Leontief utilities

From Wikipedia, the free encyclopedia
Jump to: navigation, search

Leontief utility function, first conceptualized by Wassily Leontief, are of the form

u(x_1,\ldots,x_C)=\min\left\{\frac{x_1}{a_1},\ldots,\frac{x_C}{a_C}\right\}.

Solving for Walrasian–Marshallian demand[edit]

Solving for Walrasian–Marshallian demand is a simple affair with utility functions representing Leontief preferences.[1] One need only set equal the terms of the min function and solve then w.r.t the income constraint [Income = (p1)*(x1)+ ... + (pn)(xn)]

References[edit]

  1. ^ "Intermediate Micro Lecture Notes". Yale University. 21 October 2013. Retrieved 21 October 2013.