Assume an individual's utility function is given by the following expression, where a and b are constants: U(9₁,92) = a q1 + b.q2 Assume the individual has $12 (y = 12) to spend on a bundle of q₁ and q2 and assume the price of good #1 is $4 (p₁ = 4). If the price of good #2 is greater than $2 (p₂ > 2), then this individual will maximize their utility by consuming 3 units of good #1 (9₁ = 3). However, if the price of good #2 is less than $2 (p₂ < 2), this individual will maximize their utility by consuming zero units of good #1 (91 = 0). Given this information, what is the value of the fraction ()?

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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.