# Optimal choice on budget line

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##### Intros

###### Lessons

**Optimal Choice on Budget Line Overview:**__Finding the Optimal Choice__- Maximize Utility on Budget Line
- Indifference Curve Intersects Budget Line
- Maximized when Budget Line is Tangent to IC

__Changes to Price__- Decrease in price of a good
- Optimal choice is no longer the best
- Find a new indifference curve
- New optimal choice

__Changes to Income__- Decrease in income
- Optimal choice is no longer the best
- Find a new indifference curve
- New optimal choice

##### Examples

###### Lessons

**Finding & Predicting Optimal Choices**

Suppose Vincy spent all her income on 3 pencils for $2 each and 2 erasers for $6 each. Now the price of pencils rises to $3 and the price of erasers decrease to $2.- Suppose Vincy spent all her income on 4 cups of tea for $3 each and 3 cups of coffee for $4 each. Now the price of tea decreases to $1.50 and the price of coffee increases to $8.
- Kevin's income is $16 a week. The price of a tea bag is $2 and the price of a slice of pizza is $4. The graph below shows Kevin's preference map for tea and chicken.
- Kevin's income is $50 a week. The price of a chocolate is $5, and the price of vanilla is $10. The graph below shows Kevin's preference map for tea and chicken.