Re: Demand function

Posted by Asd1995 on Jun 14, 2017; 6:55am
URL: http://discussion-forum.276.s1.nabble.com/Demand-function-tp7605535p7605550.html

Lagrangian optimization gives me d(x)= I*p(y)/2(px*py plus pw*pz) where I is income.

I'm not able to prove whether this is a maxima or a minima succintly. I could argue for that utility is sum of 2 quasiconcave functions, hence is quasiconcave itself. So this makes the Lagrangian method necessary and sufficient for evaluating maxima. Also I have to make sure that the demand of x is less than maximum possible expenditure on x i.e. I/p(x) should be greater than d(x). Which is trivial once you work with the inequality.