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Optimization With Equality Constraints

In: ESSENTIAL MATHEMATICS FOR ECONOMICS A Student’s Guide to Key Mathematical Techniques

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  • VASILEIOS ZIKOS

Abstract

After completing this chapter, students will be able to:Use the Lagrange multiplier method to solve optimization problems with equality constraints.Understand the interpretation of the Lagrange multiplier.Apply the Lagrange multiplier method to various economic problems.In Chapter 4, we studied how to optimize a function in the absence of constraints. However, economic problems often involve various types of constraints: a consumer may maximize utility subject to a budget constraint or minimize expenditure while attaining a given level of utility. Similarly, a firm may seek to maximize profits or minimize costs under quantity constraints…

Suggested Citation

  • Vasileios Zikos, 2026. "Optimization With Equality Constraints," World Scientific Book Chapters, in: ESSENTIAL MATHEMATICS FOR ECONOMICS A Student’s Guide to Key Mathematical Techniques, chapter 5, pages 73-87, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789819814114_0005
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    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • D00 - Microeconomics - - General - - - General
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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