Re: ISI 2005.. Utility function?

Posted by Dreyfus on Apr 30, 2014; 11:10am
URL: http://discussion-forum.276.s1.nabble.com/ISI-2005-Utility-function-tp7588094p7588103.html

Ron, yes max presents the maximum of the two....consider when price of potato > price of cabbage now when u exhaust all ur income on potato u'll only get fewer no. of units compated to cabbage when u exhaust all ur income on cabbage.
Therefore max function represents the concave preference as when u exhaust income on both of the veggies u will get comparatively lesser units as when u buy only 1 type of veggie that is extremes are preferred over averages!
also when prices of two veggies are same the consumer will only buy only 1 type of veggie not both!