Note for Optimization in Engineering - OE by Bou Fa

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EC422 Mathematical Economics 2 Chaiyuth Punyasavatsut Chaiyuth Punyasavatust 1

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Course materials and evaluation • Texts: Dixit, A.K ; Sydsaeter et al. • Grading: 40,30,30. OK or not. • Resources: ftp://econ.tu.ac.th/class/archan/C HAIYUTH/ Chaiyuth Punyasavatust 2

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Objectives • Dynamic economics is about explaining economic behaviors through time. • Explain the time paths of economic variables. • Optimization concept. • The choice is the use of resources in different time periods. • Maximizing a multiperiod objective function of variables in many periods, subject to budget or resource constraints on these variables through time. Chaiyuth Punyasavatust 3

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Objectives • Find optimal time path for every choice variable. • Three major approaches: Calculation of variation, maximum principle or optimal control theory (Hamiltonian), and dynamic programming (Bellman equation). • And also method of Lagrange Chaiyuth Punyasavatust 4