Convexity in economics
Significant topic in economics / From Wikipedia, the free encyclopedia
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Convexity is an important topic in economics.[1] In the Arrow–Debreu model of general economic equilibrium, agents have convex budget sets and convex preferences: At equilibrium prices, the budget hyperplane supports the best attainable indifference curve.[2] The profit function is the convex conjugate of the cost function.[1][2] Convex analysis is the standard tool for analyzing textbook economics.[1] Non‑convex phenomena in economics have been studied with nonsmooth analysis, which generalizes convex analysis.[3]