In microeconomics, the expenditure minimization problem is the dual of 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.
- ^Jonathan Levin, Paul Milgrom. “Consumer Theory” (PDF).
- Mas-Colell, Andreu; Whinston, Michael & Green, Jerry (1995). Microeconomic Theory. Oxford: Oxford University Press. ISBN 0-19-507340-1.