ABSTRACT
We start with the Fisher diagram and assume that the individual faces a transformation curve which gives the terms on which he can transform present into future resources. Given technology the economy provides a way to transform present into future resources and this is simply the process of investment. The individual faces a rate of interest in the market which will be represented by a slope (of line AB in the diagram) and his optimal investment choice is at points P1 P2 because that gives him the highest budget line along which he can maximize his utility. The presence of a market enables him to divorce his investment decisions from his consumption decisions.
