How to derive a demand function from a utility function?
Understand the Problem
The question is asking how to derive a demand function from a given utility function in economic theory. This involves applying concepts from consumer theory and optimization to express the relationship between a consumer's preferences and their demand for goods.
Answer
Maximize utility subject to budget constraints using the Lagrangian method.
Derive the demand function by maximizing utility subject to the budget constraint using the Lagrangian method.
Answer for screen readers
Derive the demand function by maximizing utility subject to the budget constraint using the Lagrangian method.
More Information
The Lagrangian method is commonly used in microeconomics to find optimal consumption bundles that maximize a consumer's utility given their budget constraint.
Tips
A common mistake is not setting up the Lagrangian correctly or forgetting to include all components of the budget constraint.
Sources
- Deriving demand functions given utility - Mathematics Stack Exchange - math.stackexchange.com
- [PDF] Deriving Demand Functions - Examples - Economics Entrance - economicsentrance.weebly.com
- How to Derive Consumer Demand from Cobb Douglas Utility Function - youtube.com
