|
|
| Line 1: |
Line 1: |
| In [[microeconomics]], the '''expenditure function''' describes the minimum amount of money an individual needs to achieve some level of utility, given a utility function and prices.
| | 31 yrs old Railway Stop Manager Spencer from Saint-Georges, really likes snowmobile riding, diet and dolls. Keeps a tour blog and has lots to write about after visiting Lines and Geoglyphs of Nasca and Pampas de Jumana. |
| | |
| Formally, if there is a [[utility function]] <math>u</math> that describes preferences over L commodities, the expenditure function
| |
| :<math>e(p, u^*) : \textbf R^L_+ \times \textbf R
| |
| \rightarrow \textbf R</math>
| |
| | |
| says what amount of money is needed to achieve a utility <math>u^*</math> if prices are set by <math>p</math>.
| |
| This function is defined by
| |
| | |
| :<math>e(p, u^*) = \min_{x \in \geq(u^*)} p \cdot x</math>
| |
| | |
| where
| |
| | |
| :<math>\geq(u^*) = \{x \in \textbf R^L_+ : u(x) \geq u^*\}</math>
| |
| | |
| is the set of all bundles that give utility at least as good as <math>u^*</math>.
| |
| | |
| ==See also==
| |
| * [[Expenditure minimization problem]]
| |
| * [[Hicksian demand function]]
| |
| * [[Utility maximization problem]]
| |
| | |
| == References ==
| |
| * Andreu Mas-Colell, Michael D. Whinston and Jerry R. Green ''Microeconomic Theory'', 2007, ISBN 0-19-510268-1, pp. 59-60, ''The Expenditure Function''
| |
| | |
| {{DEFAULTSORT:Expenditure Function}}
| |
| [[Category:Consumer theory]]
| |
Latest revision as of 15:55, 6 May 2014
31 yrs old Railway Stop Manager Spencer from Saint-Georges, really likes snowmobile riding, diet and dolls. Keeps a tour blog and has lots to write about after visiting Lines and Geoglyphs of Nasca and Pampas de Jumana.