# The two goods model

Summary

The two goods model

• Two goods: good 1 and good 2
• A single point in time
• A single individual
• $$x_1$$ : consumption of good 1
• $$x_2$$ : consumption of good 2
• Infinitely divisible, $$x_1≥0$$ , $$x_2≥0$$
• Price of good 1: $$p_1>0$$
• Price of good 2: $$p_2>0$$
• Prices are fixed
• Consumer has income: $$m>0$$

Consumption bundle

• Consumption bundle: $$\left( x_1,x_2 \right)$$ as a point in a Cartesian coordinate system