A non-calculus approach to solving the utility maximization problem using the Cobb-Douglas and CES utility function (CROSBI ID 222120)
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Podaci o odgovornosti
Kojić, Vedran
engleski
A non-calculus approach to solving the utility maximization problem using the Cobb-Douglas and CES utility function
This paper proposes a new original non-calculus method to solving the utility maximization problem using the Cobb-Douglas and the CES utility functions, and incorporating the weighted arithmetic-geometric-mean inequality (weighted AM-GM inequality) and Jensen’s inequality. Instead of using calculus, the substitution method or the Lagrange multiplier method, the maximum utility and global maximizer for the case of the Cobb-Douglas and CES utility functions are derived in a direct way. The new method does not require checking first and second order conditions, which the substitution method and the Lagrange multiplier method normally require.
constrained optimization ; Cobb-Douglas utility function ; CES utility function ; non-calculus approach ; mathematical inequalities
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Podaci o izdanju
6
2015.
269-277
objavljeno
1848-0225
1848-9931
10.17535/crorr.2015.0021
Povezanost rada
Ekonomija, Matematika