Optimal leverage for the utility maximizing firm

Article Abstract:

The manner in which a firm bent on maximizing the utility it derives from its activities is discussed. The firm is assumed to be able and willing to select its funding scheme and production method. The attitude toward risk indirectly influences production decisions while directly and significantly affecting financial transactions such as borrowing. The variable demand for credit arising from the variety of risk aversion behavior will affect interest rates and eventually production.

Credit, Demand (Economics)

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Predictions about indifference curves inside the unit triangle

Article Abstract:

Research was done to evaluate the function of indifference curves when applied to utility theory. The unit triangle diagram was used to test variants of generalized utility theories by indicating choices of lotteries on the triangle's boundary. Lottery choices indicated the presence of indifference curves with various properties. Choice and location of lotteries accounted for violations of expected utility.

Indifference curves

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Metric utility functions

Article Abstract:

A money-metric function developed by L. McKenzie as part of the larger expenditure function which he introduced as a variable in demand theory is discussed. This money-metric function is really the p-section of the bigger function and when looked upon from a different viewpoint, proves quite compatible with the metric utility functions generated by Wold and Arrow-Hahn.

Demand functions (Economics), Demand functions

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