# Questions tagged [utility]

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

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### Lexicographic preference relation cannot be represented by a utility function

I am stuck on the following exercise, related to preference relations and von-Neumann-Morgenstern utility function. A farmer wants to dig a well in a square field $[0,1000]\times[0,1000]$. The ...
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### Finding demand function given a utility min(x,y) function

I am confused about a particular point regarding finding a demand function. All the problems in this practice set I am doing have involved applying the method of Lagrangian multipliers. But I am ...
806 views

### Are there Utility Monsters in Economics?

Economics, especially in the modern school is broadly influenced by the utilitarian concept of utility. More so since the labor theory of value has been broadly replaced by the theory of marginal ...
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### If I gain, then someone else loses. Correct?

On a very small scale, it's certainly true that if I gain, somebody else might lose. If I take away my brother's chocolate, then he will lose it, and will most probably not get anything comparable. ...
13k views

### What is an example of a utility function where one good is inferior?

Say the consumer has a standard convex, monotonic preference over Apples and Bananas. (Update: I'd like the preference to be as 'standard' as possible. So ideally we have diminishing MRS everywhere ...
3k views

### Local Non-Satiation Proof

I have been having trouble with how to go forward with a proof for about three days now. I know the basic structure of the proof, but can't seem to construct it. Basically, I am trying to do a proof ...
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The von Neumann-Morgenstern theorem states that, assuming a person's preferences under risk satisfy certain rationality axioms, then there exists a utility function u, the von Neumann utility function,...
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### When can one safely talk about decreasing marginal utility?

One thing I hear a lot is talk of decreasing marginal utility—the idea being that additional units of a good become progressively less attractive the more units of that good one has already. However, ...
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### How to show that a homothetic utility function has demand functions which are linear in income

A homothetic utility function is one which is a monotonic transformation of a homogeneous utility function. I am asked to show that if a utility function is homothetic then the associated demand ...
3k views

### Which utility function yields a constant price elasticity of demand function?

How do I know which utility function I can use to find an isoelastic demand function, e.g., $x(p)=Ap^a$? And similarly, which cost function can I use to find an isoelastic supply function? Does it ...
1k views

### Homothetic preferences and utility functions

I know that if you have homothetic preferences and a utility function that represents it, then this utility function must present constant Marginal Rate of Substitution (MRS). My question is whether ...
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### Preferences where wealth effect dominates

King-Plosser-Rebelo preferences satisfy balanced growth requirements, we have that income and substitution effects of labor cancel. Labor does not respond to a change in the wage level. Greenwood-...
3k views

### Linear Expenditure System of Demands, Derivation Help

This problem I am working on comes out of--surprise--the Mas-Colell book for graduate micro (3.D.6). I think I have correctly used the FOC of the Lagrangian of the utility maximization problem to ...
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### Question on consumer theory

The story of my question is I have multiple question. (1) when John doesn’t work in the underground economy at all , t=0, how can I find the optimal value of $l$ and consumption bundle and his ...
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### What was “Pareto's proof of the immeasurability of utility”?

Wong (1978, 2002, Foundations of Paul Samuelson's Revealed Preference Theory), repeatedly refers to "Pareto’s proof of the immeasurability of utility". What was this proof?
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### Ruling out boundary solutions in Utility Maximization

Solving the basic Utility Maximization Problem, i.e. \begin{align} max_{x\geq 0} u(x) \\ s.t. \,\,\, p^Tx\leq w \end{align} we get the Kuhn-Tucker first order condition \begin{gather} \frac{\...