Sensitivity Analysis between Lagrange Multipliers and Consumer Budget: Utility Maximization Case

Mohajan, Devajit and Mohajan, Haradhan (2023): Sensitivity Analysis between Lagrange Multipliers and Consumer Budget: Utility Maximization Case. Published in: Annals of Spiru Haret University Economic Series , Vol. 23, No. 1 (31 March 2023): pp. 167-185.

Abstract

In this paper sensitivity analysis between Lagrange multipliers and total budget is discussed. The method of Lagrange multipliers is a very useful and powerful technique in multivariable calculus. In mathematical economics, utility is the vital concept that increases or decreases overall happiness of the consumers. This study tries to discuss utility maximization policy of an organization by considering two constraints: budget constraint and coupon constraint. In this article, an attempt has been taken to achieve the best result through the application of scientific method of optimization.

• Item Type: MPRA Paper
• Language: English
• Keywords: Budget, Lagrange multipliers, sensitivity analysis, utility maximization
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C31 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions ; Social Interaction Models; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C52 - Model Evaluation, Validation, and Selection; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C53 - Forecasting and Prediction Methods ; Simulation Methods; 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; C - Mathematical and Quantitative Methods > C8 - Data Collection and Data Estimation Methodology ; Computer Programs > C81 - Methodology for Collecting, Estimating, and Organizing Microeconomic Data ; Data Access; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development

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