Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322721 
Year of Publication: 
2007
Series/Report no.: 
Discussion Papers Series No. 07-09
Publisher: 
Utrecht University, Utrecht School of Economics, Tjalling C. Koopmans Research Institute, Utrecht
Abstract: 
Benchmark two-good utility functions involving a good with zero income elasticity and unit income elasticity are well known. This paper derives 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: 
Benchmark Utility Functions
Rules of Thumb
Document Type: 
Working Paper

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