Sensitivity Analysis Between Lagrange Multipliers and Consumer Coupon: Utility Maximization Perspective

Abstract

Sensitivity analysis is a vital concept in optimization models. From this analysis an economist can predict on the outcome of an economic model by the use of certain range of input variables. Utility maximization policy is essential for the sustainability of the economic organizations. This study takes an attempt to discuss sensitivity analysis between Lagrange multipliers and consumer coupon, where utility maximization is analyzed with detail mathematical analysis. In the study method of Lagrange multipliers is used to investigate the utility function; subject to two constraints: budget constraint, and coupon constraint. Moreover, two Lagrange multipliers are used here with four commodity variables.

The Responses of an Organization for the Increase in Wage Rates: Profit Maximization Cases

“…for the prediction of the economic analysis during the profit maximization investigation (Mohajan & Mohajan, 2023h).…”

Mathematical Model for Nonlinear Budget Constraint: Economic Activities on Increased Budget

“…where 0 n being the discounted price of the irregular input 4  . Therefore, the nonlinear budget constraint (3) takes the form (Mohajan, 2021a;Mohajan & Mohajan, 2023b);…”

“…Taking second-order and cross-partial derivatives of (6) we get (Roy et al, 2021;Mohajan & Mohajan, 2023b),…”

“…Now we analyze the economic effects of wage rate when the budget of the organization increases. Taking 35 T from both sides of (19) we get (Moolio et al, 2009;Roy et al, 2021, Mohajan, 2022aMohajan & Mohajan, 2022c, 2023b,…”