Question

What is the utility function with one inferior good?

1) U(x) = x
2) U(x) = ln(x)
3) U(x) = x²
4) U(x) = 1/x

Answer 1

The utility function with one inferior good is U(x) = 1/x. This function represents a situation where the more of the good is consumed, the less utility it provides.

Step-by-step explanation:

The utility function with one inferior good is U(x) = 1/x.

This utility function represents a situation where the more of

';l the good is consumed, the less utility it provides. In other words, as the quantity of the inferior good increases, its marginal utility decreases.

For example, if the inferior good is low-quality bread, the first slice may provide high utility, but as more slices are consumed, the utility of each additional slice decreases.