Indirect utility function

In economics, a consumer's indirect utility function gives the consumer's maximal attainable utility when faced with a vector of goods prices and an amount of income . It reflects both the consumer's preferences and market conditions.

This function is called indirect because consumers usually think about their preferences in terms of what they consume rather than prices. A consumer's indirect utility can be computed from his or her utility function defined over vectors of quantities of consumable goods, by first computing the most preferred affordable bundle, represented by the vector by solving the utility maximization problem, and second, computing the utility the consumer derives from that bundle. The resulting indirect utility function is