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Optimization Techniques - Sam Houston State University

1 WEB CHAPTERWEB CHAPTER PREVIEWN ormativeeconomic decision analysis involves determiningthe action that best achieves a desired goal or objec-tive. This means finding the action that optimizes(that is, maximizes or minimizes) the value of anobjective function. For example, in a price-outputdecision-making problem, we may be interested indetermining the output level that maximizes a production problem, the goal may be to find thecombination of inputs (resources) that minimizesthe cost of producing a desired level of output. In acapital budgeting problem, the objective may be toselect those projects that maximize the net presentvalue of the investments chosen. There are manytechniques for solving Optimization problems suchas these. This chapter (and appendix) focuses on theuse of differential calculus to solve certain types ofoptimization problems.

the cost of producing a desired level of output. In a capital budgeting problem, the objective may be to ... given resource need not be used in an optimal solution to the problem. An example of a ... In Chapter 2, marginal analysis was introduced as one of the fundamental concepts of

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