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.
Formally, if there is a utility function that describes preferences over L commodities, the expenditure function
says what amount of money is needed to achieve a utility if prices are set by . This function is defined by
where
is the set of all bundles that give utility at least as good as .
Famous quotes containing the words expenditure and/or function:
“To predict the behavior of ordinary people in advance, you only have to assume that they will always try to escape a disagreeable situation with the smallest possible expenditure of intelligence.”
—Friedrich Nietzsche (1844–1900)
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—Leonardo Da Vinci (1425–1519)