Sensitivity Analysis of Inputs of an Organization: A Profit Maximization Exploration

Mohajan, Devajit and Mohajan, Haradhan (2023): Sensitivity Analysis of Inputs of an Organization: A Profit Maximization Exploration. Published in: Law and Economy , Vol. 2, No. 4 (15 April 2023): pp. 32-48.

Abstract

This article tries to discuss sensitivity analysis of various inputs of an organization during profit maximization investigations. In this study Cobb-Douglas production function is analyzed with a detail mathematical analysis. The method of Lagrange multiplier is a very useful and powerful technique in multivariate calculus, and it is applied here to obtain higher dimensional unconstrained problem from the lower dimensional constrained one. In the article determinant of the 6×6 bordered Hessian matrix and 6×6 Jacobian are operated for consulting sensitivity analysis efficiently.

• Item Type: MPRA Paper
• Language: English
• Keywords: Lagrange multiplier, profit maximization, sensitivity analysis
• 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 > C5 - Econometric Modeling > C53 - Forecasting and Prediction Methods ; Simulation Methods; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C58 - Financial Econometrics; 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 > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models; H - Public Economics > H4 - Publicly Provided Goods; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs

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