Editing Utility (section)

==Applications==

Utility can be represented through sets of [[indifference curve]], which are [[level curves]] of the function itself and which plot the combination of commodities that an individual would accept to maintain a given level of satisfaction. Combining indifference curves with budget constraints allows for individual [[demand function|demand curves]] derivation.

A diagram of a general indifference curve is shown below (Figure 1). The vertical and horizontal axes represent an individual's consumption of commodity Y and X respectively. All the combinations of commodity X and Y along the same indifference curve are regarded indifferently by individuals, which means all the combinations along an indifference curve result in the same utility value.  
[[File:A simple diagram of Indifference curve.png|thumb|Figure 1]]
Individual and social utility can be construed as the value of a utility function and a [[social welfare function]], respectively.  When coupled with production or commodity constraints, by some assumptions, these functions can be used to analyze [[Pareto efficiency]], such as illustrated by [[Edgeworth box]]es in [[contract curve]]s. Such efficiency is a major concept in [[welfare economics]].