This page compares the properties of several typical

utility function As a topic of economics, utility is used to model worth or value. Its usage has evolved significantly over time. The term was introduced initially as a measure of pleasure or happiness as part of the theory of utilitarianism by moral philosoph ...

s of divisible

goods In economics, goods are items that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods which are transferable, and services, which are not ...

. These functions are commonly used as examples in

consumer theory The theory of consumer choice is the branch of microeconomics that relates preferences to consumption expenditures and to consumer demand curves. It analyzes how consumers maximize the desirability of their consumption as measured by their pre ...

. The functions are

ordinal utility In economics, an ordinal utility function is a function representing the preferences of an agent on an ordinal scale. Ordinal utility theory claims that it is only meaningful to ask which option is better than the other, but it is meaningless to ask ...

functions, which means that their properties are invariant under positive monotone transformation. For example, the Cobb–Douglas function could also be written as:

w_x \log + w_y\log

. Such functions only become interesting when there are two or more goods (with a single good, all monotonically increasing functions are ordinally equivalent). The utility functions are exemplified for two goods,

x

and

y

p_x

and

p_y

are their prices.

w_x

and

w_y

are constant positive parameters and

r

is another constant parameter.

u_y

is a utility function of a single commodity (

y

I

is the total income (wealth) of the consumer.

References

* {{Cite book, author=Hal Varian, author-link=Hal Varian, title=Intermediate micro-economics, isbn=0393927024, year=2006 chapter 5.

Acknowledgements

This page has been greatly improved thanks to comments and answers i
Economics StackExchange

References

Acknowledgements

See also