Utility Functions

Utility functions are mathematical tools used in economics to measure and represent an individual's preferences and satisfaction from different choices or goods. They help quantify how much a person values various options, allowing economists to analyze decision-making, prioritize options, and understand trade-offs. Essentially, a utility function assigns a number to each possible choice, where higher numbers indicate more preferred options. This concept is useful for studying how people make choices under scarcity and uncertainty, enabling better modeling of consumer behavior and market outcomes.