Constrained optimization plays a central role in economics. For example, the choice problem for a consumer is represented as one of maximizing a utility function subject to a budget constraint. The Lagrange multiplier has an economic interpretation as the shadow price associated with the constraint, in this example the marginal utility of income. Other examples include profit maximization for a firm, along with various macroeconomic applications.
Other articles related to "economics, economic":
... There are two mainstream approaches to welfare economics the early Neoclassical approach and the New welfare economics approach ... The New Welfare Economics approach is based on the work of Pareto, Hicks, and Kaldor ...
... Economics has been subject to criticism that it relies on unrealistic, unverifiable, or highly simplified assumptions, in some cases because these assumptions simplify ... The field of information economics includes both mathematical-economical research and also behavioral economics, akin to studies in behavioral psychology ... economists such as Keynes and Joskow have observed that much of economics is conceptual rather than quantitative, and difficult to model and formalize ...
... Great Transformation, argues that the term 'economics' has two meanings the formal meaning refers to economics as the logic of rational action and decision-making, as rational choice between the alternative uses ... The substantive meaning of 'economics' is seen in the broader sense of 'economising' or 'provisioning' ... Economics is simply the way society meets their material needs ...
... Welfare economics is a branch of economics that uses microeconomic techniques to evaluate economic well-being, especially relative to competitive general equilibrium within an economy as to ... It analyzes social welfare, however measured, in terms of economic activities of the individuals that compose the theoretical society considered ... Accordingly, individuals, with associated economic activities, are the basic units for aggregating to social welfare, whether of a group, a community, or a society ...
Famous quotes containing the word economics:
“Womens battle for financial equality has barely been joined, much less won. Society still traditionally assigns to woman the role of money-handler rather than money-maker, and our assigned specialty is far more likely to be home economics than financial economics.”
—Paula Nelson (b. 1945)
“The new sound-sphere is global. It ripples at great speed across languages, ideologies, frontiers and races.... The economics of this musical esperanto is staggering. Rock and pop breed concentric worlds of fashion, setting and life-style. Popular music has brought with it sociologies of private and public manner, of group solidarity. The politics of Eden come loud.”
—George Steiner (b. 1929)
“The animals that depend on instinct have an inherent knowledge of the laws of economics and of how to apply them; Man, with his powers of reason, has reduced economics to the level of a farce which is at once funnier and more tragic than Tobacco Road.”
—James Thurber (18941961)