# Utility maximization consumer

Introduction: In consumer behavior it is assumed that a consumer wants to maximize his utility.

Model:
• $p_1$ is the price of good $x$
• $p_2$ is the price of good $y$
• $I$ is the available income

Consider the utility maximization problem

$\begin{array}{ll} \mbox{maximize}&U(x,y)\\ \mbox{subject to}&p_1x+p_2y=I,\\ \mbox{where} & x \in D_1 \ \mbox{and} \ y \in D_2. \end{array}$

An extremum location $(x,y)=(c,d)$, where $c \in D_1$ and $d \in D_2$ that is not a boundary point, satisfies the following system of equations:

$\left\{ \begin{array}{lcl} MRS(x,y)&=&{\dfrac{p_1}{p_2}}\\ p_1x + p_2 y &=&I. \end{array} \right.$