In economics, utility is a measure of the happiness or satisfaction gained from the consumption of goods. In the model of individual utility maximization, economists assume that homo economicus is rational and self-interested and thus tends optimally to satisfy his or her needs under the given conditions. One can extend individual utility maximization to social utility maximization. While individual utility maximization plays an important role in microeconomic theory, welfare economics is inspired by the idea of social utility maximization. The economic analysis of law applies to both microeconomic and welfare economic concepts.

Individual Utility Maximization

According to the paradigm of neoclassical microeconomic theory, economists understand human behavior as a rational choice made from different alternatives under the conditions of scarcity. In other words, the individual compares all ...

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