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- Title
BENCHMARK TWO-GOOD UTILITY FUNCTIONS.
- Authors
DE JAEGHER, KRIS
- Abstract
Benchmark two-good utility functions involving a good with zero income elasticity and unit income elasticity are familiar. In this paper we derive utility functions for the additional benchmark cases where one good has zero cross-price elasticity, unit own-price elasticity and zero own-price elasticity. It is shown how each of these utility functions arises from a simple graphical construction based on a single given indifference curve. Also, it is shown that possessors of such utility functions may be seen as thinking in a particular sense of their utility, and may be seen as using simple rules of thumb to determine their demand.
- Subjects
UTILITY theory; ELASTICITY (Economics); BUSINESS forecasting; BENCHMARKING (Management); CONSUMPTION (Economics); INCOME; INDIFFERENCE curves; MICROECONOMICS; BUSINESS enterprises
- Publication
Manchester School (1463-6786), 2008, Vol 76, Issue 1, p44
- ISSN
1463-6786
- Publication type
Article
- DOI
10.1111/j.1467-9957.2007.01049.x