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Determining Maximum Utility Curves For Budget Constraint Line Variations

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  • Mehmet Pakdemirli

    (Department of Mechanical Engineering, Manisa Celal Bayar University 45140, Muradiye, Yunusemre, Manisa, Turkey)

Abstract

In the ordinal theory, maximum utility is achieved by determining the tangent point of the budget constraint line to one of the difference curves of equal satisfaction of a consumer. The model is a simplified model to determine the choices of buying two products such that maximum consumer satisfaction is reached. Market conditions frequently change due to inflation, deflation or price fluctuations. It may also happen that the individual income may change in time. In both cases, the budget constraint line shifts to the right or left. In this work, budget constraint line changes are modeled by assuming changes in the intercepts of the line. In the first scenario, the ratio of intercept changes are proportional in time while in the second scenario, the intercept changes are modeled by arbitrary functions of time. For both cases, by combining the optimal points, maximum utility curves are formed. Numerical examples are treated to outline the calculations.

Suggested Citation

  • Mehmet Pakdemirli, 2025. "Determining Maximum Utility Curves For Budget Constraint Line Variations," Matrix Science Mathematic (MSMK), Zibeline International Publishing, vol. 9(1), pages 01-05, January.
    • Handle: RePEc:zib:zbmsmk:v:9:y:2025:i:1:p:01-05
    DOI: 10.26480/msmk.01.2025.01.05
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    References listed on IDEAS

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    1. José Antonio Manuel Aguirre Sotelo & Walter E. Block, 2014. "Indifference Curve Analysis: The Correct And The Incorrect," Oeconomia Copernicana, Institute of Economic Research, vol. 5(4), pages 7-43, December.
    2. Qiguo Gong, 2023. "Machine endowment cost model: task assignment between humans and machines," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 10(1), pages 1-8, December.
    3. Mohajan, Haradhan, 2021. "Utility Maximization of Bangladeshi Consumers within Their Budget: A Mathematical Procedure," MPRA Paper 109993, University Library of Munich, Germany, revised 20 Jul 2021.
    4. José Antonio Manuel Aguirre Sotelo & Walter E. Block, 2014. "Indifference Curve Analysis: The Correct And The Incorrect," Oeconomia Copernicana, Polskie Towarzystwo Ekonomiczne Oddzial w Toruniu, Wydzial Nauk Ekonomicznych i Zarzadzania UMK, vol. 5(4), pages 7-43, December.
    Full references (including those not matched with items on IDEAS)

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