Optimization of Functions of One Variable

Many economic models are based on the idea that an individual decision maker makes an optimal choice from some given set of alternatives. To formalize this idea, we interpret optimal choice as maximizing or minimizing the value of some function. For example, a firm is assumed to minimize costs of producing each level of output and to maximize profit; a consumer to maximize utility; a policy maker to maximize welfare 01 the value of national output', and so on. it follows that the mathematics of optimization is of central importance in economics, and in this and chapters 12 and 13 we will be studying optimization methods in some depth.

In this chapter we study the simplest case, the optimization of functions of one variable. We will emphasize ihe iniuitive interpretation of the methods and their application to economic problems. More technical issues, such a.s the question of the existence of optimal solutions, are postponed unti: chapter 13.

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