00:01
So here we're going to analyze a consumer choice.
00:02
So let me set it up first.
00:03
I'm going to assume that you're kind of familiar with indifference curve budget constraint analysis.
00:08
And we're going to start off with a budget constraint.
00:11
And at a budget constraint, you would expect that the consumer will be tangent to that budget constraint on some indifference curve, right? indifference curve one.
00:20
So that would be the consumer's optimal point.
00:22
But now it's getting cheaper, right? and let's say that the good is getting cheaper is.
00:29
Is x.
00:33
Yeah.
00:34
So here what we're going to be able to do is we're going to be able to afford a larger amount of x, right? if we can devote all our resources to x, you could afford more x, right? it is now cheaper.
00:47
So your budget stretches further.
00:49
If you max out your budget on x, you can afford a larger amount...