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| In [[microeconomics]], the '''expenditure function''' describes the minimum amount of money an individual needs to achieve some level of utility, given a utility function and prices.
| | 31 yrs old Railway Stop Manager Spencer from Saint-Georges, really likes snowmobile riding, diet and dolls. Keeps a tour blog and has lots to write about after visiting Lines and Geoglyphs of Nasca and Pampas de Jumana. |
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| Formally, if there is a [[utility function]] <math>u</math> that describes preferences over L commodities, the expenditure function
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| :<math>e(p, u^*) : \textbf R^L_+ \times \textbf R
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| \rightarrow \textbf R</math>
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| says what amount of money is needed to achieve a utility <math>u^*</math> if prices are set by <math>p</math>.
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| This function is defined by
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| :<math>e(p, u^*) = \min_{x \in \geq(u^*)} p \cdot x</math>
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| where
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| :<math>\geq(u^*) = \{x \in \textbf R^L_+ : u(x) \geq u^*\}</math>
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| is the set of all bundles that give utility at least as good as <math>u^*</math>.
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| ==See also==
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| * [[Expenditure minimization problem]]
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| * [[Hicksian demand function]]
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| * [[Utility maximization problem]]
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| == References ==
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| * Andreu Mas-Colell, Michael D. Whinston and Jerry R. Green ''Microeconomic Theory'', 2007, ISBN 0-19-510268-1, pp. 59-60, ''The Expenditure Function''
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| {{DEFAULTSORT:Expenditure Function}}
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| [[Category:Consumer theory]]
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Latest revision as of 16:55, 6 May 2014
31 yrs old Railway Stop Manager Spencer from Saint-Georges, really likes snowmobile riding, diet and dolls. Keeps a tour blog and has lots to write about after visiting Lines and Geoglyphs of Nasca and Pampas de Jumana.