Activity monitor says I have 1 -3% of System Memory free, yet CPU usage shows less than 10% total of all processes

Activity monitor says I have 1 -3% of System Memory free, yet CPU usage shows less than 10% total of all processes

I think you should review what you wrote. There is no question, hence, my reply. I can't tell by the AM listing what applications are using memory. You need to click on the Real Mem column once or twice to display in descending order.
Aside from what you see in AM, what exactly is your problem or perceived problem. You are very low on Free Mem at the moment the screen shot was taken. Those displays are not depicting your computer's instantaneous memory usage.
About OS X Memory Management and Usage
Using Activity Monitor to read System Memory & determine how much RAM is used
Memory Management in Mac OS X
Performance Guidelines- Memory Management in Mac OS X
A detailed look at memory usage in OS X
Memory Usage Performance Guidelines- About the Virtual Memory System
Understanding top output in the Terminal
The amount of available RAM for applications is the sum of Free RAM and Inactive RAM. This will change as applications are opened and closed or change from active to inactive status. The Swap figure represents an estimate of the total amount of swap space required for VM if used, but does not necessarily indicate the actual size of the existing swap file. If you are really in need of more RAM that would be indicated by how frequently the system uses VM. If you open the Terminal and run the top command at the prompt you will find information reported on Pageins () and Pageouts (). Pageouts () is the important figure. If the value in the parentheses is 0 (zero) then OS X is not making instantaneous use of VM which means you have adequate physical RAM for the system with the applications you have loaded. If the figure in parentheses is running positive and your hard drive is constantly being used (thrashing) then you need more physical RAM.
Adding RAM only makes it possible to run more programs concurrently.  It doesn't speed up the computer nor make games run faster.  What it can do is prevent the system from having to use disk-based VM when it runs out of RAM because you are trying to run too many applications concurrently or using applications that are extremely RAM dependent.  It will improve the performance of applications that run mostly in RAM or when loading programs.

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