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Utility Maximization Subject to Multiple Constraints

Author

Listed:
  • Jamal Nazrul Islam
  • Haradhan Kumar Mohajan

    (Premier University, Chittagong,)

  • Pahlaj Moolio

    (University of Chittagong, Bangladesh;)

Abstract

Applying method of Lagrange multipliers, an attempt has been made to derive mathematical formulation to workout optimal purchasing policy in order to maximize utility of an individual consumer subject to multiple constraints; in this particular illustration, two constraints: 1) budget constraint, and 2) coupon constraint. An explicit example is given in order to examine the behaviour of an individual consumer and to support the analytical arguments, using comparative static analysis.

Suggested Citation

  • Jamal Nazrul Islam & Haradhan Kumar Mohajan & Pahlaj Moolio, 2010. "Utility Maximization Subject to Multiple Constraints," Indus Journal of Management & Social Science (IJMSS), Department of Business Administration, vol. 4(1), pages 15-29, December.
    • Handle: RePEc:iih:journl:v:4:y:2010:i:1:p:15-29
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    File URL: http://indus.edu.pk/RePEc/iih/journl/4(1)2010-(2)-UtilityMaximizationSubjecttoMultipleConstraints-Moolio.pdf
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    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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