Theory of Utility and Consumer Behaviour: A Comprehensive Review of Concepts, Properties and the Most Significant Theorems

Abstract

In this section, we begin our study of consumer demand in the context of a market economy referred to as the system in which commodities (goods and services) are available to the consumer for purchase at known prices. Firstly, we study the primal problem of consumer utility maximisation. Secondly, we analyse the dual approach and, fmally, we study indirect utility function, expenditure function, the theoretical restrictions of demand systems, Roy’s Identity, Hotelling’s Theorem, relationships between functions, the Slutsky equation and complementary and substitute goods, and the elasticities of substitution of goods Finally, we offer basic references and further references and readings.