Acceptable utility functions

### There are 3 main types of utility functions used in price theory: 1. **Cobb Douglas type function**
– Its form: `U(x,y) = x^alpha*y^beta`
– Product of 2 functions. `alpha` and `beta` are strength parameters. – In our opinion, this function is suitable for the vast majority of consumers. 2. **Minimum function**
– Its form: `U(x,y) = min(alphax,betay)`
– `alpha` and `beta` are parameters. 3. **Linear function**
– Its form: `U(x,y) = betax+betay`
– Sum of 2 functions. α and β are parameters of multipliers. – In our opinion, this function is suitable for few cases among consumers. ### The consumer’s indifference curves are obtained from his utility function. Each point on the plane of the axes represents a basket of products, and the result of the function that refers to it indicates the amount of utility that the basket yields. The result of the function is measured relative to the z-axis (= the height above the plane of the axes). Each result is represented by a point on the envelope of the function. All the results in the utility function, which are on the same height line (the same value on the z-axis) yield the same utility. The sequence of all the points on the envelope, which yield the same utility, constitutes an indifference curve, since the consumer is indifferent to each of the baskets that yield the same utility.