Economic Situations of Lagrange Multiplier When Costs of Various Inputs Increase for Nonlinear Budget Constraint

Devajit Mohajan and Haradhan Mohajan
Authors registered in the RePEc Author Service: Dr Haradhan Kumar Mohajan ()

MPRA Paper from University Library of Munich, Germany

Abstract: An industry always expects to survive in profit maximization atmosphere. To develop profit maximization strategy it must follow scientific methods in every step of production and distribution. Only proper decisions can propel the industry smoothly in sustainable way. This study attempts to discuss economic effects of Lagrange multiplier when per unit costs of various inputs increase. In this paper the method of Lagrange multiplier is applied to represent higher dimensional unconstrained problem from the lower dimensional constrained problem. Cobb-Douglas production function, 6×6 bordered Hessian matrix, and 6×6 Jacobian are operated here to provide economic predictions appropriately. In the study profit maximization is considered with subject to the nonlinear budget constraint.

Keywords: Profit maximization; Lagrange multiplier; nonlinear budget constraint (search for similar items in EconPapers)
JEL-codes: B41 C3 C41 C51 C61 C67 G1 I31 (search for similar items in EconPapers)
Date: 2023-02-10, Revised 2023-02-12
New Economics Papers: this item is included in nep-eff
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Published in Studies in Social Science & Humanities 4.2(2023): pp. 40-64

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