EFZG working paper series, No. 04, 2015.
Other
Solving the utility maximization problem with CES and Cobb-Douglas utility function via mathematical inequalities
Vedran Kojić
; Faculty of Economics and Business, University of Zagreb
Abstract
This paper presents a new, non-calculus approach to solving the utility maximization problem with CES utility function, as well as with Cobb-Douglas utility function in case of n≥2 commodities. Instead of using the Lagrange multiplier method or some other method based on differential calculus, these two maximization problems are solved by using Jensen's inequlity and weighted arithmetic-geometric mean (weighted AM-GM) inequality. In comparison with calculus methods, this approach does not require checking the first and the second order conditions.
Keywords
Utility maximization problem; CES and Cobb-Douglas utility function; mathematical inequalities; without calculus
Hrčak ID:
141585
URI
Publication date:
15.7.2015.
Visits: 9.322 *