What is expenditure function, Microeconomics

Assignment Help:

What is Expenditure Function?

The Expenditure Function:

When preferences satisfy the local nonsatiation assumption, in that case v(p, m) will be strictly increasing into m. After that invert the function and resolve for m as a function of the level of utility; which is, given any level of utility, u, determine the minimal amount of income essential to attain utility u at prices p. The function which relates income and utility in this method the inverse of the indirect utility function is termed as the expenditure function and is denoted through e(p, u). Properly, the expenditure function is specified by the given problem:

e(p, u) = min px

that is u(x) > u.

The expenditure function specifies the minimum cost of getting a fixed level of utility.


Related Discussions:- What is expenditure function

PERFECT COMPETITION and THE SUPPLY CURVE & MONOPOLY, Chapter 13 / PERFECT C...

Chapter 13 / PERFECT COMPETITION and THE SUPPLY CURVE 1. Joe Brown’s dairy operates in a perfectly competitive marketplace. Joe’s machinery costs $500 per day and is the only fixe

Market failure, Ask question using health care as an example explain how ma...

Ask question using health care as an example explain how markets fail due to different types of externalities arising from jointness in production and consumption

Mathematical derivation of ordinary demand function, Mathematical Derivatio...

Mathematical Derivation of ordinary demand function: Here we present the mathematical and more general proof of the above result. Consider, again, the initial price income sit

Traditional inventory control based on calculation of eoq, Traditional inve...

Traditional inventory control based on the calculation of EOQ   At this point, it is worth considering some of the problems faced by companies using the simple inventory model

Oligopoly, characteristics and models of oligopoly by Sweezy,cournot and ed...

characteristics and models of oligopoly by Sweezy,cournot and edgework

Obtain an expression for the allowed rotational energies, chemistry assignm...

chemistry assignments ,  obtain an expression for the allowed rotational energies of  N 2  molecules. The equilibrium bond length of the  N 2  molecules is  109.8 pm .

Bains theory, what is bains theory ? describe with the diagram

what is bains theory ? describe with the diagram

Optimization, Andrew has preference given by: u(x,y) = min{2x, 3y} The pri...

Andrew has preference given by: u(x,y) = min{2x, 3y} The price for good x and good y are identical and equal to 4. At his optimal consumption bundle he achieves a utility of 90. W

What are the three major types of unemployment, What are the three major ty...

What are the three major types of unemployment?   a) Frictional b) Structural and c) Cyclical unemployment. Cyclical unemployment is broadly spread by an economy durin

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd