What is expenditure minimization economics?
In microeconomics, the expenditure minimization problem is the dual of the utility maximization problem: “how much money do I need to reach a certain level of happiness?”. This question comes in two parts. Given a consumer’s utility function, prices, and a utility target, how much money would the consumer need?
What is minimum expenditure function?
From Wikipedia, the free encyclopedia. In microeconomics, the expenditure function gives the minimum amount of money an individual needs to spend to achieve some level of utility, given a utility function and the prices of the available goods.
How do you find the expenditure function?
∂E/∂pi = hi(p1,p2,U), a result that is useful for calculating the welfare consequences of a price change. See also indirect utility function.
What is alpha and beta in Cobb-Douglas?
A Cobb-Douglas Function takes the form of Q=KαLβ where Q=output, K=capital, L=labour, and alpha and beta are used to represent input shares of capital and labour respectively. Alpha is simply the percentage of capital I use in my production process, whilst beta is the percentage of labour used.
Which is the best definition of cost minimization?
Cost Minimization. A firm is a cost-minimizer if it produces any given output level y ≥0 at smallest possible total cost. c(y) denotes the firm’s smallest possible total cost for producing y units of output. c(y) is the firm’s total cost function.
How to maximize utility subject to a budget constraint?
Maximize the utility subject to a budget constraint. → get Marshallian Demand funciotn. Substitute the Marshallian-Demand-Funciton in the utility function to get an indirect utility function. Indirect utility function measure the highest level of utility we can chieve with given price and income.
How to solve the cost minimization problem in Excel?
cost-minimization problem is to solve minwx1 1 +w2x 2 1,x2 ≥0 subject tof (x, x) 1 2 =y. A firm is a cost-minimizer if it produces any given output level y ≥0 at smallest possible total cost.c(y) denotes the firm’s smallest possible total cost for producing y units of output.
Which is the best description of a perfect complement?
Perfect complements consist of two (or more) goods or services which only provide utility when consumed in fixed proportions. Perfect complements are represented with an “L” shaped utility function.