Economic Situations of Lagrange Multiplier When Costs of Various Inputs Increase for Nonlinear Budget Constraint

Mohajan, Devajit and Mohajan, Haradhan (2023): Economic Situations of Lagrange Multiplier When Costs of Various Inputs Increase for Nonlinear Budget Constraint. Published in: Studies in Social Science & Humanities , Vol. 2, No. 4 (31 March 2023): pp. 40-64.

Abstract

An industry always expects to survive in profit maximization atmosphere. To develop profit maximization strategy it must follow scientific methods in every step of production and distribution. Only proper decisions can propel the industry smoothly in sustainable way. This study attempts to discuss economic effects of Lagrange multiplier when per unit costs of various inputs increase. In this paper the method of Lagrange multiplier is applied to represent higher dimensional unconstrained problem from the lower dimensional constrained problem. Cobb-Douglas production function, 6×6 bordered Hessian matrix, and 6×6 Jacobian are operated here to provide economic predictions appropriately. In the study profit maximization is considered with subject to the nonlinear budget constraint.

• Item Type: MPRA Paper
• Language: English
• Keywords: Profit maximization, Lagrange multiplier, nonlinear budget constraint
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B4 - Economic Methodology > B41 - Economic Methodology; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables; C - Mathematical and Quantitative Methods > C4 - Econometric and Statistical Methods: Special Topics > C41 - Duration Analysis ; Optimal Timing Strategies; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C67 - Input-Output Models; G - Financial Economics > G1 - General Financial Markets; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I31 - General Welfare, Well-Being

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