A utility function is a mathematical representation used in economics to model how individuals or groups make choices based on their preferences. It assigns a numerical value to different bundles of goods or services, reflecting the satisfaction or happiness derived from each option. Higher values indicate greater satisfaction, helping to predict consumer behavior. In decision-making, utility functions help analyze trade-offs and optimize choices. For example, when faced with options like food and entertainment, individuals can use their utility functions to determine which combination maximizes their overall happiness. This concept is fundamental in understanding consumer behavior and market dynamics.