Utility Maximization Subject to Multiple Constraints

Islam, Jamal and Mohajan, Haradhan and Moolio, Pahlaj (2010): Utility Maximization Subject to Multiple Constraints. Published in: Indus Journal of Management & Social Sciences , Vol. 4, No. 1 (30 June 2010): pp. 15-29.

Abstract

Using method of Lagrange multipliers, an attempt has been taken in this paper to derive mathematical formulation to devise optimal purchasing policy in order to maximize utility function subject to multiple constrained, in this particular illustration, two constraints: 1) budget constraint, and 2) coupon constraint. An explicit example is provided in order to examine the behaviour of an individual consumer and to support the analytical arguments.

• Item Type: MPRA Paper
• Language: English
• Keywords: Lagrange Multipliers, Utility Function, Multiple Constraints, Comparative Static Analysis, Necessary and Sufficient Conditions, Consumer Behaviour.
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis

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