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

Explain how diminishing returns differ return to scale, Explain how diminis...

Explain how diminishing returns differ from diminishing returns to scale. The answer should clearly distinguish among SR (one or more factors are fixed) and LR (where all facto

Economic planning, How does planning serve as a solution to economic proble...

How does planning serve as a solution to economic problems?

How to calculate the cpi index, When measuring price levels in the economy ...

When measuring price levels in the economy (such as when calculating the CPI index), why is a weighted average used? Because we require giving greater emphasis to prices at whi

Applications, hey, I just have a question on how to apply things like ATC a...

hey, I just have a question on how to apply things like ATC and AVC in a problem. im just not too sure about what happens to the quantity of a particular good when asked. this is p

Explain total fixed and variable costs, Fixed costs are those which are ind...

Fixed costs are those which are independent of output that is they do not change with changes in output. These costs are a fixed amount which must be incurred by a firm in the shor

Determine the value of the marginal product of labor, Determine the value o...

Determine the value of the marginal product of labor. Equilibrium in the Labor Market Each firm will hire labor up to the point at that the value of the marginal product of

What are the two main forms of economic distribution, What are the two main...

What are the two main forms of economic distribution? What is the difference between them?   The two major forms of economic distribution are exchange and transfer. Exchange in

Why is the goal of stability important to many people, Why is the goal of s...

Why is the goal of stability and security important to many people?  What problems typically emerge during periods of instability? The instability over the business cycle can b

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