Expenditure Minimization Problem

In microeconomics, the expenditure minimization problem is another perspective on the utility maximization problem: "how much money do I need to reach a certain level of happiness?". This question comes in two parts. Given a consumer's utility function, prices, and a utility target,

  • how much money would the consumer need? This is answered by the expenditure function.
  • what could the consumer buy to meet this utility target while minimizing expenditure? This is answered by the Hicksian demand function.

Read more about Expenditure Minimization Problem:  Expenditure Function, Hicksian Demand Correspondence

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Expenditure Minimization Problem - Hicksian Demand Correspondence
... It can be defined in terms of the expenditure function with the Marshallian demand function The relationship between the utility function and Marshallian demand in the Utility Maximization Problem ... one commodity bundle that satisfies the expenditure minimization problem), then the demand is a correspondence, and not a function ...

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