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General Equilibrium Theory of Value$
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Yves Balasko

Print publication date: 2011

Print ISBN-13: 9780691146799

Published to Princeton Scholarship Online: October 2017

DOI: 10.23943/princeton/9780691146799.001.0001

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Preferences and Utility

Preferences and Utility

Chapter:
(p.5) Chapter 2 Preferences and Utility
Source:
General Equilibrium Theory of Value
Author(s):

Yves Balasko

Publisher:
Princeton University Press
DOI:10.23943/princeton/9780691146799.003.0002

Classical consumer theory is essentially the theory of utility maximization under a budget constraint. This theory starts with the definition of consumers' preferences. In classical consumer theory, preferences are assumed to be transitive, complete, monotone, and convex. These preferences can then be represented by utility functions. The latter are mathematically easier to handle than preferences. Another reason for being interested in utility functions goes back to the early phases of economic theory. Then, it was thought that utility functions could be used as a measure of consumer's satisfaction or utility. This chapter is devoted to a presentation of the basic issues regarding preferences and their representability by utility functions.

Keywords:   consumption, classical consumer theory, utility maximization, budget constraint, consumer preferences, utility functions

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