Maximizing utility between two goods

Definition

Maximizing utility between two goods involves allocating resources in such a way that it maximizes overall satisfaction or well-being given limited resources and budget constraints.

Related terms

Budget constraint: The limit on the amount of goods or services that can be purchased due to limited income or resources.

Indifference curve: A graphical representation showing different combinations of two goods that provide the same level of satisfaction or utility to a consumer.

Marginal rate of substitution: The rate at which a consumer is willing to trade off one good for another while maintaining the same level of satisfaction.