PREFERENCES AND UTILITY参考.pptVIP

Indifference Curves With a Discrete Good Gas-oline Aircraft 0 1 2 3 4 Indifference “curves”are collections ofdiscrete points. * * Examples of Utility Functions Cobb-Douglas Utility utility = U(x,y) = x?y? where ? and ? are positive constants The relative sizes of ? and ? indicate the relative importance of the goods * Examples of Utility Functions Perfect Substitutes utility = U(x,y) = ?x + ?y Quantity of x Quantity of y U1 U2 U3 The indifference curves will be linear. The MRS will be constant along the indifference curve. * Examples of Utility Functions Perfect Complements utility = U(x