice Problem
4:59 - The Budget Constraint Explained
5:39 - MRS and Solving the Consumer Choice Problem
