How to derive the demand function from utility function?
Understand the Problem
The question is asking how to derive the demand function based on a utility function, which involves understanding consumer preferences and how they choose to allocate their resources to maximize satisfaction.
Answer
Expressions of x and y based on prices and income.
The final demand functions will express quantities x and y based on prices and income.
Answer for screen readers
The final demand functions will express quantities x and y based on prices and income.
More Information
Demand functions are derived through utility maximization under a budget constraint, often using Lagrangian multipliers for optimization.
Tips
A common mistake is overlooking the budget constraint while optimizing the utility function. Remember to include the constraint in the Lagrangian formulation.
Sources
- Deriving demand functions given utility - Mathematics Stack Exchange - math.stackexchange.com
- Derivation of Marshallian Demand Functions from Utility Function - YouTube - youtube.com
- Demand Function vs. Utility Function - Investopedia - investopedia.com
Thank you for voting!
