The consumer's utility function is the following: U=x1*2 The consumer's optimal values of x and x2 are the given by the following: x₁= I 1 x 2P 2P 1 2 I 1/2 The compensated demand equations for x, is the following: x 1 === I lc 2 2P'.P Assume the prices are the following: P₁ =12, P2=10, and 1=1000. The price of x changes to P'1=15. 1 1 What is the substitution effect?

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Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.