Chapter Eight Economic Applications There are many applications of optimization theory to economics. For mathematical applications, we hold those problems in the highest es- teem that are the hardest to solve. For economic applications, the name of the game is different. To clarify the matter, we recall once more the words of Marshall: "A good mathematical theorem dealing with economic hypotheses is very unlikely to be good economics." The success of an economic application is measured by the light it sheds on examples that are important in real life. We begin with some applications of the one-variable Fermat theo- rem.