Utility functions and indifference curves | Wiskunde op Tilburg University

Introduction: Utility functions are a quantitative method to describe the preferences of a consumer.

Definition: An indifference curve is a level curve of a utility function.

Example: Let

$U(x,y)=xy$ be a utility function. We determine the indifference curve with

$U$ -value 10.

$U(x,y)=10 \Leftrightarrow xy=10 \Leftrightarrow y=\dfrac{10}{x}$ .