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A New Approach to Utility Function

Catalin Angelo Ioan ()

Acta Universitatis Danubius. OEconomica, 2015, issue 11(2), 194-223

Abstract: This paper treats from an axiomatic point of view the notions of indifference and preference, relative to the consumption of goods. After the introduction and analysis of indifference classes, the notion of the utility function is introduced naturally, a number of axioms giving consistency and rigor. The concept of marginal utility is presented in both differentiable and, especially, in the discretized case. There are introduced new types of discretized marginal utility that adapts better when analyzing discrete the differential situation. The marginal rate of substitution is addressed globally, for n goods, obtaining the notions of hyperplane or minimal vector of substitution. Also, in the discretized case, there are introduced the marginal rates of substitution to the left, right or bilateral, as well as the adjusted rates, which give more precisely the possibility of consumption of a good when replaced another.

Keywords: economic disparities; GDP growth rate; unemployment rate; inflation rate; public debt; economic forecasting. (search for similar items in EconPapers)
Date: 2015
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Handle: RePEc:dug:actaec:y:2015:i:2:p:194-223