In page navigation

Constrained optimum

Updated: Aug 20, 2021

The solution of a constrained optimization problblem at which one or more constraints are hinding. Also referred to as constrained maximiini (minimum) when optimization involves maximizing (minimizing) the objective function.

Constrained optimum

The optimum is constrained if, at the saddle point, at least one of the constraints holds as an equality. Examples of constrained optima are the maximization of utility subject to a budget constraint for a consumer who is never satiated, and the minimization o cost subject to a production constraint for a firm employing factors of production with strictly positive prices.

Reference: Oxford Press Dictonary of Economics, 5th edt.

Sources & references
Risk disclaimer

Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >

James Knight
Editor of Education
James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.