# Questions tagged [utility]

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

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### Does Varian define the MRS differently/ as negative?

Varian defines the MRS as the slope of the indifference curve. However, Snyder/Nicholson (and apparently Wikipedia) define the MRS as the negative of the slope. Does Varian use a different definition, ...
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### Are standard discrete choice models based on ordinal utility or cardinal utility?

Suppose we model consumer's choice between three brands Honda(choice 1), Toyota(choice 2) and BMW(choice 3) using a standard discrete choice model, with the utility of choice $j\in\{1,2,3\}$ being ...
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### How Can I Model Demand Elasticity?

Can demand elasticity be determined by examining the distribution of marginal utility across a potential customer base? For example, if the distribution of marginal utility among potential customers ...
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1 vote
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### Risk Premium for Prospect Theory-like value function

I am curious how to calculate the following risk premium for a utility function that is not linear in $w$. What i'm asking is the following: Consider an agent with utility function $u$, initial wealth ...
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### How does marginal utility and marginal product differ?

The marginal utility is, in plain English, the additional benefit (utility) that an individual gets by consuming an additional unit of a good or service. According to the Law of Diminishing Marginal ...
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### Is Epstein-Zin utility a generalization of dynamic expected utility (DEU)?

Epstein-Zin (EZ) utility is the solution to: DEU is relatively simple: $\sum_t \delta ^t\mathbb E[u(c_t)]$. Is DEU a special case of EZ? How are those two models compared? Since EZ is a solution of a ...
1 vote
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### Is it possible to get a demand function as function of income and utility from this log linear indirect utility?

I have this indirect utility function: $$v=-c\frac{p^{(-β+1)}}{(-\beta+1)}+\frac{y^{(-\gamma+1)}}{(-\gamma+1)}$$ with constraint Y = c + pq I have posted before about getting the utility function from ...
1 vote
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### What is the typical utility function of the standard loglinear demand function?

What is the typical utility function of this demand function? $$x_1 = \ln(x_2) - \beta \ln(p_1) + \gamma \ln(y).$$ With budget constraint $y = p x_1 + x_2.$
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### What the name of a demand function that is both a function of income and utility?

I am working with a model that includes a demand function that follows this proces: We have utility function and budget constraint. Good x1 has price p and good x2 is normalised. p = dU/dx1/dU/dx2 ...
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### How to derive utility function from indirect utility and Marshallian demand?

c is composite good with normalised price, q is good with price p. y is income. I have this indirect utility function: $$v=-c\frac{p^{(-β+1)}}{(-\beta+1)}+\frac{y^{(-\gamma+1)}}{(-\gamma+1)}$$ And ...
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### Price Offer Curve for a U(q1,q2)=max{q1,q2} Utility Function

Can someone help me understand how to draw out the price offer curve, or price consumption curve (PCC), for a U(q1,q2)=max{q1,q2} function? There's no information about this in my textbook and it's ...
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### Help solving utility optimization problem from Connelly 1992 (Economics)

I am working through a paper by Connelly 1992 in RESTAT and I'm hoping to get some assistance in working through the optimization problem that she sets up. I apologize that it might be simple for many ...
1 vote
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### Perfect substitutes mathematical definitions not equivalent

Statement: Consider goods $X$ and $Y$ (and we denote the quantities of by the same notation) such that they are perfect substitutes with the substitution ratio $1:n$. Assume the basic axioms ...
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### In consumer theory, shouldn't necessity good and neutral good be different ? What will be the IC and utility function for both?

Necessity good for example salt, which regardless of income has to be consumed at certain quantity. But neutral good for example is Suppliments for a healthy person which regardless of income he/she ...
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### How do I get to this demand function in the monocentric city model?

I need to get this resulting price and quantity (housing): It's pretty clear that the denominator of the quantity function is just the price function. From this utility function: And this constraint:...
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### Representing a Lexicographic Preference in a Natural X Natural Choice Space With Utility Function

my current thinking is i have to dis/prove two things cardinality continuity but im not sure about how it would apply since the above is a natural X natural choice space I know cardinality of ...
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### What are the necessary and sufficient assumptions for indifference curves to be convex to the origin?

I thought this required (quasi-)concavity of the utility, but can this (e.g. declining MRS) occur with fewer assumptions?
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### Visualizing the expenditure minimization problem

I can easily visualize the utility maximization problem ie. $$v(\mathbf{p},m^{*})= \max_{\mathbf{x}} \ u(\mathbf{x}) \ \ s.t \ \ \mathbf{px}\leq m$$ Since it is pretty easy to graph the indifference ...
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### Is the market price objective?

Is the market price objective, does it exist independently of human consciousness, how do we treat the market price in economics and the philosophy of economics? The market price is the current price ...
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I frequently encounter the following two versions of writing CIES or CRRA preferences: $$u(c_t) = \frac{c_t^{1-\theta}-1}{1 - \theta}$$ ...and... $$u(c_t) = \frac{c_t^{1-\theta}}{1 - \theta}$$ The ...