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
Famous quotes containing the words expenditure and/or problem:
“The putting into force of laws which shall secure the conservation of our resources, as far as they may be within the jurisdiction of the Federal Government, including the more important work of saving and restoring our forests and the great improvement of waterways, are all proper government functions which must involve large expenditure if properly performed.”
—William Howard Taft (1857–1930)
“You are a problem and rune,
you are mystery;
writ on a stone.”
—Hilda Doolittle (1886–1961)