Chapter 5: Optimization

Many economic models are based on the notion of maximizing or minimizing an economic entity: a producer is considered to minimize costs, a consumer tries to maximize his utility and the government aims for maximum welfare of its civilians or for a maximum national product. Hence, determining the largest or smallest value of a function is a key topic in a mathematics course.

In this chapter we first discuss optimization of functions of one variable. Secondly, we discuss the optimization of functions of two variables; first without and then with constraints. We end the chapter with a section on convex and concave functions.