# Questions tagged [utility]

Utility, or usefulness, is the (perceived) ability of something to satisfy needs or wants.

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### Utility Function Challenge

A utility function is given for two goods Good 1 and Good 2 U = f(G1,G2) = 45G1^0.7, G2^0.3 ^ Did I get this right, the marginal utility functions with respect to G1 and G2? Solution dU/dG1 - MU of ...
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### What utility function represents an agent with a time-discount factor?

Consider an agent who has a fixed budget, and should decide how to split it between consumption today and consumption tomorrow. For simplicity, suppose there is no interest, and no borrowing/lending, ...
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### marginal utility and Marginal rate of substitution

While studying for my microeconomics class, I realized that I could not fully understand the meanings of Marginal utilities and marginal rate of substitution. Can anyone explain to me the difference ...
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### is the investors risk-premium 51/8 [closed]

An investor's utility function for his wealth W is given by u(W) = W^1/3. his wealth after 1 year is either 8 with probability 3/4, or 64 with probability 1/4. Then the investor's risk-premium is ...
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### how to solve such UMP where utility function is quasi-linear with cobb-douglas function as the non-linear part [closed]

U =$X_1+X_2^aX_3^{1-a}$ $a ∈[0,1]$ $s.t. p·x≤w , x≥0$ I have tried FOC for x1 x2 x3 and λ, but I cannot get two pairs of equalities separately in order to express two unknowns as a function of ...
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### Binary choices in consumer theory

Back when I was a teaching assistant, we were teaching utility theory and how it relates to price determination. So we were looking at continuous goods (e.g. "food") so as to get marginal ...
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### certainty equivalent and lotteries [closed]

suppose an agent has $u(z)=-e^{-bz}$ where $b>0$ as her Bernoulli utility function and faces two gambles: G1: win 1000 dollars with probability $\frac{1}{2}$ and zero with probability $\frac{1}{2}$ ...
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### comparing two lotteries

Suppose the prize space (in dollars) is $\mathbb{Z}$ = {1, 2, 3, 4, 5, 6, 7, 8} and consider choices by an agent whose preferences (over lotteries) satisfy the von Neumann-Morgenstern axioms. A risk ...
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### Lagrangian in Ramsey model

I struggle to write and solve Lagrangian in the Ramsey model. I have the following individual preferences with a budget constraint: and an additional constraint that is a no-ponzi condition: How to ...
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### Market clearing price for a single good with two consumers with different utilities

Say I have a single indivisible good that is randomly allocated to one of two consumers. The first consumer's utility for the good is \$5 and the second consumer's utility for it is$10. If the good ...