calculus of variations in economics

Calculus of variations in economics is a mathematical method used to determine the best possible decision or strategy by finding the path or function that maximizes or minimizes a specific goal, like profit, utility, or efficiency. Instead of analyzing individual points, it considers entire functions or plans—such as production schedules or consumption paths—to optimize outcomes over time or scenarios. This approach helps economists identify optimal policies or behaviors where choices depend on continuously changing variables, ensuring the best overall result within given constraints.