Utility Maximization as an Optimization Task

Utility Maximization as an Optimization Task

Paper in proceedings (conference paper)

In economics, utility is a term used to describe a subjective feeling of consumer's satisfaction created by goods consumption. Every rational consumer tries to maximize their utility, while minimizing their expenses related to the utility, on the other hand. Utility is evaluated by the user who has to evaluate it in view of their consumption and costs expended to achieve it. If the consumer has limited resources to cover their needs, he or she will try to maximize their utility with a given restriction (income amount). Which brings us to the solution of an optimization task using the Lagrange function and Lagrange multipliers.

In economics, utility is a term used to describe a subjective feeling of consumer's satisfaction created by goods consumption. Every rational consumer tries to maximize their utility, while minimizing their expenses related to the utility, on the other hand. Utility is evaluated by the user who has to evaluate it in view of their consumption and costs expended to achieve it. If the consumer has limited resources to cover their needs, he or she will try to maximize their utility with a given restriction (income amount). Which brings us to the solution of an optimization task using the Lagrange function and Lagrange multipliers.

Utility, optimization, Lagrange function

Utility, optimization, Lagrange function

BOBALOVÁ, M.

2019

16.11.2018

IBIMA

Seville

978-0-9998551-1-9

Vision 2020: Sustainable Economic Development and Application Management from Regional expansion to Global Growth

-

1343

1347

5

http://hdl.handle.net/