Izvorni znanstveni članak
https://doi.org/10.17535/crorr.2015.0021
A non-calculus approach to solving the utility maximization problem using the Cobb-Douglas and CES utility function
Vedran Kojić
orcid.org/0000-0002-6802-1719
; Ekonomski fakultet, Sveučilište u Zagrebu, Zagreb, Hrvatska
Sažetak
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.
Ključne riječi
constrained optimization; Cobb-Douglas utility function; CES utility function; non-calculus approach; mathematical inequalities
Hrčak ID:
138613
URI
Datum izdavanja:
30.3.2015.
Posjeta: 2.097 *