Utility Functions Indiff Curves all bundles in an indifference curve have the same utility level U(x1, X2=Constant is the equation of an indifference curve
Utility Functions & Indiff. Curves All bundles in an indifference curve have the same utility level. U(x1, x2)=Constant is the equation of an indifference curve
Utility Functions Indiff Curves 2 (2,3)x(2,2)~(4,1) U≡6 2 4 X
Utility Functions & Indiff. Curves U 6 U 4 (2,3) (2,2) ~ (4,1) x1 x2 p
Utility functions Indiff Curves The collection of all indifference curves for a given preference relation is an indifference map An indifference map is equivalent to a utility function
Utility Functions & Indiff. Curves The collection of all indifference curves for a given preference relation is an indifference map. An indifference map is equivalent to a utility function
Utility Functions f U is a utility function that represents a preference relation and f is a strictly increasing function, then v=f(U)is also a utility function representing
Utility Functions If –U is a utility function that represents a preference relation and – f is a strictly increasing function, then V = f(U) is also a utility function representing . ~ f ~ f
Goods Bads and Neutrals a good is a commodity unit which increases utility (gives a more preferred bundle a bad is a commodity unit which decreases utility(gives a less preferred bundle) a neutral is a commodity unit which does not change utility (gives an equally preferred bundle
Goods, Bads and Neutrals A good is a commodity unit which increases utility (gives a more preferred bundle). A bad is a commodity unit which decreases utility (gives a less preferred bundle). A neutral is a commodity unit which does not change utility (gives an equally preferred bundle)