Obtaining analytical solutions to utility maximization problems

EconJohn
111 ●3 ●8 ●20

A while back I posted asking about Solving Lagrangians in Sage. The numeric solutions I found to be extremely useful for understanding where exactly a maximum/ minimum lies. This is given by the following code:

x, y, l = var('x, y, l')
U = x^7/10 * y^3/10; U
m = 2*x+2*y; m
solve(m == 4000, y)
L = U - l * (m - 4000); L
dLdx = L.diff(x); dLdx
dLdy = L.diff(y); dLdy
dLdl = L.diff(l); dLdl
solve([dLdx == 0, dLdy == 0, dLdl == 0], x, y, l)

Im wondering however if there is a way to get an analytical solution? In the context of a utility maximization problem it would be a set of demand equations as a function of prices and Income. On paper we can do this easily in this context however it seems pretty difficult for me to understand.

add a comment

x, y, l, p, q, R= var('x, y, l, p, q, R') U = x^7/10 * y^3/10; U m = p*x+q*y; m solve(m == R, y) L = U - l * (m - R); L dLdx = L.diff(x); dLdx dLdy = L.diff(y); dLdy dLdl = L.diff(l); dLdl solve([dLdx == 0, dLdy == 0, dLdl == 0], x, y, l) [[x == 7/10*R/p, y == 3/10*R/q, l == 22235661/100000000000*R^9/(p^7*q^3)], [x == 0, y == R/q, l == 0], [x == R/p, y == 0, l == 0]]

Your Answer

Please start posting anonymously - your entry will be published after you log in or create a new account.

Obtaining analytical solutions to utility maximization problems

1 Answer

Your Answer

Question Tools

Stats

Related questions

Obtaining analytical solutions to utility maximization problems savecancel

1 Answer