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3.2
2. (a + b)6 = a 6 + 6a 5 b + 15a 4 b2 + 20a 3 b3 + 15a 2 b4 + 6ab5 + b6 . (The coefficients are those in the
seventh row of Pascals triangle in the text.)
5 543 54321 5! 5! m m(m 1) (m k + 1)
4. (a) = = = = . In general, =
3 123 12321 3! 2! 2! 3! k k!
m(m 1) (m k + 1) (m k)! m!
= = .
k!(m k)! (m k)! k!
8 876 8 8 87654 8 8
(b) = = 56. Also, = = = 56; + =
3 123 8 3 5 12345 3 3+1
8765 8+1 9 9876
56 + = 126 and = = = 126.
1234 3+1 4 1234
m m! m m m m! m!
(c) = = and + = +
k (m k)!k! mk k k+1 (m k)!k! (m k 1)!(k + 1)!
m!(k + 1 + m k) (m + 1)! m+1
= = =
(m k)!(k + 1)! (m k)!(k + 1)! k+1
3.3
2. (a) The total number of units of good i.
(b) The total number of units of all goods owned by person j .
(c) The total number of units of goods owned by the group as a whole.
4. Because arj a is independent of the summation index s, it is a common factor when we sum over s, so
Pm Pm
s=1 (arj a)(asj a) = (arj a) s=1 (asj a) for each r. Next, summing over r gives
m X
X m X
m X
m
(arj a)(asj a) = (arj a) (asj a) ()
r=1 s=1 r=1 s=1
3.4
2. x = 2. (x = 1, 0, and 1 make the equation meaningless. Multiplying each term by the common
denominator x(x 1)(x + 1) yields 2x(x 2 3x + 2) = 0, or 2x(x 1)(x 2) = 0. Hence, x = 2 is
the only solution.)
4. (a) x 0 is necessary, but not sufficient. (b) x 50 is sufficient, but not necessary.
(c) x 4 is necessary and sufficient.
6. (a) No solutions. (Squaring each side yields x4 = x+518 x + 5+81, which reduces to x + 5 = 5,
with solution x = 20. But x = 20 does not satisfy the given equation.)
(b) x = 20
(i) (ii)
8. (a) x+ x + 4 = 2 x + 4 = 2x x+4 = 44x+x 2 x 2 5x = 0 x5 = 0 x = 5.
Here implication (i) is incorrect (x 2 5x = 0 x 5 = 0 or x = 0.) Implication (ii) is correct, but
it breaks the chain of implications. (b) x = 0. (After correcting implication (i), we see that the given
equation implies x = 5 or x = 0. But only x = 0 is a solution; x = 5 solves x x + 4 = 2.)
3.5
2. (a) Logically the two statements are equivalent. (b) Appending the second statement is still an expressive
poetic reinforcement.
3.6
6. (b) and (c) are true, the others are wrong. (Counter example for (a), (d), and (f): A = {1, 2}, B = {1},
C = {1, 3}. As for (e), note in particular that A B = A C = A whenever B and C are subsets of A,
even if B 6= C.)
8. (a) Consider Fig. M3.6.8, and let nk denote the number of people in the set marked Sk , for k = 1, 2, . . . , 8.
Obviously n1 + n2 + + n8 = 1000. The responses imply that: n1 + n3 + n4 + n7 = 420; n1 + n2 +
n5 + n7 = 316; n2 + n3 + n6 + n7 = 160; n1 + n7 = 116; n3 + n7 = 100; n2 + n7 = 30; n7 = 16,
and n8 = 334. From these equations we easily find n1 = 100, n2 = 14, n3 = 84, n4 = 220, n5 = 186,
n6 = 46, n7 = 16. (i) n3 + n4 = 304 had read A but not B; (ii) n6 = 46; (iii) n8 = 334.
(b) We find n(A \ B) = n3 + n4 = 304, n(C \ (A B)) = n6 = 46, and n( \ (A B C)) = n8 = 334.
The last equality is a special case of n( \ D) = n() n(D). (The number of persons who are in ,
but not in D, is the number of persons in all of minus the number of those who are in D.)
A B
S5
S1
S4
S7
S2
S3
S6
S8
C
Figure M3.6.8
3.7
2. We prove only (3.2.6); the proof of (3.2.5) is very similar, but slightly easier. For n = 1 the LHS and the
RHS of (3.2.6) are both equal to 1. As the induction hypothesis, suppose (3.2.6) is true for n = k, so that
k
X
i 3 = 13 + 23 + + k 3 = [ 21 k(k + 1)]2
i=1
Then
k+1
X k
X
3
i = i 3 + (k + 1)3 = [ 21 k(k + 1)]2 + (k + 1)3 = (k + 1)2 ( 41 k 2 + k + 1)
i=1 i=1
But this last expression is equal to 41 (k + 1)2 (k 2 + 4k + 4) = [ 21 (k + 1)(k + 2)]2 , which proves that
(3.2.6) is true for n = k + 1. By induction, we have proved (3.2.6).
4. The claim is true for n = 1. As the induction hypothesis, suppose k 3 + (k + 1)3 + (k + 2)3 is divisible
by 9. Note that (k + 1)3 + (k + 2)3 + (k + 3)3 = (k + 1)3 + (k + 2)3 + k 3 + 9k 2 + 27k + 27 =
k 3 + (k + 1)3 + (k + 2)3 + 9(k 2 + 3k + 3). This is divisible by 9 because the induction hypothesis implies
that the sum of the first three terms is divisible by 9, whereas the last term is also obviously divisible by 9.
6. (a) true, false (b) false (because x 2 = 16 also has the solution x = 4), true (c) true,
false (x can be 3) (d) and both true
8. A B = ; A B = {1, 2, 4, 6, 11, 12}; \ B = {1, 3, 4, 5, 6, 7, 8, 9, 10}; CA = \ A =
{2, 3, 5, 7, 8, 9, 10, 11, 12}
10. For n = 1, the inequality is correct: 1 + x 1 + x. Suppose (1 + x)k 1 + kx for an arbitrary natural
number k. We have to prove that then (1 + x)k+1 1 + (k + 1)x. But because x 1 and k > 0, we
have (1 + x)k+1 = (1 + x)k (1 + x) (1 + kx)(1 + x) = 1 + (k + 1)x + kx 2 1 + (k + 1)x. Thus, by
induction, Bernoullis inequality is true for all natural numbers n.
1 x1 11 1
x x2 1x x
x 1 x
4.3
2. (a) f (5) = 0, f (3) = 3, f (2) = 0, f (0) = 2, f (3) = 4, f (4) = 0
(b) Df = [5, 4], Rf = [3, 4]
x 2 1 0 1 2 3 4
4.
h(x) = x 2 2x 3 5 0 3 4 3 0 5
x 2 1 0 1 2 3
6.
G(x) = 1 2x 3 1 0 1/2 3/4 7/8
y
6
5 y
4 6
5
3 4
2 3
1 2
1
2 1 2 3 4 x
-2 -1 1 2 3 x
-1
-2
3 -3
4 -4
4.4
2. See Figs. M4.4.2a, M4.4.2b, M4.4.2c
y y y
1 4
4
1 2 3 4 5 6 7 8 10 x 3
3 1
2
2 2
1
3
1
4 1 2 3 4 5 x
1 2 3 4 5 1
x
6. If P is the price of Q copies, then applying the pointpoint formula gives P 1400 = 30001400
500100 (Q100)
or P = 1000 + 4Q. The price of printing 300 copies is therefore P = 1000 + 4 300 = 2200.
y y y
1 1
1 x 1 1 x 1 x
10. See Fig. M4.4.10. Each arrow points to the side of the line where the relevant inequality is satisfied. The
shaded triangle is the required set.
y y
3
xy =1 2 f (x) = 1 x 2 x + 3
3
2 2
1
2
1 -4 -3 -2 -1 1 2 3 x
-1
x -2
2 3 4 -3
-4
3x + 4y = 12
3x + y = 3
Figure M4.4.10 Figure M4.6.2
4.5
2. (a) 75 3P e = 20 + 2P e , and hence P e = 11. (b) P e = 90
4. C = 0.8y +100. (The equation is C = ay +b. We are told that 900 = 1000a +b and a = 80/100 = 0.8.
So b = 100.)
6. (a) April 1960 corresponds to t = 9/4, when N (9/4) = 17 400 (9/4) + 151 000 = 111 850.
(b) 17 400 t + 151 000 = 0 implies t = 8.68, which corresponds roughly to September 1966.
4.6
x 4 3 2 1 0 1 2
2. (a)
f (x) = 21 x 2 x + 3
2 2.5 0 1.5 2 1.5 0 2.5
(b) See Fig. M4.6.2. (c) f (x) = 21 (x + 1)2 + 2. Maximum point (1, 2).
(d) x = 3 and x = 1. (e) f (x) > 0 in (3, 1), f (x) < 0 for x < 3 and for x > 1.
4. (a) x(x + 4). Zeros 0 and 4. (b) No factoring is possible.
No zeros.
(c) 3(x x1 )(x x2 ), where the zeros are x1 = 5 + 15 and x2 = 5
15.
(d) 9(x x1 )(x x2 ), where the zeros are x1 = 1/3 + 5 and x2 = 1/3 5.
(e) (x + 300)(x 100). Zeros 300 and 100. (f) (x + 200)(x 100). Zeros 200 and 100.
6. U (x) has maximum for x = 4(r 1)/(1 + r 2 ). (Use (5).)
8. (a) If PE = 1 13 Q denotes the selling price in England, and PG = 2 + 61 Q denotes the buying
price in Ghana, (Q) = (PE PG )Q = 21 Q2 + (1 2 )Q. (b) Using (5), we see that
Q = 1 2 maximizes profit if 1 2 > 0. If 1 2 0, then Q = 0.
(c) (Q) = 21 Q2 + (1 2 t)Q and Q = 1 2 t if 1 2 t > 0.
(d) T = tQ = t (1 2 t). Here t = 21 (1 2 ) maximizes export tax revenue.
4.7
2. (a) 1 and 2 (b) 1, 5, and 5 (c) 1
4. (a) y = 21 (x + 1)(x 3) (b) y = 2(x + 3)(x 1)(x 2) (c) y = 21 (x + 3)(x 2)2
6. c4 + 3c2 + 5 = (c2 + 3/2)2 + 11/4 is not 0 for any choice of c, so the division has to leave a remainder.
4.8
2. (a): C (b): D (c): E (d): B (e): A (f) F: y = 2 (1/2)x
4. (a) 23 = 8, so x = 3/2 (b) 3x + 1 = 4, so x = 5/3 (c) x 2 2x + 2 = 2, so x 2 2x = 0,
implying that x = 0 or x = 2.
2/3
V = (4/3) r 3 implies r 3 = 3V /4 and so r = (3V /4 )1/3 . Hence, S = 4 r 2 = 4 3V /4
6. =
3
36 V 2/3 .
4.9
2. P (t) = 1.22 1.034t . The doubling time t is given by the equation (1.034)t = 2, and we find t 20.7
(years).
4. The graphs are drawn in Fig. M4.9.4.
x 3 2 1 0 1 2 3
y
8
y = 2x 6 y = 2x
4
y f (x) = 1 + 4x
x 2 +4
2 2
1
3 2 1 1 2 3 x x
4 3 2 1 1 2 3 4 5
Figure M4.9.4 Figure M4.R.2
6. We find (1.035)t = 3.91 105 /5.1 0.7667 105 , and (taking ln of each side) we find t 327. So the
year is 1969 + 327 = 2296. This is when every Zimbabwean would have only 1 m2 of land on average.
8. (b) and (d) do not define exponential functions. (In (f): y = (1/2)x .)
10. Use the two points on each graph to determine A and b from the equation y = Abx .
You then get: (a) y = 2 2x (b) y = 2 3x (c) y = 4(1/2)x .
4.10
2. (a) ln 3x = x ln 3 = ln 8, so x = ln 8/ ln 3. (b) x = e3 (c)x 2 4x + 5 = 1 so (x 2)2 = 0. Hence,
x = 2. (d) x(x 2) = 1 or x 2 2x 1 = 0, so x = 1 2. (e) x = 0 or ln(x + 3) = 0, so x = 0
or x = 2. (f) x 5 = 1 so x = 36.
1 B 1 5.6
4. (a) t = ln (b) t = ln 22. It will take approximately 22 years before the two
r s A 0.07 1.2
countries have the same GNP.
6. (a) Wrong. (Let A = e.) (b) and (c) are right.
y y y
1 1 1
1 x 1 x 1 x
4. Move y = |x| two units to the left. Then reflect the graph about the x-axis. Finally, move the graph up 2
units. See Fig. M5.1.4. y
1 x
Figure M5.1.4
Bd 2 Ad + c
6. y =
2Bd
5.2
2
2. See Figs. M5.2.2a to M5.2.2c. (Note that the graph of ex + x is not symmetric about (0, 1).)
y y y
x x
5.3
2. p = (157.8/D)10/3
4. (a) The domain of f 1 is {4, 2, 0, 2, 4, 6, 8}. f 1 (2) = 1 (b) f (x) = 2x + 4, f 1 (x) = 21 x 2
6. (a) f (x) = x/2 and g(x) = 2x are inverse functions. (b) f (x) = 3x 2 and g(x) = 13 (x + 2) are
inverse functions. (c) C = 95 (F 32) and F = 59 C + 32 are inverse functions.
8. (a) See Fig. M5.3.8a. (b) See Fig. M5.3.8b. Triangles OBA and OBC are congruent.
y y
y=x y=x y
C = (b, a)
D
(3, 5) 3
B
2
(1, 3) (5, 3)
1
A = (a, b)
(3, 1)
1 2 3 x
x E x
5.4
2. (a) See Fig. M5.4.2. (b) If a > 1, then g(a) = 1 a 1 and g(a) < 1 (see the figure), so that
g(g(a)) = g(1 a 1) = (1 a 1)2 2(1 a 1)+2 2
p = a. If a < 1, then g(a) = a 2a +2,
2 2
and g(a) > 1, so that g(g(a)) = 1 a 2a + 2 1 = 1 (a 1) = 1 + (a 1) = a. Moreover,
g(g(1)) = 1. It follows that g(g(a)) = a for all a, so g is its own inverse. (Alternatively, show that one
can solve y = g(x) for x in terms of y, in which case x = g(y).)
4. F (100 000) = 4070. The graph is the thick line sketched in Fig. M5.4.4.
y
Y y
4070 2 A = (3, 2)
(2, 4)
2 x
2
P
RN
B = (5, 4)
2 5 x
7500 100 000
5.5
2. (5 2)2 + (y 4)2 = 13, or y 2 8y + 12
= 0, with solutions y = 2 and y = 6. Geometric explanation:
The circle with centre at (2, 4) and radius 13 intersects the line x = 5 at two points. See Fig. M5.5.2.
4. (a) (x 2)2 + (y 3)2 = 16 (b) (x 2)2 + (y 5)2 = 13
p p
6. The condition is that (x + 2)2 + y 2 = 2 (x 4)2 + y 2 , which reduces to (x 6)2 + y 2 = 42 .
5.6
2. The function in (b) is one-to-one and has an inverse: the rule mapping each youngest child alive today to
his/her mother. (Though the youngest child of a mother with several children will have been different at
different dates.) The function in (d) is one-to-one and has an inverse: the rule mapping the surface area to
the volume. The function in (e) is one-to-one and has an inverse: the rule that maps (u, v) to (u 3, v).
The other functions are many-to-one, in general, and so have no inverses.
Chapter 6 Differentiation
Our treatment of the single variable calculus begins in Chapter 6. Section 6.1 is devoted to the slopes of curves
and their tangents, as well as the tangent definition of derivative. Section 6.2 discusses how the tangent is
the limit of a sequence of lines joining nearby points on the graph of a function. It proceeds to present the
formula for the Newton (or differential) quotient, whose limit is the derivative. The derivative is then used in
the general equation for the tangent to the graph of a function at any point where it is differentiable. A general
recipe for finding derivatives is provided, and Leibnizs differential notation is introduced.
Section 6.3 discusses increasing and decreasing functions and explains how the sign of the derivative
can help us to find the intervals of increase/decrease of a differentiable function. (Note 8.4.2 shows how the
mean-value theorem can be used to prove the main results of this section.)
Section 6.4 is devoted to the economic significance of the derivative of a function. The instantaneous
and proportional rates of change are distinguished. Marginal cost, revenue, profit, propensity to consume,
product, are all defined in terms of derivatives. Marginal cost is distinguished from incremental cost.
It is crucially important for economics students to understand the definition of the derivative. In fact, this
is more important than knowing how to differentiate very complicated functions. Example 6.4.3 and problems
like 6.4.5 should be emphasized. The procedure of smoothing a function to fit a set of discrete data points is
illustrated at the end of this section.
Limits were used to define derivatives informally in Section 6.2. The more careful discussion that is
really needed is the topic of Section 6.5, though even this remains rather informal. The discussion proceeds
mostly through examples. Some general rules for limits of sums, differences, products, ratios, and powers are
presented.
After these preliminaries, Section 6.6 is devoted to some simple rules for differentiation, including the
rule for differentiating a power function. Section 6.7 presents the rules for differentiating sums, differences,
products, and quotients. The product rule in particular is illustrated economically. The quotient rule is used
to show that average cost is increasing iff it is less than marginal cost.
Section 6.8 states the chain rule, first using Leibnizs notation in a suggestive way, then more carefully.
An incomplete proof of the chain rule is provided in small print; we judge that a complete proof belongs to
more rigorous courses in mathematical analysis.
The next section 6.9 introduces second-order derivatives. It also defines convex and concave functions
using the sign of the second derivative. In fact, much modern economic analysis has been built on specific
assumptions to the effect that certain functions are either concave or convex. The examples illustrated in
Figures 4 and 5, or similar examples, should be carefully discussed. In Example 5 it is shown that an increas-
ing concave transformation of a concave function is concave. Higher-order derivatives, found by repeated
differentiation, are discussed next.
Sections 4.9 and 4.10 introduced exponential and logarithmic functions, which are often used in econom-
ics, of course, as well as in statistics. Section 6.10 shows that if the special number e = 2.718281828 . . . is
used as the base for the exponential function, then dex /dx = ex for all x, so the derivative of the function is the
function itself. It also shows how to differentiate eg(x) using the chain rule. Finally, the rule for differentiating
the general exponential function a x is derived.
Section 6.11 shows how to differentiate the natural logarithmic function, d ln x/dx = 1/x, and also
the derivative d ln[h(x)]/dx for any positive valued differentiable function h(x). The section includes a
discussion of the useful technique of logarithmic differentiationi.e., taking the logarithm of an expression
before differentiating. As shown later in Section 7.7, this is often a natural way for economists to calculate
elasticities.
A subsection characterizes the number e as limh0 (1 + h)1/ h . Finally, when a is any real number and
x > 0, the power x a can be defined as exp(a ln x), and using the chain rule, the power rule then follows for
all real exponents a.
In fact, Chapter 6 almost completes the inventory of functions of a single variable used in this book, and in
most mathematical work in economics. The major omission is the family of trigonometric functions discussed
in FMEA. In economics, they are used almost exclusively to solve difference and differential equations, which
are topics in FMEA.
6.2
2. (a) f (x) = 6x + 2 (b) f (0) = 2, f (2) = 10, f (3) = 20. The tangent equation is y = 2x 1.
f (x + h) f (x) 1/(x + h) 1/x x (x + h) h 1 1
4. = = = = 2
h h hx(x + h) hx(x + h) x(x + h) h0 x
6. (a) f (x + h) f (x) = a(x + h)2 + b(x + h) + c (ax 2 + bx + c) = 2ahx + bh + ah2 , so
[f (x + h) f (x)]/ h = 2ax + b + ah 2ax + b as h 0. Thus f (x) = 2ax + b.
(b) f (x) = 0 for x = b/2a. The tangent is parallel to the x-axis at the minimum/maximum point.
8. (a) Use the difference of squares formula. (b) [f (x + h) f (x)]/ h = x + h x)/ h. The identity
in (a) yields the result. (c) Letting h 0, the formula follows. (The students may need reminding that
x = x 1/2 and 1/ x = x 1/2 .)
f (x + h) f (x) (x + h)1/3 x 1/3 1 1
10. = = 2/3 1/3 1/3 2/3
as h 0,
h h (x + h) + (x + h) x + x 3x 2/3
and 1/(3x 2/3 ) = 31 x 2/3 .
6.3
2. f (x) = 3x 2 + 8x 1 = 3(x x0 )(x x1 ), where x0 = 31 (4 13) 0.13 and x1 = 31 (4 + 13)
2.54. Then f (x) is increasing in [x0 , x1 ], decreasing in (, x0 ] and in [x1 , ).
6.4
2. I is the fixed cost, whereas k is the marginal cost, and also the (constant) incremental cost of producing
each additional unit.
4. T (y) = t, so the marginal tax rate is constant.
6. (a) C (x) = 3x 2 180x + 7500 (b) x = 30 (C (x) has a minimum at x = 180/6 = 30, using (4.6.5).)
6.5
2. (a) 0.6931 (b) 1.0986 (c) 0.4055 (Actually, using the result in Example 7.12.2, the precise values of
these limits are ln 2, ln 3, and ln(3/2), respectively.)
6.6
2. (a) 2g (x) (b) 16 g (x) (c) 13 g (x)
4. (a) 8 r (b) A(b + 1)y b (c) (5/2)A7/2
x a+1
6. (a) F (x) = 13 x 3 + C (b) F (x) = x 2 + 3x + C (c) F (x) = + C, where in all three cases C is
a+1
an arbitrary constant.
6.7
2. (a) 56 x 14x 6 21 x 1/2 (b) 4x(3x 4 x 2 1) (c) 10x 9 + 5x 4 + 4x 3 x 2
3 x 4 + 5x 2 + 18x + 2 2(1 + 2x) 4x 2x 2 + 2
4. (a) (b) (c) (d) (e)
2 x( x + 1)2 (x 2 + 2)2 (x + 3)2 x3 (x 2 + 1)2 (x 2 x + 1)2
3 2
2(x x + x + 1)
(f)
3x 3 (x + 1)2
6. (a) [2, ) (b) 3, 0 and in 3, (c) 2, 2
x(x x1 )(x x2 )
(d) (, x1 ] and in [0, x2 ], where x1,2 = 21 21 5. (f (x) = )
(x + 1)2
3(x 1)(x + 1)
8. f (x) = . f (x) is increasing in (, 1], in 1, 2 + 3 , and in 2 + 3, .
(x 2 + 4x 1)2
10. Differentiating f (x) f (x) = x gives f (x) f (x) + f (x) f (x) = 1, so 2f (x) f (x) = 1. Hence,
1 1
f (x) = = .
2f (x) 2 x
6.8
2. (a) dY /dt = (dY /dV )(dV /dt) = (3)5(V + 1)4 t 2 = 15t 2 (t 3 /3 + 1)4
(b) dK/dt = (dK/dL)(dL/dt) = AaLa1 b = Aab(bt + c)a1
dx a
4. (dY /dt)t=t0 = (dY /dK)t=t0 (dK/dt)t=t0 = Y (K(t0 ))K (t0 ) 6. =
dp 2 ap c
8. b(t) is the total fuel consumption after t hours. b (t) = B s(t) s (t). So the rate of fuel consumption
per hour is equal to the rate per kilometre multiplied by the speed in kph.
10. (a) y = 5(x 4 )4 4x 3 = 20x 19(b) y = 3(1 x)2 (1) = 3 + 6x 3x 2
3 2
12. (a) 1 + f (x) (b) 2f (x)f (x) 1 (c) 4 f (x) f (x) (d) 2xf (x) + x 2 f (x) + 3 f (x) f (x)
f (x) 2xf (x) x 2 f (x) 2xf (x)f (x) 3[f (x)]2
(e) f (x) + xf (x) (f) (g) (h)
2 f (x) [f (x)]2 x4
6.9
2. d 2 y/dx 2 = (1 + x 2 )1/2 x 2 (1 + x 2 )3/2 = (1 + x 2 )3/2 4. g (2) = 2. (g (t) = 2(t 1)3 )
6. d 2 L/dt 2 = 3(2t 1)5/2 8. Because g(u) is not concave. 10. d 3 L/dt 3 > 0
6.10
qt 4 + 2qt 3 pt p
2. (a) x = et [a + b + t (b + 2c + ct)] (b) x =
t 2 et
2 t 2 2
2(at + bt )(a + 2bt)e (at + bt ) e t t (a + bt)(bt 2 + (4b a)t + 2a)
(c) x = =
(et )2 et
4. (a) (, ) (b) [0, 1/2] (c) (, 2/2] and in [0, 2/2]
x x +x et et 3 3
6. (a) ee ex = ee (b) 21 (et/2 et/2 ) (c) (d) z2 ez (ez 1)2/3
(et + et )2
6.11
x(2 ln x 1) 10(ln x)9 2 ln x
2. (a) x 2 ln x(3 ln x + 2) (b) (c) (d) + 6 ln x + 18x + 6
(ln x)2 x x
4. (a) x > 1 (b) 1/3 < x < 1 (c) x 6 = 0
6. (a) (2, 0] (y is defined only in (2, 2).) (b) [e1/3 , ) (y = x 2 (3 ln x + 1), x > 0)
(c) [e, e3 ] (y = (1 ln x)(ln x 3)/2x 2 , x > 0)
f (x) 2 f (x) f (x) 1 2x 4x 3
8. (a) = (b) = 2 ln x + 2 (c) = + 2 + 4
f (x) 3(x 2 1) f (x) f (x) 2x 4 x + 1 x + 6
10. ln y = v ln u, so y /y = v ln u + vu /u.
7.2
2. (a) 1 = C (Q )(dQ /dP ), so dQ /dP = 1/C (Q ) (b) dQ /dP > 0, which is reasonable because
if the price received by the producer increases, the optimal production should increase.
4. (a) Y = f (Y )+I +Xg(Y
). Differentiating
w.r.t. I yields dY /dI = f (Y )(dY /dI )+1g (Y )(dY /dI ).
Thus, dY /dI = 1/ 1 f (Y ) + g (Y ) . Imports should increase when income increases, so g (Y ) > 0.
We find that dY /dI > 0. (b) d 2 Y /dI 2 = (f g )(dY /dI )/(1f +g )2 = (f g )/(1f +g )3 .
7.3
4x 2 (3 x 2 )
2. (a) f (x) = . So f increases in [ 3, 3 ], and decreases in [2, 3 ] and in [ 3, 2].
3 4 x2
See Figure
M7.3.2. (b) f has an inverse in the interval [0, 3] because f is strictly increasing there.
g ( 13 3 ) = 1/f (1) = 3 3/8.
y
2
1 r + dr
x r
2 1 1 2
1
7.4
1 1 10
2. 2
x. (f (0) = 1/9, f (x) = 10(5x + 3)3 , so f (0) = 10/27.)
(5x + 3) 9 27
4. AK A 1 + (K 1)
6. (a) (px p1 + qx q1 ) dx (b) (p + q)x p+q1 dx (c) rp(px + q)r1 dx (d) (pepx + qeqx )dx
8. (a) (i) 1y = 0.61, dy = 0.6 (ii) 1y = 0.0601, dy = 0.06
(b) (i) 1y = 0.011494, dy = 0.011111 (ii) 1y = 0.001115, dy = 0.001111
(c) (i) 1y = 0.012461, dy = 0.0125 (ii) 1y = 0.002498, dy = 0.0025
10. (a) A(r + dr) A(r) is the shaded area in Fig. M7.4.10. It is approximately equal to the length of the
inner circle, 2 r, times dr.
(b) V (r + dr) V (r) is the volume of the shell between the ball with radius r + dr and the ball with
radius r. It is approximately equal to the area of the inner ball 4 r 2 times dr.
7.5
2. p(x) = x 21 x 2 + 31 x 3 41 x 4 + 51 x 5
4. Follows from formula (1) with f = U , a = y, x = y + M s.
6. We find x(0) = 2[x(0)]2 = 2. Differentiating the expression for x(t) yields x(t) = x(t) + t x(t) +
4[x(t)]x(t), and so x(0) = x(0)+4[x(0)]x(0) = 1+412 = 9. Hence, x(t) x(0)+ x(0)t + 21 x(0)t 2 =
1 + 2t + 29 t 2 .
8. Use (2) with f (x) = (1+x)n and x = p/100. Then f (x) = n(1+x)n1 and f (x) = n(n1)(1+x)n2 .
The approximation follows.
7.6
2. (a) 25 = 3(1 2/27)1/3 3(1 31 27 2
91 2742 ) 2.924
3
1 2 1
(b) 33 = 2(1 + 1/32)1/5 2(1 + 532
5
25 322
) 2.0125
4. (a) p(x) = 1 + 1
x 1 2
x (b) |R 3 (x)| = 1 g (c)x 3 = 1 10 (1 + c)8/3 x 3 5 x 3
3 9 3! 6 27 81
(c) 3 1003 = 10(1+3103 )1/3 10.0099900, using part (a) to approximate (1+3103 )1/3 . The error
5
in (b) is |R3 (x)| 81 (3 103 )3 = 53 109 . So the error in 3 1003 is 10|R3 (x)| = 50 3 10
9 < 2 108 ,
7.7
2. ElK T = 1.06. A 1% increase in expenditure on road building leads to an increase in the traffic volume
of approx. 1.06 %.
4. (a) Elx eax = (x/eax )aeax = ax (b) 1/ ln x (c) p + ax (d) p + 1/ ln x
6. Elr D = 1.23. This means that a 1% increase in income leads to an increase in the demand for apples of
approx. 1.23 %
8. (a) See Fig. M7.7.8. (The straight line has been drawn through the lowest and highest points.)
(b) f (T ) = 1.99e0.12T (c) The fall in temperature that halves the pulse rate is (ln 2)/0.12 5.8 degrees.
ln n
T
20 25 30 35 40
Figure M7.7.8
7.8
2. f is discontinuous at x = 0. g is continuous at x = 2. The graphs of f and g are shown in Figs. M7.8.2a
and M7.8.2b.
y y
4 4
3 3 g
2 2
1 1
2 1 2 3 x 1 2 3 4 5 x
1
f
2 2
3
y
y f (x)
x
1
a x
x
Figure M7.8.4 Figure M7.8.6 Figure M7.9.6
7.9
1 3 r s
x3 2 2 + 3x 3 + 2/x
2. (a) 2 = x x 0 as x . (b) = 3 as x . (c) a 2
x +1 1 x1 1 1/x
1+ 2
x
7.10
2. A persons height is a continuous function of time (even if growth occurs in intermittent spurts, often
overnight). The intermediate value theorem (and common sense) give the conclusion.
4. Integer root: x = 3. Newtons method gives 1.880, 0.346, and 1.533 for the three other roots.
6. If f (x0 ) and f (x0 ) have the same sign (as in Fig. 2), then (1) implies that x1 < x0 . But if they have
opposite signs, then x1 > x0 .
7.11
3n 3
2. (a) Converges to 5. (b) Diverges to . (c) Converges to 3 2/2. (sn = p = p
n 2 1/n2 2 1/n2
3/ 2 = 3 2/2 as n )
7.12
x 2 a2 0 2x x 2 a2 (x a)(x + a)
2. (a) lim = = lim = 2a (or = = x + a 2a as x a.)
xa x a 0 xa 1 xa xa
2(1 + x)1/2 2 x 0 (1 + x)1/2 1 0
(b) lim 2 1/2
= = lim 2 1/2
= =
x0 2(1 + x + x ) 2x 0 x0 (1 + 2x)(1 + x + x ) 1 0
(1/2)(1 + x)3/2 1/2 1
lim 2 1/2 2 2 3/2
= =
x0 2(1 + x + x ) + (1/2)(1 + 2x) (1 + x + x ) 2 1/2 3
4. The second fraction is not 0/0. The correct limit is 5/2.
f (x) f (1/t) 0 f (1/t)(1/t 2 ) f (1/t) f (x)
6. lim = lim+ = = lim+ = lim = lim
x g(x) t0 g(1/t) 0 t0 g (1/t)(1/t 2 ) t0+ g (1/t) x g (x)
1
12. Letting x = 2 and n = 5, formula (7.6.6) yields,
1
1
2 ( 21 )2 ( 1 )3 ( 1 )4 ( 1 )5 ( 1 )6
e2 = 1 + + + 2 + 2 + 2 + 2 ec
1! 2! 3! 4! 5! 6!
( 1 )6 ( 21 )6
where c is some number between 0 and 21 . Now, R6 ( 21 ) = 6! 2
ec < 6! 2 = 1
23040 0.0004340, where
1
we used the fact that since c < 21 , ec < e 2 < 2. Thus it follows that
1
1
2 ( 21 )2 ( 1 )3 ( 1 )4 ( 1 )5 1 1 1 1 1
e2 1 + + + 2 + 2 + 2 =1+ + + + + 1.6486979
1! 2! 3! 4! 5! 2 8 48 384 3840
1
The error is less than 0.000043, and e 2 1.649 correct to 3 decimals.
14. We find y = 1/2 and y = 1/8, so y(x) 1 + 21 x + 1 2
16 x .
16. Elr (Dmarg ) = 0.165 and Elr (Dmah ) = 2.39. When income increased by 1%, the demand for mar-
garine decreased by approximately 0.165 %, while the demand for meals away from home increased by
approximately 2.39 %.
18. Put f (x) = x 3 x 5. Then f (x) = 3x 2 1. Taking x0 = 2, formula (7.10.1) with n = 1 gives
x1 = 2 f (2)/f (2) = 1 1/11 1.909.
3 x + 17
20. (a) 2 (b) Approaches +. (c) approaches + as x 1 , but as x 1+ ,
x+1
so there is no limit as x 1.
2ex+1 x 2 4x 5 0 2ex+1 2x 4 0
22. (a) 1 (b) 1/16 (c) lim = = lim = =
x1 (x + 1)3 0 x1 3(x + 1)2 0
2ex+1 2 0 2ex+1 1
lim = = lim = .
x1 6(x + 1) 0 x1 6 3
24. Does not exist if b 6= d. If b = d, the limit is 0/0 andby lHpitals
rule, it is
1 1/2 1 1/2
limx0 2 a(ax + b) 2 c(cx + d) /1 = a/2 b c/2 d = (a c)/2 b.
26. x1 = 0.9f (0.9)/f (0.9) 0.9247924, x2 = x1 f (x1 )/f (x1 ) 0.9279565, x3 = x2 f (x2 )/f (x2 )
0.9280338, and x4 = x3 f (x3 )/f (x3 ) 0.9280339. So it seems that the answer correct to 3 decimals
is 0.928.
Section 8.7 considers inflection points, for which Theorem 8.7.1 gives a simple test. This section also
provides an alternative definition of concavity/convexity based on line segments joining pairs of points on
the graph. This leads next to standard definitions of strict concavity or convexity, for which there are obvious
second-derivative sufficient conditions. These ideas will be generalized and extensively discussed in FMEA.
8.2
8(2
3x)(2 + 3x)
2. h (x)
= . The function has a maximum at x = 2 3/3 and a minimum at
(3x 2 +
4)2
x = 2 3/3, with h(2 3/3) = 2 3/3 and h(2 3/3) = 2 3/3.
4. f (x) = [4x(x 4 + 1) 2x 2 4x 3 ]/(x 4 + 1)2 , then simplify and factor. f on [0, ) has maximum 1 at
x = 1, because f (x) increases in [0, 1] and decreases in [1, ).
6. f (x) = 3e3x 6ex = 3ex (e2x 2). So f (x) = 0 when e2x = 2 or 2x = ln 2, so x = 21 ln 2. If
x < 21 ln 2 then f (x) < 0, and if x > 21 ln 2 then f (x) > 0, so x = 21 ln 2 is a minimum point.
f (x) = ex (e2x 6) tends to + as x , so f has no maximum.
1
8. (a) x = 3 ln 2 is a minimum point (y is convex). (b) x = 31 (a + 2b) is a maximum point (y is concave).
1
(c) x = 5 is a maximum point (y is concave).
10. (a) f (x) = k Aex = 0 when x0 = (1/) ln(A/k). Note that x0 > 0 iff A > k. Moreover,
f (x) < 0 if x < x0 and f (x) > 0 if x > x0 , so x0 solves the minimization problem.
(b) Substituting for A in the answer to (a) gives the expression for the optimal height x0 . Its value increases
as p0 (probability of flooding) or V (cost of flooding) increases, but decreases as (interest rate) or k
(marginal construction costs) increases. The signs of these responses are obviously what an economist
would expect.
8.3
2. (a) (Q) = (102 2Q)Q (2Q + 21 Q2 ) = 100Q 25 Q2 , which is maximized at Q = 20.
(Q) = 100Q 25 Q2 tQ, which is maximized at Q = 20 t/5.
(b) b
4. p (x) = kcecx , p (x) = kc2 ecx . No maximum exists, and p(x) a + k as x . See
Fig. M8.3.2.
8.4
2. (a) Maximum 1 at x = 0. Minimum 7 at x = 3.
(b) Maximum 10 at x = 1 and x = 2. Minimum 6 at x = 1.
(c) Maximum 5/2 at x = 1/2 and x = 2. Minimum
2at x = 1.
(d) Maximum 4 at x = 1. Minimum 6 3 at x = 3.
(e) Maximum 4.5 109 at x = 3000. Minimum 0 at x = 0.
R(Q) = 80Q
p 4000
a+k 3000
p(x) = a + k(1 ecx ) C(Q) = Q2 + 10Q + 900
2000
a 1000
x Q
10 Q0 30 Q 40 50
Figure M8.3.2 Figure M8.5.2
2 2
4. g (x) = 25 xex (1 e22x ). Stationary points: x = 0 and x = 1. Here x = 2 is a maximum point,
x = 1 and x = 1 are minimum points. (Note that g(2) = 15 (e4 + e2 ) > g(0) = 51 (1 + e2 ).)
6. (a) x = 3/2 (b) x = 2/2 (c) x = 12 (d) x = 3
8. f is not continuous at x = 1 and x = 1. It has no maximum because f (x) is arbitrarily close to 1 for
x sufficiently close to 1. But there is no value of x for which f (x) = 1. Similarly, there is no minimum.
8.5
Q [0, 50], that is Q2 +70Q900 0
2. (a) See Fig. M8.5.2. (b) (i) The requirement is (Q) 0 and
and Q [0, 50]. The firm must produce at least Q0 = 35 5 13 17 units. (ii) Profits are maximized
at Q = 35.
4. (i) Q = 450 (ii) Q = 550 (iii) Q = 0
6. (Q) is stationary at Q = (P /ab)1/(b1) . Moreover, (Q) = ab(b 1)Qb2 < 0 for all Q > 0, so
this is a maximum point.
8.6
2. (a) No local extreme points. (b) Local maximum 10 at x = 1. Local minimum 6 at x = 1.
(c) Local maximum 2 at x = 1.Local minimum 2 at x =
1.
(d) Local maximum 6 3 at x = 3. Local minimum 6 3 at x = 3.
(e) No local maximum point. Local minimum 1/2 at x = 3.
(f) Local maximum 2 at x = 2. Local minimum 2 at x = 0.
4. a and d are local minimum points, whereas c is a local maximum point for f . Points b and e are neither.
6. (a) x = 3 is a local (and global) minimum point. No local maximum points. (b) x = 0 is a local
minimum point and x = 2/ ln 2 is a local maximum point. (Note that f (x) = x2x (2 + x ln 2).)
8.7
2. (a) f (x)
= 2x(x 2 3)(1 + x 2 )3 , so f is convex in [ 3, 0] and in [ 3, ). Inflection points are at
x = 3, 0, and 3.
(b) g (x) = 4(1 + x)3 > 0 when x > 1, so g is (strictly) convex in (1, ). No inflection points.
(c) h (x) = (2 + x)ex , so h is convex in [2, ) and x = 2 is an inflection point.
4. (a) For x > 0 one has R = p x, C = wx + F , and (x) = p x wx F .
(b) (x) = p(1/2 x) w = 0, or p/2 x = w. (Marginal cost = price times marginal product.) Then
x = p2 /4w 2 . Moreover, (x) = 41 px 3/2 < 0 for all x > 0, so profit is maximized over the interval
(0, ). When x = p2 /4w2 , then = p2 /2w p 2 /4w F = p 2 /4w F . So this is a profit maximum
if F p2 /4w; otherwise, the firm does better not to start up and to choose x = 0.
6. a = 2/5, b = 3/5 (f (1) = 1 gives a + b = 1. Moreover, f (x) = 3ax 2 + 2bx and f (x) =
6ax + 2b, so f (1/2) = 0 yields 3a + 2b = 0.)
y
y 2
f g
1
x
1 1 2 3 4 5
1
x 2
Chapter 9 Integration
Integration is an important mathematical technique which features occasionally in economic analysis. Indeed,
after this chapter, integrals appear only rarely in the rest of the book. However, when we study differential
equations and control theory in FMEA, integrals become important. Despite this, undergraduate economics
students do need a thorough understanding of elementary ideas in the theory of integration, not so much for
the occasional economic application they may see, but because integrals play such an enormous role in the
statistical foundations of econometrics.
Section 9.1 introduces an indefinite integral as, in effect, an antiderivativei.e., a function whose de-
rivative is the original function. Indefinite integrals are defined only up to an arbitrary additive constant of
integration. General rules for integration are presented.
Section 9.2 shows how integrals are used to find the area of certain plane regions. In fact, it is shown that
if A(x) denotes the area under the graph of the non-negative valued function f (x) over the interval [a, x], then
A(x) is an indefinite integral of f (x). Students should be made aware that this discovery is not another boring
fact, but historically a fundamental breakthrough in the history of science. On this basis the area under the
graphs of complicated functions can often be calculated with ease. We next introduce definite integrals. They
can be found, of course, as differences in the value of any indefinite integral (or antiderivative), provided that
such an indefinite integral is known. The section concludes with a brief consideration of the areas associated
with graphs of functions that may have negative values.
In Section 9.3 standard properties of definite integrals are explainede.g., the integral of a sum is the
sum of the integrals, etc. The rules for differentiating a definite integral w.r.t. both its upper and lower limits
of integration are given. It is pointed out that any continuous function, at least, can be integrated, and a list of
insoluble integrals is given. Also, it is briefly explained how the NewtonLeibniz integral presented in
the chapter can be extended to Riemann integrals (at least for bounded functions).
After three sections of almost pure mathematics comes Section 9.4, with economic applications. The first
concerns extraction from an oil well. It brings out the elementary but important idea that changes in stocks
are integrals of flows. There follows a rather extended discussion of the cumulative distribution function of
income, defined as the integral of a density function. It is shown how one can find total and mean income
for all individuals with income in a certain interval. There is also a discussion of how, when all individuals
demands for a commodity are a known function of their incomes, it is possible to find total demand for that
commodity once the income distribution is also known. The section concludes with a brief discussion of
consumer and producer surplus.
Next, Section 9.5 presents the method of integration by parts. This is the counterpart for integrals of the
product rule for differentiation. It is a tricky technique to master, however, because it is not very obvious
which part of the integral needs to be integrated first. So students should be encouraged to attempt as many
problems as possible.
The second important technique for economics students to learn is that of integration by substitution, as
discussed in Section 9.6. This is the counterpart for integration of the chain rule for differentiating a function
of a function.
In Section 9.7 we study integrals over infinite intervals, partly because some important economic models
involve an infinite planning horizon, partly because this generalization is useful in statistics.
The chapter ends with a short introduction to differential equations. The first-order equations for propor-
tional growth, growth towards an upper limit, and logistic growth are presented and solved. Of course, FMEA
provides a much more extensive discussion of differential equations.
y y y
f
2 2
1 1
f (x) = ex
4 3 2 1 1 2 x 1 1 2 x
1 1
1 1 x
9.2
R2 2
2. (a) 0 3x 2 dx = 0 x 3 = 8 (b) 1/7 (c) e 1/e. (See the shaded area in Fig. M9.2.2.) (d) 9/10
R1 1
4. A = 21 1 (ex + ex ) dx = 21 1 (ex ex ) = e e1
6. (a) f (x) = 3x 2 6x + 2. With x0 = 1 13 3 and x1 = 1 + 13 3, f (x) increases in (, x0 ) and in
R1
(x1 , ). (b) See Fig. M9.2.6. The shaded area is 0 f (x) dx = 10 ( 41 x 4 x 3 + x 2 ) = 41 .
8. (a) 6/5 (b) 26/3 (c) (e 1)/ (d) ln 2
9.3
1 1
2. (a) + (b) f (x) = 4x 3 3x 2 + 5. (f (1) = 6 gives a + b = 6, f (1) = 18 gives
p+q +1 p+r +1
2a + b = 18.
R 2 Then a = 12 and b = 6, so f (x) = 12x 2 6x. By integration, f (x) = 4x 3 3x 2 + C.
Requiring 0 (4x 3x 2 + C) dx = 18 gives C = 5.)
3
4. (a) Use formula (6) to obtain F (x) = x 2 + 2. To find G (x), put u = x 2 and use formula (8). Then
G (x) = [(x 2 )2 + 2]2x = 2x 5 + 4x. (One can also evaluate the integrals and then differentiate: G(x) =
x 2 1 3
( t + 2t) = 1 x 6 + 2x 2 , so G (x) = 2x 5 + 4x.) (b) H (t) = 2tK(t 2 )et 2 (use formula (8)).
0 3 3
R3 2
6. The parabolas intersect at (0, 0) and (3, 3), so A = 0 ( 3x x + 2x) dx = 6. See Fig. M9.3.6.
2
8. (a) f (x) = > 0 for x > 0 and f has range (, ), so f has an inverse g
x + 4 ( x + 4 2)
defined on (, ). We find that the inverse is g(x) = ex/2 + 4ex/4 .
(b) See Fig. M9.3.8. (c) InR Fig. M9.3.8 the graphs of f and g are symmetric about the line y = x, so
a
A = area B = 10a 0 (ex/2 + 4ex/4 ) dx= 10a + 18 2ea/2 16ea/4 . Because a = f (10) =
area
4 ln( 14 2), this simplifies to 10a + 14 8 14 6.26.
y
a
10
B y=x
y
y + 1 = (x 1)2 5 150 g f
4 g
y2 = 3x
3 A a 100
2 5 5 10 x
1 50
f
x
1 1 3 4 5 6 5 t
1 2 4 6 8 10
Figure M9.3.6 Figure M9.3.8 Figure M9.4.4
9.4
R 2b
2. (a) m = 2b ln 2. (The relevant number of individuals is n b Br 2 dr = nB/2b, whose total income is
R 2b R 2b
M = n b Br 1 dr = nB ln 2.) (b) x(p) = b nAp r Br 2 dr = nABp b1 (21 1)/( 1)
4. (a) See Fig. M9.4.4.Z (f and g both have maximum value 4000/27 148 at t = 20/3 and at t = 10/3,
t 1
respectively.) (b) g( ) f ( ) d = t 2 (t 10)2 0 for all t.
Z 10 0 Z 2
10
(c) p(t)f (t) dt = t 3 + 9t 2 + 11t 11 + 11/(t + 1) dt = 940 + 11 ln 11 966.38,
Z 10 0 Z 10 0
3
p(t)g(t)dt = t 19t 2 + 79t + 121 121/(t + 1) dt = 3980/3 121 ln 11 1036.52.
0 0
Profile g should be chosen.
6000
6. Equilibrium when = Q + 10. The only positive solution is Q = 50, and then P = 60.
Z 50 Q + 50 50
6000
CS = 60 dQ = [6000 ln(Q + 50) 60Q] = 6000 ln 2 3000,
Q + 50
Z 050 0
PS = (50 Q) dQ = 1250
0
9.5
Z 1 1 Z 1 Z 1
1 2 1 2 1 1 1 x2
2. (a) x ln(x + 2) dx = ln(x + 2)
2x 2x x dx = 2 ln 3 2 dx =
1 1 1 +2 1 x+2
Z 1
1 1 4
2 ln 3 2 x 2 + dx = 2 23 ln 3 (b) 8/(ln 2) 3/(ln 2)2 (c) e 2
1 x + 2
4. Use (1) with f (x) = ln x and g (x) = x . (Alternatively, simply differentiate the right-hand side.)
9.6
1
R
2. (a) 2 6 2
24 (2x + 3) + C. (Substitute u = 2x + 3, so du = 4x dx. The integral becomes 41 u5 du.)
1 x 3 +2 3 2
(b) 3e + C. (Substitute u = ex +2 .) (c) 41 ln(x + 2) + C. (Substitute u = ln(x + 2).)
2 5/2 2 (1 + x)3/2 + C. (Substitute u =
(d) 5 (1 + x) 3 1 + x.)
1 1
(e) + + C. (Substitute u = 1 + x 2 , or u = (1 + x 2 )1 .)
2(1 + x ) 4(1 + x 2 )2
2
2
(f) 15 (4 x 3 )5/2 98 (4 x 3 )3/2 + C. (Substitute u = 4 x 3 .)
Z x x
2t 2
4. dt = ln(t 2 2t) = ln(x 2 2x) ln 3 = ln 1 (x 2 2x), so the given equation reduces to
t 2 2t 3
3 3
1 2 2 2
3 (x 2x) = 3 x 1. Hence, x 4x + 3 = 0, with solutions x = 1 and x = 3. But only x = 3 is in
the specified domain. So the solution is x = 3.
6. (a) 1/70 (The integrand can be written as x 4 (x 5 1)13 . Then put u = x 5 1.)
(b) 2 x ln x 4 x + C. (Let
p u = x. Then u2 = x, 2udu = dx, etc. Alternatively, use integration by
parts.) (c) 8/3. (Let u = 1 + x.)
9.7
Z Z
+ b
1 1 b 1
2. (a) f (x) dx = dx = x= (b a) = 1
a ba ba a ba
Z + Z b b
x 1 2 1 1
(b) xf (x) dx = dx = x = (b2 a 2 ) = (a + b)
a ba 2(b a) a 2(b a) 2
1 b
1 b 3 a3 1
(c) x3 = = (a 2 + ab + b2 )
3(b a) a 3 ba 3
Z b b
4. The first integral diverges because [x/(1+x 2 )] dx = 21 ln(1+x 2 ) = 21 ln(1+b2 ) as b .
Z b 0 0
b
1
On the other hand, [x/(1 + x 2 )] dx = ln(1 + x 2 ) = 0 for all b, so the limit as b is 0.
b b 2
Z b b
1 1 1
6. 2
2
for x 1, and 2
dx = (1/x) = 1 1/b 1 as b , so by Theorem 9.7.1
1+x x 1 x 1
the given integral converges.
Z Z
1 rs 1 r 2( s) rs 2 1 r
8. (a) z = e ds = (1 e ) (b) z = e ds = 1 (1 e )
0 r 0 2 r r
Z 1
ln x 1
10. Using the answer to Problem 9.6.6(b), dx =h (2 x ln x 4 x) = 4 (2 h ln h 4 h)
h x
4 as h 0+ , so the given integral converges to 4. ( h ln h = ln h/ h1/2 0, by lHpitals rule.)
Z + Z +
1 2
12. (a) The suggested substitution gives f (x) dx = eu du = 1, by (8).
Z + Z +
1 2
(b) Here xf (x) dx = ( + 2 u)eu du = , using part (a) and Example 3.
Z + Z +
1 2
(c) Here I = 2
x f (x) dx = (2 2 u2 + 2 2 u + 2 )eu du
Z Z Z +
2 2 + 2 u2 2 2 + u2 2 2
= u e du + ue du + eu du = 2 + 0 + 2 . (Note how
Z Z Z +
2 u2 1 u2 1 u2 2
integration by parts gives u e du = ue + e du, so u2 eu du = 21 .)
2 2
9.8
2. (a) K(t) = (K0 I /)et + I / (b) (i) K(t) = 200 50e0.05t and K(t) tends to 200 from below
as t . (ii) K(t) = 200 + 50e0.05t , and K(t) tends to 200 from above as t .
4. N (t) = 0.02N (t) + 4 104 . The solution with N (0) = 2 106 is N (t) = 2 106 (2e0.02t 1).
6. The percentage surviving after t seconds satisfies p(t) = 100et , where p(7) = 70.5 and so =
ln 0.705/7 0.05. Thus p(30) = 100e30 22.3% are still alive after 30 seconds. Because
100et = 5 when t ln 20/0.05 60, it takes about 60 seconds to kill 95%.
8. (a) In 1950 there were about 276 thousand. In the next 10 years the number increased by 155 thousand.
(b) y 479.36 as t . See Fig. M9.8.8 for the graph.
300
200
100
t
5 10 15 20
(1950) (1960) (1970)
Figure M9.8.8
10. At about 11:26. (Measuring time in hours, with t = 0 being 12 noon, one has T = k(20T ) with T (0) =
35 and T (1) = 32. So the body temperature at time t is T (t) = 20 + 15ekt with k = ln(5/4). Assuming
that the temperature was the normal 37 degrees at the time of death t , then t = ln(17/15)/ ln(5/4)
0.56 hours, or about 34 minutes before 12:00.)
10.1
2. (a) 5000(1+0.03)10 6719.58 (b) 37.17 years. (5000(1.03)t = 35000, so t = ln 3/ ln 1.03 37.17.)
4. (a) (i) After 2 years: 2000(1.07)2 = 2289.80 (ii) After 10 years: 2000(1.07)10 3934.30
(b) t = ln 3/ ln 1.07 16.2 years.
6. The effective yearly rate for alternative (ii) is (1 + 0.2/4)4 1 = 1.054 1 0.2155 > 0.215, so
alternative (i) is (slightly) cheaper.
8. Let the nominal yearly rate be r. By (2), 0.28 = (1 + r/4)4 1, so r = 4( 4 1.28 1) 0.25, or 25%.
10.2
2. (a) (i) 1000(1 + 0.05)10 1629 (ii) 1000(1 + 0.05/12)120 1647 (iii) 1000e0.0510 1649
(b) (i) 1000(1 + 0.05)50 11467 (ii) 1000(1 + 0.05/12)600 12119 (iii) 1000e0.0550 12182
4. e0.1t = 1/10, so 0.1t = ln 10, hence t = ln 10/0.1 23.
6. h (u) = u/(1 + u)2 > 0 for u > 0, so h(u) > 0 for u > 0, implying that g (x)/g(x) = h(r/x) > 0
for all x > 0. So g(x) is strictly increasing for x > 0. Because g(x) er as x , it follows that
g(x) < er for all x > 0. Continuous compounding of interest is best for the lender.
10.3
2. (i) The present value is 50 000 1.05755 37 806.64. (ii) 50 000 e0.05755 37 506.83
10.4
2. (a) (1/5)/(1 1/5) = 1/4 (b) 0.1/(1 0.1) = 1/9 (c) 517/[1 (1.1)1 ] = 5687
(d) a/[1 (1 + a)1 ] = 1 + a (e) 5/(1 3/7) = 35/4
6. Let x denote the number of years beyond 1971 that the Earths extractable resources of iron will last. Then
we get 794+7941.05+ +794(1.05)x = 249103 . Using (3), 794[1(1.05)x+1 ]/(11.05) = 249103
or (1.05)x+1 = 249 103 0.05/794 16.68. Using a calculator, we find x (ln 16.68/ ln 1.05) 1
56.68, so the resources will be exhausted part way through the year 2028.
P (t)ert P (t) rt rt
(t) = P (t)(e 1) P (t)re , and t > 0 can only
8. (a) f (t) = = (b) Here f
1 ert ert 1 (ert 1)2
maximize f (t) if f (t ) = 0, that is, if P (t )(e 1) = rP (t )ert , which implies that P (t ) =
rt
r P (t )/(1 ert ). (c) Using lHpitals rule, P (t )/P (t ) 1/t as r 0.
10.5
2. (a) 10 years ago the amount was: 100 000(1.04)10 67556.42
1.064 1
(b) 10000(1.063 + 1.062 + 1.06 + 1) = 10 000 43746.16
1.06 1
1 (1.06)5
4. Offer (a) is better. The second offer has present value 4600 20 540.
1 (1.06)1
6. If the largest amount is a, then according to formula (4), a/r = K, so that a = rK.
R 15 15 1 0.06t
8. PDV = 0 500e0.06t dt = 500 0 0.06 e 500
= 0.06 1 e0.9 4945.25.
FDV = e0.0615 PDV = e0.9 PDV 2.4596 4945.25 12163.3.
10.6
(0.07/12) 80000
2. Using (2) we get a = 928.87.
1 (1 + 0.07/12)120
12 000 1.115
4. Schedule (b) has present value [1 (1.115)8 ] 67 644.42.
0.115
7000
Schedule (c) has present value 22 000 + [1 (1.115)12 ] 66 384.08.
0.115
Thus schedule (c) is cheapest. When the interest rate becomes 12.5 %, schedules (b) and (c) have present
values equal to 65907.61 and 64374.33, respectively.
10.7
a a
2. Equation (1) is here + + = a0 , which yields a/r = a0 , so r = a/a0 .
1+r (1 + r)2
4. $ 1.55 million. (400 000 1/1.175 + (1/1.175)2 + + (1/1.175)7 1 546 522.94.)
6. Applying (10.5.2) with a = 1000 and n = 5 gives the equation P5 = (1000/r) 1 1/(1 + r)5 = 4340
to be solved for r. For r = 0.05%, the present value is $4329.48; for r = 0.045%, the present value is
$4389.98. Because dP5 /dr < 0, it follows that p is a little less than 5%.
y y
2
x2 + y2 2
y
x
x 1 2 x
11.2
2. (a) z/x = 2x, z/y = 6y (b) z/x = y, z/y = x
(c) z/x = 20x 3 y 2 2y 5 , z/y = 10x 4 y 10xy 4 (d) z/x = z/y = ex+y
(e) z/x = yexy , z/y = xexy (f) z/x = ex /y, z/y = ex /y 2
(g) z/x = z/y = 1/(x + y) (h) z/x = 1/x, z/y = 1/y
4. (a) zx = 3, zy = 4, and zxx = z = z = z = 0
xy yx yy
(b) zx = 3x 2 y 2 , zy = 2x 3 y, zxx
= 6xy 2 , z = 2x 3 , and z = z = 6x 2 y
yy xy yx
(c) zx = 5x 4 6xy, zy = 3x 2 + 6y 5 , zxx = 20x 3 6y, z = 30y 4 , and z = z = 6x
yy xy yx
(d) zx = 1/y, zy = x/y 2 , zxx = 0, z = 2x/y 3 , and z = z = 1/y 2
yy xy yx
(e) zx = 2y(x + y)2 , zy = 2x(x + y)2 , zxx = 4y(x + y)3 , z = 4x(x + y)3 , and z =
yy xy
= 2(x y)(x + y)3 (f) z = x(x 2 + y 2 )1/2 , z = y(x 2 + y 2 )1/2 , z = y 2 (x 2 + y 2 )3/2 ,
zyx x y xx
= x 2 (x 2 + y 2 )3/2 , and z = z = xy(x 2 + y 2 )3/2
zyy xy yx
6. (a) FS = 2.260.44S 0.56 E 0.48 = 0.9944S 0.56 E 0.48 , FE = 2.260.48S 0.44 E 0.52 = 1.0848S 0.44 E 0.52
(b) SFS + EFE = S 2.26 0.44S 0.56 E 0.48 + E 2.26 0.48S 0.44 E 0.52 = 0.44 F + 0.48 F = 0.92 F ,
so k = 0.92.
8. Here z/x = x/(x 2 + y 2 ), z/y = y/(x 2 + y 2 ), 2 z/x 2 = (y 2 x 2 )/(x 2 + y 2 )2 , and 2 z/y 2 =
(x 2 y 2 )/(x 2 + y 2 )2 . Thus, 2 z/x 2 + 2 z/y 2 = 0.
11.3
2. (a) A straight line through (0, 2, 3) parallel to the x-axis.
(b) A plane parallel to the z-axis whose intersection with the xy-plane is the line y = x.
2 2
4. f (x, y) = ex y + (x 2 y 2 )2 = ec + c2 when x 2 y 2 = c, so the last equation represents a level curve
of f at height ec + c2 .
6. Generally, the graph of g(x, y) = f (x) in 3-space consists of a surface traced out by moving the graph
of z = f (x) parallel to the y-axis in both directions. The graph of g(x, y) = x is the plane through the
y-axis at a 45 angle with the xy-plane. The graph of g(x, y) = x 3 is shown in Fig. M11.3.6. (Only a
portion of the the unbounded graph is indicated, of course.)
8. (a) f (2, 3) = 8. f (x, 3) = 8 has the solutions x = 2 and x = 5 (b) As y varies with x = 2 fixed,
the minimum of f (2, y) is 8 when y = 3. (c) A: f1 (x, y) > 0, f2 (x, y) > 0. B: f1 (x, y) < 0,
f2 (x, y) < 0. C: f1 (x, y) = 0, f2 (x, y) = 0. At A, f1 2/1 = 2 and f2 2/0.6 = 10/3.
R1 R2
10. F (1, 0) = F (0, 0) + 0 F1 (x, 0) dx 2, F (2, 0) = F (1, 0) + 1 F1 (x, 0) dx F (1, 0) + 2,
R1 R1
F (0, 1) = F (0, 0) + 0 F2 (0, y) dy 1, F (1, 1) = F (0, 1) + 0 F1 (x, 1) dx F (0, 1) + 2,
R1
F (1, 1) = F (1, 0) + 0 F2 (1, y) dy F (1, 0) + 1.
11.4
p
2. d = (4 (1))2 + (2 2)2 + (0 3)2 = 25 + 16 + 9 = 50 = 5 2.
4. (x 2)2 + (y 1)2 + (z 1)2 = 25
6. (x 4)2 + (y 4)2 + (z 21 )2 measures the square of the distance from the point (4, 4, 21 ) to the point
(x, y, z) on the paraboloid.
11.5
2. (a) F (K + 1, L, T ) F (K, L, T ) is the increase in output from increasing capital input by one unit.
(b) F (K, L, T ) = AK a Lb T c , where A, a, b, and c are constants, A > 0.
(c) F (tK, tL, tT ) = t a+b+c F (K, L, T )
4. You drive (5/60) 0 + (10/60) 30 + (20/60) 60 + (15/60) 80 = 45 kilometres in 5 + 10 + 20 + 15 = 50
minutes, so the average speed is 45 60/50 = 54 kph.
6. (a) Each machine would produce 60 units per day, so each unit produced would require 480/60 = 8
P P
minutes. (b) Total output is ni=1 (T /ti ) = T ni=1 (1/ti ). If all
P n machines were equally efficient,
Pn n
the time needed for each unit would be nT T i=1 (1/ti ) = n i=1 (1/ti ), the harmonic mean of
t1 , . . . , tn .
11.6
2. (a) f1 = 2x, f2 = 3y 2 , and f3 = 4z3 (b) f1 = 10x, f2 = 9y 2 , and f3 = 12z3
(c) f1 = yz, f2 = xz, and f3 = xy (d) f1 = 4x 3 /yz, f2 = x 4 /y 2 z, and f3 = x 4 /yz2
(e) f1 = 12x(x 2 + y 3 + z4 )5 , f2 = 18y 2 (x 2 + y 3 + z4 )5 , and f3 = 24z3 (x 2 + y 3 + z4 )5
(f) f1 = yzexyz , f2 = xzexyz , and f3 = xyexyz
4. First-order partials: w1 = 3yz + 2xy z3 , w2 = 3xz + x 2 , w3 = 3xy 3xz2 . Second-order partials:
w11 = 2y, w12 = w21 = 3z + 2x, w13 = w31 = 3y 3z2 , w22 = 0, w23 = w32 = 3x, w33 = 6xz.
2a 0 0 a(a 1)g/x 2 abg/xy acg/xz
6. (a) 0 2b 0 (b) abg/xy b(b 1)g/y 2 bcg/yz , in concise form.
0 0 2c acg/xz bcg/yz c(c 1)g/z2
z 1 z z
8. fx = y z x y , fy = zy z1 (ln x)x y , fz = y z (ln x)(ln y)x y
11.7
2. Simplified answers: (a) KYK + LYL = aY (b) KYK + LYL = (a + b)Y (c) KYK + LYL = Y
4. D/p and E/q are normally negative, because the demand for a commodity goes down when the
price of that commodity increases. If the commodities are substitutes, this means that demand increases
when the price of the other good increases. So the usual signs are D/q > 0 and E/p > 0.
6. KYK + LYL = mY . (YK = (m/)a()Aet K 1 [aK + (1 a)L ](m/)1 and
YL = (m/)(1 a)()Aet L1 [aK + (1 a)L ](m/)1 , so
KYK + LYL = (m/)()[aK + (1 a)L ]m/ = mY.
11.8
2. Let z = ug with u = ax1d + bx2d + cx3d . Then El1 z = Elu ug El1 u = g(x1 /u)adx1d1 = adgx1d /u.
Similarly, El2 z = bdgx2d /u and El3 z = cdgx3d /u, so El1 z+El2 z+El3 z = dg(ax1d +bx2d +cx3d )/u = dg.
(This result follows easily from the fact that the function is homogeneous of degree dg (see Problem
12.7.2(b) and the elasticity form (12.7.3) of the Euler equation.)
pD(p, m) mDm (p, m) D(p, m) pD(p, m)
4. =p 2
= [Elm D(p, m)1] > 0 iff Elm D(p, m) > 1,
m m m m2
so pD/m increases with m if Elm D > 1. (Using the formulas in Problem 7.7.10, the result also follows
from the fact that Elm (pD(p, m)/m) = Elm D(p, m) Elm m = Elm D(p, m) 1.)
Chapter 12 gathers together a number of tools and techniques from the calculus of many variables that are much
used by economists. It also introduces important concepts such as elasticity of substitution, homogeneous
and homothetic functions, linear approximations, and differentials.
First, however, Section 12.1 deals with the chain rule for differentiating functions of many variables,
when these variables all depend on a single variable such as time. Of course, it begins with the two variable
case, and Examples 1 and 2 where the validity of the rule is checked by direct differentiation. Examples 3
and 4 are just two of the many obvious economic applications that spring to mind immediately. Finally, the
section closes with an attempt (in small print) to justify the chain rule.
Next, Section 12.2 considers chain rules for functions of many variables that are themselves functions of
many variables. It is necessary to learn how to keep notation straight, and under control!
Section 12.3 deals with implicit differentiation, generalizing the results from Section 7.1. It introduces
formula (1), giving the slope of a level curve for the two-variable case. This formula is then applied mech-
anically in Examples 1 to 3, and to the economic Example 4 on the incidence of taxation in a simple model
of supply and demand. Next comes a formula for the second derivative. For those students who have already
learned about determinants, the second derivative can also be expressed as a bordered Hessian (though we do
not use this term).
Section 12.4 develops more general results on implicit differentiation. Two interesting examples are a
standard profit maximization model, and then a simple search model.
Section 12.5 introduces the elasticity of substitution, with standard applications to the CobbDouglas
and CES (constant elasticity of substitution) functions.
Homogeneous functions receive much attention in economics. Section 12.6 introduces them for the case
of two variables, along with Eulers theorem and other properties. Some geometric properties that may be
helpful are discussed.
Section 12.7 considers homogeneous functions of many variables. After proving that a function is homo-
geneous if and only if it satisfies the Euler equation, we show that the other relevant properties of functions of
two variables generalize appropriately. Economic applications are then considered. In particular, the relation-
ship between homogeneity and returns to scale is considered, as well as homogeneity of demand functions.
The section concludes with an introduction to homothetic functions, and how they generalize homogeneous
functions.
Next, Section 12.8 considers linear approximations and tangent planes.
Section 12.9 turns to differentials of functions of several variables. Rules for differentials are presented,
as well as an explanation of how they are natural counterparts of rules for derivatives. The invariance of the
differential, however, deserves more careful consideration, though most economists have neglected it.
Section 12.10, on systems of equations, begins with an elementary discussion of degrees of freedom,
and the associated counting rule. Some examples illustrate difficulties with the counting rule for nonlinear
functions.1
1
We do not discuss the concept of functional dependence. Most texts in mathematics for economists state erro-
neously that functional dependence of n functions is equivalent to the vanishing of the associated Jacobian determinant.
For a correct account, see J. E. Marsden and M. J. Hoffman: Elementary Classical Analysis, 2. ed. W. H. Freeman and
Co. (1993).
The main part of Section 12.11 consists of Examples 13 showing how to find partial derivatives from
differentials. Whereas Examples 1 and 2 are purely mechanical, with no economic distractions, Example 3 is
based on a rather standard macroeconomic model.
The general case of a system of structural equations is briefly discussed, as is the distinction between
endogenous and exogenous variables. Finally, the concept of reduced form is defined in this setting.
12.2
2. (a) z/t = y 2 + 2xy2ts = 5t 4 s 2 + 4t 3 s 4 , z/s = y 2 2s + 2xyt 2 = 2t 5 s + 4t 4 s 3
z 2(1 s)ets+t+s z 2(1 t)ets+t+s
(b) = and =
t (et+s + ets )2 s (et+s + ets )2
4. z/t1 = F (x)f1 (t1 , t2 ), z/t2 = F (x)f2 (t1 , t2 )
C Q1 Q2 Q1
= 1 A(a + 2cAp11 p2 1 )p11 1 p2 1 + 2 bBp12 1 p2 2
6. =a +b + 2cQ1
p1 p1 p1 p1
C 1 1 1 1 1 1
= 1 A(a + 2cAp1 p2 )p1 p2 2 bBp12 p2 2
p2
u f x f y f z f w u
8. (a) = + + + (b) = yzw + xzw + xyws + xyz(1/s) = 28
r x r y r z r w r r
12.3
2. See the answers to Problem 7.1.1. (For (a): Put F (x, y) = x 2 y. Then F1 = 2xy, F2 = x 2 , F11
=
2
2y, F12 = 2x, F 22 = 0, so y = F1 /F2 = 2xy/x = 2y/x. Moreover, according to (3),
y = (1/(F2 )3 ) F11
(F2 )2 2F12
F1 F2 + F22 (F1 )2 = (1/x 6 )[2yx 4 2(2x)(2xy)x 2 ] = 6y/x 2 .)
6x 3y 2
4. h (x) = = 1 at (x, y) = (1, 1).
6xy + 3y 2 + 6y
6. Differentiating the equation w.r.t. x gives (i) 1 azx = f (y bz)(bzx ). Differentiating w.r.t. y
gives (ii) azy = f (y bz)(1 bzy ). If bzx 6= 0, solving (i) for f and inserting it into (ii) yields
azx + bzy = 1. If bzx = 0, then (i) implies azx = 1. But then zx 6 = 0, so b = 0 and then again
azx + bzy = 1.
12.4
2. Differentiating partially w.r.t. x yields () 3x 2 + 3z2 zx 3zx = 0, so zx = x 2 /(1 z2 ). By symmetry,
zy = y 2 /(1 z2 ). To find zxy , differentiate () w.r.t. y to obtain 6zz z + 3z2 z 3z = 0, so
y x xy xy
= 2zx 2 y 2 /(1 z2 )3 . (Alternatively, differentiate z = x 2 /(1 z2 ) w.r.t. y.)
zxy x
yx y1 + zx ln z x y ln x + zy z1
4. zx = and zy
=
y z ln y + xzx1 y z ln y + xzx1
Fx (1, 3)
6. (a) F (1, 3) = 4. The equation for the tangent is y 3 = (x 1) with Fx (1, 3) = 10 and
Fy (1, 3)
y y y y
Fy (1, 3) = 5, so y = 2x + 5. (b) = , =
K K(1 + 2c ln y) L L(1 + 2c ln y)
12.5
2. (a) Ryx = (x/y)a1 = (y/x)1a (b) yx = ElRyx (y/x) = ElRyx (Ryx )1/(1a) = 1/(1 a)
12.6
2. x(tp, tr) = A(tp)1.5 (tr)2.08 = At 1.5 p1.5 t 2.08 r 2.08 = t 1.5 t 2.08 Ap1.5 r 2.08 = t 0.58 x(p, r), so the
function is homogeneous of degree 0.58 . (Alternatively, use the result in Example 11.1.4.)
4. Checking definition (1) shows that f is homogeneous of degree 0. Then using the partial derivatives
found in Example 11.2.1(b), we confirm that xf1 (x, y) + yf2 (x, y) = 0.
6. Definition (1) requires that for some number k one has, t 3 x 3 + t 2 xy = t k (x 3 + xy) for all t > 0 and
all (x, y). In particular, for x = y = 1, we must have t 3 + t 2 = 2t k . For t = 2, we get 12 = 2 2k , or
2k = 6. For t = 4, we get 80 = 2 4k , or 4k = 40. But 2k = 6 implies 4k = 36. So the two values of k
must actually be different, implying that f is not homogeneous of any degree.
8. Let C and D denote the the numerator and the denominator in the expression for yx in Problem 12.5.3.
Because F is homogeneous of degree one, Eulers theorem implies that C = F1 F2 F , and () implies
that xF 11 = yF12 and yF22 = xF21 = xF12 . Hence, D = xy (F2 )2 F11
2F1 F2 F12
+(F1 )2 F22
=
F12 y 2 (F2 )2 + 2xyF1 F2 + x 2 (F1 )2 = F12
(xF1 + yF2 )2 = F12
2
F , using Eulers theorem again.
Hence xy = C/D = (F1 F2 F )/(F12 2
F ) = F1 F2 /F F12
.
12.7
2. (a) The function is homogeneous of degree 1 because
(tx1 tx2 tx3 )2 1 1 1
F (tx1 , tx2 , tx3 ) = + +
(tx1 )4 + (tx2 )4 + (tx3 )4 tx1 tx2 tx3
6 2
t (x1 x2 x3 ) 1 1 1 1
= 4 4 4 4 t
+ + = tF (x1 , x2 , x3 )
t (x1 + x2 + x3 ) x1 x2 x3
g g
(b) G(tx1 , tx2 , tx3 ) = a(tx1 )d + b(tx2 )d + c(tx3 )d = t d (ax1d + bx2d + cx3d )
= t dg G(x1 , x2 , x3 ), so G is homogeneous of degree dg.
P P P
4. vi = ui a/(x1 + + xn ), so ni=1 xi vi = ni=1 xi ui ni=1 axi /(x1 + + xn ) =
Pn
a [a/(x1 + + xn )] i=1 xi = a a = 0. By Eulers theorem, v is homogeneous of degree 0.
6. Let 1 = ln C(tw, y) ln C(w, t). It suffices to prove that 1 = ln t, because then C(tw, y)/C(w, y) =
ln et = t. We find that
n
X n n
1 X X
1= ai [ln(twi ) ln wi ] + aij [ln(twi ) ln(twj ) ln wi ln wj ] + ln y bi [ln(twi ) ln wi ]
2
i=1 i,j =1 i=1
n
X n
X n
X n
X n
X n
X n
X
1 2 1 1
1 = ln t ai + (ln t) aij + (ln t) ln wi aij + (ln t) ln wj aij + ln y ln t bi
2 2 2
i=1 i,j =1 j =1 i=1 i=1 j =1 i=1
12.8
x x0 y y0
2. f (x, y) Ax0a y0b + aAx0a1 y0b (x x0 ) + bAx0a y0b1 (y y0 ) = Ax0a y0b 1 + a +b
x0 y0
4. f (0.98, 1.01) 5 6(0.98 1) + 9(1.01 + 1) = 4.97. The exact value is 4.970614, so the
error is 0.000614.
6. v(1.01, 0.02) v(1, 0) + v1 (1, 0) 0.01 + v2 (1, 0) 0.02 = 1 1/150
8. g(0) = f (x0 ), g(1) = f (x). Using formula (12.2.3), it follows that
g (t) = f1 (x0 + t (x x0 ))(x1 x10 ) + + fn (x0 + t (x x0 ))(xn xn0 ). Putting t = 0 gives
g (0) = f1 (x0 )(x1 x10 ) + + fn (x0 )(xn xn0 ), and the conclusion follows.
12.9
2 2
2. (a) dz = 3x 2 dx + 3y 2 dy (b) dz = ey (dx + 2xy dy) (c) dz = (x dx y dy)
x2 y2
4. Let T (x, y, z) = [x 2 + y 2 + z2 ]1/2 = u1/2 , where u = x 2 + y 2 + z2 . Then dT = 21 u1/2 du =
1 1/2
2u (2xdx + 2ydy + 2zdz). For x = 2, y = 3, and z = 6, we have u = 49, T = 7 and dT =
1
7 (xdx + ydy + zdz) = 17 (2dx + 3dy + 6dz). Thus, T (2 + 0.01, 3 0.01, 6 + 0.02) T (2, 3, 6) +
1
7 [2 0.01 + 3(0.01)
+ 6 0.02] = 7 + 17 0.11 7.015714. (A calculator or computer gives a better
approximation: 49.2206 7.015739.)
6. (a) dX = AN 1 et dN + AN et dt
(b) dX1 = BEXE1 N 1E dX + B(1 E)X E N E dN
8. d(ln z) = a1 d(ln x1 ) + + an d(ln xn ), so dz/z = a1 dx1 /x1 + a2 dx2 /x2 + + an dxn /xn .
12.10
2. There are 6 variables Y , C, I , G, T , and r, and 3 equations. So there are 6 3 = 3 degrees of freedom.
12.11
2. (a) Differentiating yields: u3 dx + x3u2 du + dv = 2y dy and 3v du + 3u dv dx = 0.
Solving for du and dv yields, with D = 9xu3 3v,
4. With a fixed, I (r) dr = S (Y ) dY and a dY + L (r) dr = dM. Solving for dY and dr in terms of dM
gives
Y I (r) r S (Y )
= and =
M aI (r) + L (r)S (Y ) M aI (r) + L (r)S (Y )
dY = dC + dI + dG,
6. (a) Differentiation yields the equations:
= FY dY + FT dT + Fr dr , and
dC
dI = fY dY + fr dr. Hence, dY = FT dT + dG + (Fr + fr ) dr /(1 FY fY ).
(b) Y /T = FT /(1 FY fY ) < 0, so Y decreases as T increases. But if dT = dG with dr = 0,
then dY = 1 + FT dT /(1 FY fY ), which is positive provided that FT > 1.
8. (a) There are 3 variables and 2 equations, so there is (in general) one degree of freedom.
(b) Differentiation gives 0 = lP dy + L (r)dr and Sy dy + Sr dr + Sg dg = Iy dy + Ir dr. We find
dy L (r)Sg dr lP Sg
= , =
dg L (r)(Sy Iy ) lP (Sr Ir ) dg L (r)(Sy Iy ) lP (Sr Ir )
10. Differentiating while putting dp2 = dm = 0, gives: (i) U11 dx1 + U12 dx2 = p1 d + dp1 ;
(ii) U21 dx1 + U22 dx2 = p2 d; (iii) p1 dx1 + dp1 x1 + p2 dx2 = 0. Solving for dx1 , we obtain
x1 p 2 + x1 (p2 U12 p1 U22 )
= 2 2 2
p1 p1 U22 2p1 p2 U12 + p2 U11
2. z/t = G1 (u, v)1 (t, s) and z/s = G1 (u, v)2 (t, s) + G2 (u, v) (s)
4. dX/dN = g(u) + g (u) (N ) u , where u = (N )/N,
2
d 2 X/dN 2 = (1/N )g (u) (N ) u + g (u) (N )
6. Differentiating each side w.r.t. x while holding y constant gives 3x 2 ln x + x 2 = (6z2 ln z + 2z2 )z1 .
When x = y = z = e, this gives z1 = 1/2. Differentiating a second time gives 6x ln x + 5x =
(12z ln z + 10z)(z1 )2 + (6z2 ln z + 2z2 )z11
. When x = y = z = e and z1 = 1/2, this gives z11
= 11/16e.
8. (a) MRS = Ryx = 2y/3x (b) MRS = Ryx = y/(x + 1) (c) MRS = Ryx = (y/x)3
14. Differentiate f (tx1 , . . . , txn ) = g(t)f (x1 , . . . , xn ) w.r.t. t and put t = 1, as in the proof of Eulers
P
theorem (Theorem 12.7.1). This yields ni=1 xi fi (x1 , . . . , xn ) = g (1)f (x1 , . . . , xn ). Thus, by Eulers
theorem, f must be homogeneous of degree g (1). In fact, g(t) = t k where k = g (1).
16. (a) Differentiating, then gathering all terms in dp and dL on the left-hand side, yields
Since we know that pF (L) = w, (ii) implies that dp = (Ldw + dB)/F (L). Substituting this into (i)
and solving for dL, we obtain dL = [(F (L) LF (L))dw F (L)dB]/pF (L)F (L). It follows that
(b) We know that p > 0, F (L) > 0, and F (L) < 0. Also, F (L) = (wL + B)/p > 0. Hence, it is
clear that p/w > 0, p/B > 0, and L/B > 0.
To find the sign of L/w, we need the sign of F (L) LF (L). From the equations in the model, we
get F (L) = w/p and F (L) = (wL + B)/p, so F (L) LF (L) = B/p > 0. Therefore L/w < 0.
13.2
2. (a) Profit: (x, y) = 24x + 12y C(x, y) = 2x 2 4y 2 + 4xy + 64x + 32y 514. Maximum at
x = 40, y = 24. (Then (40, 24) = 1150.) Since 11 = 4 0, 22 = 8 0, and 11 22
2
(12 ) = 16 0, we have found the maximum. (b) x = 34, y = 20. (With y = 54 x, profits are
= 2x 2 4(54 x)2 + 4x(54 x) + 64x + 32(54 x) 514 = 10x 2 + 680x 10450, which
has a maximum at x = 34. Then y = 54 34 = 20. The maximum value is 1110.)
4. (a) (x, y) = px + qy C(x, y) = (25 x)x + (24 2y)y (3x 2 + 3xy + y 2 ) = 4x 2 3xy
3y 2 + 25x + 24y. (b) 1 = 8x 3y + 25 = 0 and 2 = 3x 6y + 24 = 0 when (x, y) = (2, 3).
2
Moreover, then 11 = 8 0, 22 = 6 0, and 11 22 (12 ) = (8)(6) (3)2 = 39 0.
So (x, y) = (2, 3) maximizes profits.
6. (a) The first-order conditions are: 1 = p2x = 0, 2 = q 2y = 0. Thus the only stationary point is
2
x = p/2, y = q/2. Moreover, 11 = 2 0, 22 = 2 0, and 11 22 (12 ) = 4 0,
so (x , y ) = (p/2, q/2) maximizes profits.
(b) (p, q) = px + qy (x )2 (y )2 = p 2 /4 + q 2 /2. Hence (p, q)/p = p/2 = x :
Increasing the price p by one unit increases the optimal profit by x , the optimal production level of the
first good. (p, q)/q = y has a similar interpretation.
8. The second-order partial derivatives are f11 = a(a 1)Ax a2 y b, f12 = f21
= abAx a1 y b1 , and
2
f22 = b(b1)Ax a y b2 . Thus, f11 f22 (f12 ) = abA2 x 2a2 y 2b2 1(a +b) . Suppose that a +b 1.
2
Then a 1 and b 1 as well. If x > 0 and y > 0, then f11 0 and f22 0, and f11 f22 (f12 ) 0.
We conclude from Note 13.2.2 that f is concave for x > 0, y > 0 when a + b 1.
13.3
2. (a) f1 = 2x + 2y 2 , f2 = 4xy + 4y, f11
= 2, f12
= 4y, f22 = 4x + 4
(b) f2 = 0 4y(x + 1) = 0 x = 1 or y = 0. If x = 1, then f1 = 0 for y = 1. If
y = 0, then f1 = 0 for x = 0. Thus we get the three stationary points classified in the table:
4. (a) f1 (x, y) = 24x 2 12y = 12(2x 2 y), f2 (x, y) = 12x + 3y 2 = 3(y 2 4x). The stationary
points are thus the solutions of the system (i) 2x 2 y = 0, (ii) 4x + y 2 = 0. From (i) we get y = 2x 2
which inserted into (ii) yields 4x(x 3 1) = 0. The only solutions of this equation are x = 0 and x = 1.
The stationary points are thus (0, 0) and (1, 2). Moreover, f11 (x, y) = 48x, f12 (x, y) = 12, and
f22 (x, y) = 6y. The stationary points are classified in the table:
(b) Since g(x, y) is a square, g(x, y) 0 for all x and y. On the other hand, g(0, 0) = 0, so (0, 0) is
a global minimum point for g. (There are many global minimum points for g, namely all points (x, y)
satisfying 8x 3 12xy + y 3 = 0.)
6. In all three cases we easily find that (0, 0) is a stationary point where z = 0 and A = B = C = 0, so
AC B 2 = 0. In case (a), z 0 for all (x, y), so the origin is a maximum point. In case (b), z 0 for all
(x, y), so the origin is a minimum point. In (c), z takes positive and negative values at points arbitrarily
close to the origin, so it is a saddle point.
2xy x2
8. (a) f is defined for x = 0 and for y > 1/x 2 . (b) f1 (x, y) = and f
2 (x, y) = . Here
1 + x2y 1 + x2y
f1 = f2 = 0 at all points (0, b) with b R. (c) Because AC B 2 = 0 when (x, y) = (0, b), the
second-derivative test fails. But by studying the function directly, we see that (0, b) is a local maximum
point if b < 0; a saddle point if b = 0; and a local minimum point if b > 0. See Fig. M13.3.8.
z
z = ln(1 + x 2 y)
y
Figure M13.3.8
13.4
a + b c + d
2. (a) = bp 2 dq 2 + (a + b)p + (c + d)q (a + c), p =,q = .
2b 2d
The second-order conditions are obviously satisfied because 11 = 2b, 12 = 0, and 22 = 2d.
2 2
(b) The new profit function is = bp dp + (a + b)p + (c + d)p (a + c) and the price
a + c + (b + d)
which maximizes profits is p = .
2(b + d)
a c a2 c2 a+c
(c) If = 0, then p = ,q = , and (p , q ) = + . Moreover, p = with
2b 2d 4b 4d 2(b + d)
(a + c)2 (ad bc)2
(p) = , and (p , q ) (p) = 0. Note that the difference is 0 when
4(b + d) 4bd(b + d)
ad = bc, in which case p = q , so the firm wants to charge the same price in each market anyway.
4. (a) Let (x0 , y0 ) = (0, 11.29), (x1 , y1 ) = (1, 11.40), (x2 , y2 ) = (2, 11.49), and (x3 , y3 ) = (3, 11.61),
so that x0 corresponds to 1970, etc. (The numbers yt are approximate, as are most subsequent results.)
We find that x = 41 (0 + 1 + 2 + 3) = 1.5, y = 41 (11.29 + 11.40 + 11.49 + 11.61) = 11.45,
and xx = 41 [(0 1.5)2 + (1 1.5)2 + (2 1.5)2 + (3 1.5)2 ] = 1.25. Moreover, we find xy =
1
4 [(1.5)(11.2911.45)+(0.5)(11.4011.45)+(0.5)(11.4911.45)+(1.5)(11.6111.45)], which
is equal to 0.13125, and so a = xy /xx = 0.105 and b = y ax 11.45 0.105 1.5 = 11.29.
(b) With z0 = ln 274, z1 = ln 307, z2 = ln 436, and z3 = ln 524, we have (x0 , z0 ) = (0, 5.61),
(x1 , z1 ) = (1, 5.73), (x2 , z2 ) = (2, 6.08), and (x3 , z3 ) = (3, 6.26). As before, x = 1.5 and xx = 1.25.
Moreover, z = 41 (5.61 + 5.73 + 6.08 + 6.26) = 5.92 and
xz 41 [(1.5)(5.615.92)+(0.5)(5.735.92)+(0.5)(6.085.92)+(1.5)(6.265.92)] = 0.2875
13.5
2. (a) Stationary points occur where both (i) f1 (x, y) = 3x 2 9y = 0 and (ii) f2 (x, y) = 3y 2 9x = 0.
From (ii) we get x = 13 y 2 , which inserted into (i) yields y 4 = 27y, whose only solutions are y = 0 and
y = 3. So the only interior stationary point is (3, 3). Along the edges x = 0 and y = 0 of the boundary,
the function has no extreme point except at a corner. Along the edges x = 4 and y = 4, we find two
candidates for extreme points at (4, 2 3) and (2 3, 4). There are also the four corners (0, 0), (4, 0),
(0, 4), and (4, 4). Comparing the values of f at all these points, we find that f has maximum 91 at (0, 4)
and at (4, 0), and minimum 0 at (3, 3). (Extreme points exist by the extreme-value theorem.)
(b) At any stationary point, f1 = 2x 1 = 0 and f2 = 4y = 0, so f is stationary at the interior point
( 21 , 0) of the domain. Along the boundary x 2 + y 2 = 1, the behaviour of f is described by the function
g(x) = x 2 + 2(1 x 2 ) x = 2 x x 2 , with x in [1, 1]. We see that g (x) = 1 2x = 0 at
x = 21 , so the points ( 21 , 21 3) are optimality candidates. Moreover, g(1) = 2 and g(1) = 0,
so (1, 0) and (1, 0) are also optimality candidates.
Comparing the values
of f at all these points, we
conclude that f has maximum 9/4 at (1/2, 3/2) and at (1/2, 3/2). The minimum is 1/4 at
(1/2, 0).
(c) At any stationary point, f1 = 3x 2 2x = 0 and f2 = 2y = 0, so f is stationary at ( 23 , 0) (and at
the boundary point (0, 0)). Along the edge x = 0, y [1, 1], f (0, y) = 3 y 2 , which is largest at
y = 0 and smallest at y = 1. Along the edge x 2 + y 2 = 1, x [0, 1], one has f (x, y) = 2 + x 3 , which
is strictly increasing, smallest at x = 0, largest at x = 1. Comparing the values of f at all these points,
we conclude that the maximum is 3 at (0, 0) and at (1, 0). The minimum is 2 at (0, 1) and at (0, 1).
2 2 2 2
(d) f1 (x, y) = (2x 2 5x + 3)ex x (2y 1)e(y2) and f2 (x, y) = 2(2y 2 5y + 3)(x 2)ex x e(y2) ,
so the function f has five stationary points, with (x, y) = (1, 1), ( 23 , 1), (1, 23 ), ( 23 , 23 ), or (2, 21 ). None
of these are in the interior of the domain, however. So any maximum or minimum must be on one of the
four edges, or at the four corners. Obviously f = 0 along the edges x = 2 and y = 21 , as well as at the
three corners which make up the ends of these edges. At the other corner, f (0, 0) = 2e4 . Along the edge
x = 0 one has f2 < 0 for all y in [0, 21 ], so only the corners are relevant. It remains to consider the edge
y = 0, along which f1 < 0 for 0 x < 1 and for 23 < x 2, but f1 > 0 for 1 < x < 23 . Note that
f (1, 0) = e4 > 0 and f ( 23 , 0) = 21 e19/4 < 2e4 . We conclude that the maximum is 2e4 at (0, 0) and the
minimum is 0 at (x, 1/2) for all x [0, 2], and at (2, y) for all y [0, 1/2].
4. (a) The first-order conditions 2axy + by + 2y 2 = 0 and ax 2 + bx + 4xy = 0 must have (x, y) =
(2/3, 1/3) as a solution. So a = 1 and b = 2. Also c = 1/27, so that f (2/3, 1/3) = 1/9. Because
A = f11 (2/3, 1/3) = 2/3, B = f12 (2/3, 1/3) = 2/3, and C = f22 (2/3, 1/3) = 8/3, Theorem 13.3.1
shows that this is a local minimum.
(b) Maximum 193/27 at (2/3, 8/3). Minimum 1/9 at (2/3, 1/3). (The extreme points must be stationary
points in the interior of the admissible set or else points on the boundary. Note that we must check if
there are stationary points in the interior other than (2/3, 1/3). The first-order conditions reduce to
2y(x 1 + y) = 0 and x(x 2 + 4y) = 0. The stationary points satisfying these equations are (0, 0),
(0, 1), (2, 0), and (2/3, 1/3). Three of these four are on the boundary. The maximum is a point on the
boundary line 2x + y = 4.)
6. (a) Closed and bounded, so compact. (b) Open and unbounded. (c) Closed and bounded, so compact.
(d) Closed and unbounded. (e) Closed and unbounded. (f) Open and unbounded.
8. (a) The domain D is shown in Fig. M13.5.8.
The first order partials
are
41 (x+y 2 ) 1 41 (x+y 2 ) 1
f1 (x, y) = e 1 4 (x + y) , f2 (x, y) = e 1 2 y(x + y) .
(b) The unique stationary point (7/2, 1/2) gives the maximum value 4e15/16 .
D
y =1x
x
Figure M13.5.8
13.6
2 2
2. (a) f (x) = ex and g(x) = F (f (x)) = ln(ex ) = x 2 both have a unique maximum at x = 0.
(b) Only x = 0 maximizes f (x). But g(x) = 5 is maximized at every point x because it is a constant.
2 2
4. fx = 6x 2 + 30x 36, fy = 2 ey , fz = 3 + ez . The 8 stationary points are (x, y, z) =
(3, ln 2, ln 3 ), and (x, y, z) = (2, ln 2, ln 3 ), where all combinations of signs are allowed.
13.7
8 3 3 1 2 2 1
2. (a) K =
27 p r , L = 4 p w , T = 3 3 p
3/2 q 3/2
4 2 2
(b) Q = 9p r + 21 pw1 + 13 p 1/2 q 1/2 , so Q/r = 98 p 2 r 3 = K /p
(R11 C11
)dx1 + (R12
C12 )dx2 = ds,
(R21
C21
)dx1 + (R22
C22 )dx2 = dt
(R22 C22 )ds (R12 C12 )dt (R C21
)ds + (R11
C11 )dt
dx1 = , dx2 = 21
D D
x1
R22
+ C22 x1
R12
+ C12 x2 R C21
x2 R C11
= > 0, = > 0, = 21 < 0, = 11 <0
s D t D s D t D
where the signs follow from the assumptions in the problem and the fact that D > 0 from (b). Note
that these signs accord with economic intuition. For example, if the tax on good 2 increases, then the
production of good 1 increases, while the production of good 2 decreases.
(d) Follows from the expressions in (c) because R12 = R21 and C12 = C21 .
2. (a) The profit is (Q1 , Q2 ) = 120Q1 + 90Q2 0.1Q21 0.1Q1 Q2 0.1Q22 . The first-order conditions
give Q1 = 500, Q2 = 200. We easily see that the second-order conditions are satisfied.
(b) The profit is now (Q1 , Q2 ) = P1 Q1 + 90Q2 0.1Q21 0.1Q1 Q2 0.1Q22 . The first-order
conditions give 1 = P1 0.2Q1 0.1Q2 = 0 and 2 = 90 0.1Q1 0.2Q2 = 0. If we require
Q1 = 400, then P1 80 0.1Q2 = 0 and 90 40 0.2Q2 = 0. It follows that Q2 = 250 and so
P1 = 105. Second-order conditions are easily checked.
(c) f (0, 2) = f (1, 1) = 0, and f (x, y) 0 for all (x, y), so these are (global) minimum points.
Constrained optimization is the central tool of mathematical economics. Economics is about making the best
use of scarce resources, and scarcity is naturally represented by constraints. The usual technique for solving
constrained optimization problems is the Lagrange multiplier method. Most of this chapter is concerned with
equality constraints; the last two sections offer a brief introduction to inequality constraints.
For the case of two variables, the Lagrange multiplier method is the subject of Section 14.1. The method
is set out as a procedure in a large frame that should be memorized by the students. Partly because it easily
leads to errors when there are inequality constraints, we prefer not to set to zero the partial derivative of
the Lagrangian w.r.t. the multiplier (as is done in many other textbooks).2 Example 2 is important because
it explains what needs to be done when the equation system has multiple solutions. The consumer demand
problem with a CobbDouglas utility function is considered in Example 3, and the appropriate demand
functions are derived.
Section 14.2 presents the standard economic interpretation of Lagrange multipliers as shadow prices.
For the case when the (optimal) value function is differentiable, we present an easy proof that its derivative
is equal to the Lagrange multiplier. Example 1 illustrates its use in economics. The section ends with a rich
selection of problems.
Section 14.3 is devoted to explaining first with a geometric argument why the Lagrangian method works
when it does. Then an analytic argument for the first-order conditions is given, and a precise result is formulated
in Theorem 14.3.1. Example 1 considers a utility maximization problem in which a mechanical application
of the Lagrangian method fails to give the right answer. Problem 1 shows that the solution to a constrained
maximization problem need not maximize the Lagrangian, even though (under usual conditions) it must make
the Lagrangian stationary. This is another point that is rather commonly misunderstood. Let the teacher beware
of misleading attempts to motivate the Lagrangian technique! Fortunately, the error found in the quotation in
Problem 2 is far less common.
In Section 14.4 we turn from necessary to sufficient conditions for optimality. Of these, the simplest to
state is that a global maximum (or minimum) of the Lagrangian which satisfies the constraint is optimal. This
could have been stated as a theorem in its own right. In practice, however, there are difficulties in verifying that
a global maximum (or minimum) has been found, except in the important case when the Lagrangian happens
to be concave (or convex). This is the case mentioned in Theorem 14.4.1. (The appropriate generalization to
quasi-concave functions is not, in our view, an essential topic for an undergraduate course.)
The concept of a local constrained extremum is introduced. Theorem 14.4.2 then gives sufficient condi-
tions for the Lagrangian method to find a local constrained extremum. In smaller print the sufficient conditions
in Theorem 14.4.2 are expressed in terms of the sign of the bordered Hessian determinant.
Sections 14.114.4 consider only functions of two variables. The extension to n variables in Section
14.5 is mostly routine, though actually solving problems with many variables is often very complicated.
Example 3 discusses how to derive individual demand functions in a general n good setting. Then the case
of m equality constraints is considered. The Lagrangian needs as many Lagrange multipliers as there are
constraints, of course. This gives the right number of equations when the first-order conditions are combined
with the constraints themselves. In Example 5 we study a welfare maximization problem in a simple exchange
economy. Problem 3 is an interesting economic example, involving the optimal choice of leisure as well as
2
The equality constraint is an obvious necessary condition for optimality. There is no reason to differentiate
anything to demonstrate this.
consumption of two goods. It also shows the possibility of a corner solution with zero labour supply in case
unearned income is sufficiently high.
Section 14.6 deals with sensitivity analysis. First, the standard interpretation of Lagrange multipliers
as shadow prices is mentioned. With m constraints, the value function depends on m variables. Where it is
differentiable, the m Lagrange multipliers are partial derivatives of the value function. Example 1 verifies the
properties of Lagrange multipliers numerically for a case with two constraints.
Adjusting the right-hand side of an equality constraint is just one of many perturbations to which a
constrained optimization problem can be subjected. Other perturbations are considered in this section; in
economics they feature constantly in comparative static propositions, of course. For such perturbations, frame
(6) states one version of the envelope theorem, which often arises in economic analysis. Examples 2, 3, and
4 involve interesting economic applications.
The final Sections 14.7 and 14.8 give a brief introduction to nonlinear programmingi.e., optimization
problems where the contraints are expressed as inequalities, rather than equalities. For the case of two variables
and one constraint, a frame sets out a recipe for solving the problem based on the Lagrange multiplier method.
Part of the recipe involves a complementary slackness condition. Theorem 14.7.1 emphasizes how this method
leads to a sufficient condition when the Lagrangian is concave. Section 14.7 concludes with a graphical
explanation of the complementary slackness condition.
In Section 14.8, the recipe of Section 14.7 is extended to general problems with n variables and m
constraints. Particular attention is paid to nonnegativity restrictions on the variables. The Lagrange multipliers
are related to partial derivatives of the (optimal) value function.
14.2
2. (a) L(x, y) = x + y (x 2 + y 1). The equations L1 = 1 2x = 0, L2 = 1 = 0, and x 2 + y = 1
have the solution x = 1/2, y = 3/4, and = 1. (b) The solution is illustrated in Fig. M14.2.2. The
minimization problem has no solution because f (x, 1 x 2 ) = x + 1 x 2 as x .
(c) The new solution is x = 0.5 and y = 0.85. The change in the value function is f (1.1) f (1) =
(0.5 + 0.85) (0.5 + 0.75) = 0.1. Because = 1, one has dc = 1 0.1 = 0.1. So, in this case, (3)
is satisfied with equality. (This is because of the special form of the functions f and g.)
y
6
5
4 y 2 = x(x + 1)2
y
3
2 (x, y)
d 1
( 21 , 43 ) x
y = 1 x2 321
1
1 2 3 4
2
3
x 4
1 1 5
x+y = 4 5
1
x+y = 2 6
4. (a) x = 4, y = 24, = 1/4. (b) y = 97/4, x = 4. 1U = 105/4 104/4 = 1/4, the value of the
Lagrange multiplier from (a). (There is exact equality here because U is linear in one of the variables.)
(c) x = q 2 /4p, y = m/q q/4p. (Note that y > 0 iff m > q 2 /4p.)
14.3
2. The problem with systems of three equations and two unknowns is not that they are merely difficult to
solve but that they are usually inconsistenti.e., it is impossible to solve them. The equations fx (x, y) =
fy (x, y) = 0 are NOT valid at the optimal point.
4. The minimum is 1 at (x, y) = (1, 0). Actually, this problem is quite tricky. The Lagrangian can be
written in the form L = (x + 2)2 + (1 )y 2 + x(x + 1)2 . The only stationary point which satisfies
the constraint is (0, 0), with = 4, and with f (0, 0) = 4. (In fact, L2 = 0 only if = 1 or y = 0. For
= 1, L1 = 3(x + 1)2 + 2 > 0 for all x. For y = 0, the constraint gives x = 0 or x = 1. But x = 1
gives L1 = 2, so x = 0 is necessary for a stationary point.) Yet at (1, 0) both g1 (1, 0) and g2 (1, 0)
are 0, and the Lagrange multiplier method fails. The given problem is to minimize (the square of) the
distance from (2, 0) to a point on the graph of g(x, y) = 0. But the graph consists of the isolated point
(1, 0) and a smooth curve, as illustrated in Fig. M14.3.4.
14.4
2. With L(x, y) = x 2 + y 2 (x + 2y a) the first-order conditions are 2x = 0 = 2y 2.
So (x, y) = (a/5, 2a/5) with = 2a/5. Applying Theorem 14.4.2 with f (x, y) = x 2 + y 2 and
g(x, y) = x + 2y, we find that D(x, y, ) = 10, so the only stationary point is a local minimum. (By
reducing the problem to a one-variable problem, it is easy to see that it is actually a global minimum.)
Geometrically, the problem is to find that point on the straight line x + 2y = a that is closest to the origin.
14.5
2. Here L = x + 4y + 3z (x 2 + 2y 2 + 31 z2 b). So necessary conditions are:
(i) L1 = 1 2x = 0; (ii) L2 = 4 4y = 0; (iii) L3 = 3 23 z = 0. It follows that 6 = 0,
= 1/2, y = 1/, z = 9/2. Inserting these values into the constraint yields 2
and so x = 9/b, so
= 3/ b. The value of the objective function is x + 4y + 3z
= 18/, so = 3/ b determines the
minimum point. This is (x, y, z) = (a, 2a, 9a), where a = b/6.
6. (a) c1i = 1 r i /p i i i i i
1 , c2 = 2 r /p2 . (Write the utility function in the equivalent form U (c1 , c2 ) =
i 1 i 2
ln (c1 ) (c2 ) . Using Theorem 13.6.3, the result follows immediately from () in Example 14.1.3,
recalling that 1 + 2 = 1.) (b) In Example 5, 1 = 1 /e1 , 2 = 2 /e2 . So p1 = 1 and p2 = 2
implies c1i = 1 r i /p1 = r i e1 = i e1 provided that r i = i , which also gives c2i = i e2 . Because
p1 e1 + p2 e2 = 1 e1 + 2 e2 = 1 + 2 = 1, it follows that r i = i (p1 e1 + p2 e2 ) for i = 1, 2.
8. (a) With a CobbDouglas utility function, Uk (x) = k U (x)/xk , so from (6) (with j = 1), we have
pk /p1 = Uk (x)/U1 (x) = k x1 /1 xk . Thus pk xk = (ak /a1 )p1 x1 . Inserted into the budget constraint, we
have p1 x1 + (a2 /a1 )p1 x1 + + (an /a1 )p1 x1 = m, which implies that p1 x1 = a1 m/(a1 + + an ).
Similarly, pk xk = ak m/(a1 + + an ) for k = 1, . . . , n.
(b) From (6) (with j = 1), we get xka1 /x1a1 = pk /p1 and so xk /x1 = (pk /p1 )1/(1a) or pk xk /p1 x1 =
(pk /p1 )11/(1a) = (pk /p1 )a/(1a) . The budget constraint gives
n
X
a/(1a) a/(1a)
p1 x1 1 + (p2 /p1 )a/(1a) + + (pn /p1 )a/(1a) = m. So p1 x1 = mp1 pi .
i=1
.X
n
1/(1a) a/(1a)
Arguing similarly for each k, one has xk = mpk pi for k = 1, . . . , n.
i=1
10. Differentiating the constraint w.r.t. x1 (keeping x2 fixed) yields g1 + g3 (x3 /x1 ) = 0, which implies
(i) x3 /x1 = g1 /g3 . Similarly, (ii) x3 /x2 = g2 /g3 . The first-order conditions for the maximiza-
tion of z = f (x1 , x2 , x3 ), where x3 is a function of (x1 , x2 ), are (iii) z/x1 = f1 + f3 (x3 /x1 ) = 0 and
(iv) z/x2 = f2 + f3 (x3 /x2 ) = 0. Substitute from (i) and (ii) into (iii) and (iv), letting = f3 /g3 .
This yields the equations f1 g1 = 0 and f2 g2 = 0. Also, by definition of , f3 g3 = 0. These
are the conditions (3) for n = 3.
14.6
p
2. (a) x = aM/, y = bM/, z = cM/ , = 1/(2M), where M = L/ a 2 / + b2 / + c2 / . (The
first-order conditions give x = a/2, y = b/2, z = c/2 . Substituting in the constraint and solving
for gives the solution.) (b) We find that M = L/5, and the given values of x, y, and z follow. For
L = 100 one has M = 2 and = 1/4. The increase in the maximalvalue as L increases from 100 to
101, is approximately 1 = 0.25. The actual increase is 5( 101 100 ) 0.249378.
4. K = 21/3 r 1/3 w1/3 Q4/3 , L = 22/3 r 2/3 w 2/3 Q4/3 , C = 3 22/3 r 2/3 w 1/3 Q4/3 ,
= 24/3 r 2/3 w1/3 Q1/3 . The equalities () are easily verified.
14.7
2. (a) The Lagrangian is L(x, y) = x 2 + 2y 2 x (x 2 + y 2 1). Conditions (2)(4) take the form:
2x 1 2x = 0; 4y 2y = 0; 0 ( = 0 if x 2 + y 2 <1). (b) Candidates: (1/2, 0) with
= 0; (1,
0) with = 1/2; (1,
0) with = 3/2; and (1/2, 3/2) with = 2. Maximum 9/4 at
(1/2, 3/2) and at (1/2, 3/2). The extreme-value theorem confirms that this is the solution.
4. (a) f1 (x, y) 0 (f1 (x, y) = 0 if x < b) and f2 (x, y) = 0 (b) f1 (x, y) = 0 and f2 (x, y) 0
(f2 (x, y) = 0 if y > a)
14.8
2. (a) The admissible set is the shaded region in Fig. M14.8.2.
(b) With the constraints g1 (x, y) = x y 4, g2 (x, y) = x 1, g3 (x, y) = y 1, the
Lagrangian is L = x + y ex ex+y 1 (x y + 4) 2 (x 1) 3 (y + 1). The first-order
conditions are that there exist nonnegative numbers 1 , 2 , and 3 such that:
(i) Lx = 1 ex ex+y + 1 + 2 = 0; (ii) Ly = 1 ex+y + 1 + 3 = 0; (iii) 1 (x y + 4) = 0;
(iv) 2 (x 1) = 0; (v) 3 (y + 1) = 0. (We formulate the complementary slackness conditions as
in (14.7.5).) From (ii), ex+y = 1 + 1 + 3 . Inserting this into (i) yields 2 = ex + 3 ex > 0.
Because 2 > 0, (iv) implies that x = 1. So any solution must lie on the line (II) in the figure, which
shows that the third constraint must be slack. (Algebraically, because x + y 4 and x = 1, we have
y 4 x = 5 > 1.) So from (v) we get 3 = 0, and then (ii) gives 1 = ex+y 1 e4 1 > 0.
Thus from (iii), the first constraint is active, so y = 4 x = 5. Hence the only possible solution is
(x , y ) = (1, 5). Because L(x, y) is concave, we have found the optimal point.
y
7
II
6
(1, 5) 5
4
3
2 I
(3, 1)
1
III
x
2 1 1 2 3 4 5 6 7
Figure M14.8.2
It remains to consider the case x = 1/2. But then the first constraint gives z = 5/2 y, and the
second constraint gives the equation 2y 2 5y + 5 = 0, which has no real solutions.
By evaluating the objective function f at all the four candidate points, we find that f has its largest
value at P3 and P4 , with fmax = f (1/2, 1, 1/2) = f (1/2, 1/2, 1) = 4.
8. (a) The maximum value is 20 attained at (x, y, z) = (4, 0, 0). The minimum value is 7.5 attained at all
points (x, y, z) satisfying x = 1 and y 2 + z2 = 7.5. (With as the Lagrange multiplier, the first-order
conditions imply (i) 2x + 1 = 2x; (ii) 2y = 4y; (iii) 2z = 4z. From (ii), y = 0 or = 1/2. From
(iii), z = 0 or = 1/2. Suppose first that = 1/2. Then (i) implies x = 1 and 2(y 2 + z2 ) = 15,
which gives the minimum value. On the other hand, if 6 = 1/2, then (ii) and (iii) give y = z = 0. Then
x = 4, and x = 4 gives the maximum. By the extreme value theorem, maximum and minimum values
exist in (a) as well as in (b).)
(b) The function f has a unique stationary point in the interior of S at (x, y, z) = (1/2, 0, 0), with
f (1/2, 0, 0) = 1/4. We conclude that the maximum point of f in S is at (4, 0, 0) and the minimum
is at (1/2, 0, 0).
10. (a) The Lagrangian is L(x, y) = U (x, y) [py w(24 x)]. The first-order conditions imply
pU1 = wU2 = wp, which immediately yields (). (b) Differentiating () and () w.r.t. w gives
pyw = 24 x wxw and p(U11 xw + U12
yw ) = U2 + w(U21
xw + U22 yw ). Solving for xw = x/w
yields the given formula. (c) x/w = (4 ln 18 5)/(ln 18 + 1).
12. (a) See Fig. M14.R.12. Note that x ln(3/2). (b) With and as the Lagrange multipliers, the first-
order conditions are: (i) (2x + 1) + ex = 0; (ii) y + = 0; (iii) 0 ( = 0 if ex < y);
(iv) 0 ( = 0 if y < 2/3). From (i), = (2x + 1)ex 3/2, because of (a). From (ii), =
y 3/2 2/3 > 0, so y = 2/3 because of (iii). Solution: (x , y ) = (ln(3/2), 2/3), with
= 3[ln(3/2) + 1/2], = 3 ln(3/2) + 5/6. (The Lagrangian is concave so this is the solution.)
y
2
y = ex
1
(x , y )
y = 2/3
1 2 x
Figure M14.R.12
15.1
2. Yes, the system is linear in a, b, c, and d.
6. (a) The commodity bundle owned by individual j . (b) ai1 +ai2 + +ain is the total stock of commodity i.
The first case is when i = 1. (c) p1 a1j + p2 a2j + + pm amj
15.2
2. u = 3 and v = 2. (Equating the elements in row 1 and column 3 gives u = 3. Then, equating those in
row 2 and column 3 gives u v = 5 and so v = 2. The other elements then need to be checked, but
this is obvious.)
1 0 4 1 2 6 3 8 20
4. A + B = ,AB= , and 5A 3B =
2 4 16 2 2 2 10 12 8
15.3
1 15 0 0 0 0
2. (i) (ii) and (iii): AB = C(AB) = , since AB = .
6 13 0 0 0 0
1 2 1 x1 4
1 1 x1 3
4. (a) = (b) 1 1 1 x2 = 5
3 5 x2 5
2 3 1 x3 1
x1
2 3 1 0
(c) x2 =
1 1 1 0
x3
0.2875
6. T(Ts) = 0.2250
0.4875
15.4
2. (ax 2 + by 2 + cz2 + 2dxy + 2exz + 2fyz) (a 1 1 matrix)
15.5
3 1 0 2 3 1 6 2
2. A = ,B =
, (A + B) =
, (A) = ,
2 5 2 2 4 7 4 10
4 10 4 10 2 4
AB = , (AB) = = B A , and A B =
10 8 10 8 10 14
Verifying the rules in (2) is now very easy.
4. Symmetry requires a 2 1 = a + 1 and a 2 + 4 = 4a. The second equation has the unique root a = 2,
which also satisfies the first equation.
6. By the associative law and rule (15.5.2)(d) for transposition, (A1 A2 A3 ) = (A1 (A2 A3 )) = (A2 A3 ) A1 =
(A3 A2 )A1 = A3 A2 A1 . In general, for any natural number n > 3, one has
(A1 A2 An ) ((A1 A2 An1 )An ) = An (A1 A2 An1 ) . As the induction hypothesis, suppose the
result is true for n 1. Then the last expression becomes An An1 , A2 A1 , so the result is true for n.
15.6
2. Gaussian elimination yields:
1 1 1 1 1 1 1 1 1 1
1 1 2 2 0 2 3 1 21
1 2 a b 0 1 a+1 b1
1 1 1 1 1 1 1 1
0 1 3/2 1/2 1 0 1 3/2 1/2
0 1 a+1 b1 0 0 a + 5/2 b 1/2
For any z, the first two equations imply that y = 21 + 23 z and x = 1 y + z =
3 1
2 2 z. From the last
equation we see that for a 6 = 25 , there is a unique solution with z = (b 21 ) (a + 25 ). For a = 25 ,
there are no solutions if b 6= 21 , but z is arbitrary (one degree of freedom) if b = 21 .
4. (a) After moving the first row down to row number three, Gaussian elimination yields the matrix
1 2 1 b2
0 1 2 3
b2 1 b3
2 2
0 0 3 4a b1 + (2a 23 )b2 + ( 21 a)b3
Obviously, there is a unique solution iff a 6 = 3/4.
(b) Put a = 3/4 in part (a). Then the last row in the matrix in (a) becomes (0, 0, 0, b1 41 b3 ). It follows
that if b1 6= 41 b3 there is no solution. If b1 = 41 b3 there are an infinite number of solutions. In fact,
x = 2b2 + b3 5t, y = 23 b2 21 b3 + 2t, z = t, with t R.
15.7
2. a + b + c = (1, 6, 4), a 2b + 2c = (3, 10, 2), 3a + 2b 3c = (9, 6, 9),
a b c = (a + b + c) = (1, 6, 4).
4. (a) xi = 0 for all i. (b) Nothing, because 0 x = 0 for all x.
6. 4x 2x = 7a + 8b a, so 2x = 6a + 8b, and x = 3a + 4b.
8. The scalar product of the two vectors is x 2 +(x 1)x +33x = x 2 +x 2 x +9x = 2x 2 +8x = 2x(x +4),
which is 0 for x = 0 and x = 4.
10. (a) The firms revenue is pz. Its costs are px. (b) Profit = revenue costs = pzpx = p(zx) = py.
If p y < 0, the firm makes a loss equal to p y.
15.8
2. (a) = 0 gives x = (3, 1), = 1/4 gives x = (2, 5/4), = 1/2 gives x = (1, 3/2),
= 3/4 gives x = (0, 7/4), and = 1 gives x = (1, 2). See Fig. M15.8.2.
(b) As runs through [0, 1], the vector x will run through all points on the line segment S between a and
b. In fact, according to the pointpoint formula, the line L through (3, 1) and (1, 2) has the equation
x2 = 41 x1 + 47 or x1 + 4x2 = 7. The line segment S is traced out by having x1 run through [3, 1] as x2
runs through [1, 2]. Now, (1 )a + b = (3 4, 1 + ). Any point (x1 , x2 ) on L satisfies x1 + 4x2 = 7
and equals (3 4, 1 + ) for = 41 (3 x1 ) = x2 1. Any point on the segment of this line between
a = (3, 1) and b = (1, 2) equals (3 4, 1 + ) for some [0, 1].
y
=1
= 3/4
= 1/2
= 1/4
1 =0
b
a
x
1 1 2 3
Figure M15.8.2
4. (a) x1 (1, 2, 1) + x2 (3, 0, 2) = (x1 3x2 , 2x1 , x1 2x2 ) = (5, 4, 4) when x1 = 2 and x2 = 1.
(b) x1 and x2 must satisfy x1 (1, 2, 1) + x2 (3, 0, 2) = (3, 6, 1). Then x1 3x2 = 3, 2x1 = 6, and
x1 2x2 = 1. The first two equations yield x1 = 3 and x2 = 2; then the last equation is not satisfied.
6. The vectors are orthogonal iff their scalar product is 0, that is iff x 2 x 8 2x + x = x 2 2x 8 = 0,
which is the case for x = 2 and x = 4.
8. (||a|| + ||b||)2 ||a + b||2 = ||a||2 + 2||a|| ||b|| + ||b||2 (a + b)(a + b) = 2(||a|| ||b|| a b)
2(||a|| ||b|| |a b|) 0 by the CauchySchwarz inequality (2).
15.9
2. (a) Direct verification. (To show that a lies on L, put t = 0.) (b) The direction of L is given by the vector
(1, 2, 1), and the equation of the orthogonal plane is (1)(x1 2) + 2(x2 (1)) + 1 (x3 3) = 0,
or x1 + 2x2 + x3 = 1. (c) We must have 3(t + 2) + 5(2t 1) (t + 3) = 6, and so t = 4/3. The
point of intersection is then (2/3, 5/3, 13/3).
4. (a) Direct verification. (b) (x1 , x2 , x3 ) = (2, 1, 1) + t (1, 2, 3) = (2 t, 1 + 2t, 1 + 3t).
Section 16.8 explains how a general linear system of n equations in n unknowns with a non-singular
coefficient matrix can be solved by means of Cramers rule (Theorem 16.8.1). This result is of theoretical
interest, but for systems with more than 4 unknowns, the calculation of the appropriate determinants usually
becomes computationally impractical. Finally, whereas a linear system of n equations in n unknowns is
usually soluble only when its coefficient matrix is non-singular, a system of homogeneous equations (with
zero right-hand sides) has a non-trivial solution iff the coefficient matrix is singular. This is Theorem 16.8.2.
To conclude the chapter, Section 16.9 gives a brief introduction to the Leontief model.
(2, 6)
(3, 0)
Figure M16.1.2
a11 b11 + a12 b21 a11 b12 + a12 b22
4. The matrix product is AB = , implying that
a21 b11 + a22 b21 a21 b12 + a22 b22
|AB| = (a11 b11 + a12 b21 )(a21 b12 + a22 b22 ) (a11 b12 + a12 b22 )(a21 b11 + a22 b21 ). On the other hand,
|A||B| = (a11 a22 a12 a21 )(b11 b22 b12 b21 ). A tedious process of expanding each expression, then
cancelling four terms in the expression of |A||B|, reveals that the two expressions are equal.
6. We write the system as
Y C = I 0 + G0
bY + C = a
Then Cramers rule yields
I0 + G0 1 1 I 0 + G0
a 1 a + I 0 + G0 b a a + b(I0 + G0 )
Y = = , C= =
1 1 1b 1 1 1b
b 1 b 1
The expression for Y is most easily found by substituting the second equation into the first, and then
solving for Y . Then use C = a + bY to find C.
16.2
1 1 1
2. AB = 7 13 13 , |A| = 2, |B| = 3, |AB| = |A| |B| = 6
5 9 10
6. (a) Substituting T = d + tY into the expression for C gives C = a bd + b(1 t)Y . Substituting for
C in the expression for Y then yields Y = a + b(Y d tY ) + A0 . Then solve for Y , T , and C in turn
to derive the answers givenin (b) below.
1 1 0 Y A0
(b) We write the system as b 1 b
C = a . Then Cramers rule yields
t 0 1 T d
A0 1 0 1 A0 0
a 1 b b a b
d 0 1 a bd + A0 t d 1 a bd + A0 b(1 t)
Y = = , C= =
1 1 0 1 b(1 t) 1 1 0 1 b(1 t)
b
1 b b 1 b
t 0 1 t 0 1
1 1 A0
b 1 a
t 0 d t (a + A0 ) + (1 b)d
T = =
1 1 0 1 b(1 t)
b 1 b
t 0 1
(This problem is meant to train you in using Cramers rule. Note how systematic elimination is much
more efficient.)
16.3
2. +a12 a23 a35 a41 a54 (Four lines between pairs of boxed elements rise as one goes to the right.)
a b
11 a12 . . . a1n 11 b12 . . . b1n
0 a22 . . . a2n 0 b22 . . . b2n
4. With A = ... .. .. ..
and B = ... .. .. .. ,
. . . . . .
0 0 . . . ann 0 0 . . . bnn
the product AB is easily seen to be upper triangular, with the elements a11 b11 , a22 b22 , . . . , ann bnn on the
main diagonal. The determinant |AB| is, according to (4), the product of these n numbers. On the other
hand, |A| = a11 a22 ann , and |B| = b11 b22 bnn , so the required equality follows immediately.
16.4
2 1 1
2. A = 1 0 2 , |A| = |A | = 2
3 1 5
4. |AB| = |A||B| = 12, 3|A| = 9, | 2B| = (2)3 (4) = 32, |4A| = 43 |A| = 4 3 3 = 192,
1 0 0
|A| + |B| = 1, whereas |A + B| is not determined. (As an example showing this, let A1 = 0 1 0
0 0 3
Next, add the first row multiplied by a to all the other n 1 rows. The result is an upper triangular
matrix whose diagonal elements are 1, b, b, ..., b, with product equal to bn1 . The conclusion follows
easily.
16.5
2. (a) abc (b) abcd (c) 6 4 3 5 1 = 360
16.6
2. Multiply the two matrices to get I3 .
1
x 2 3 3 4 3 3 3
4. (a) = = =
y 3 4 5 3 2 5 1
x 4 3 8 1 x 0
(b) = = (c) =
y 3 2 11 2 y 0
0 1 1 1 1 2
2
6. (a) |A| = 1, A = 1 1 2 , A = 2 2 3 . Direct verification yields A3 2A2 + A I = 0.
3
1 1 1 1 2 2
(b) The equality shown in (a) is equivalent to A(A I)2 = I, so A1 = (A I)2 .
0 0 1
(c) Choose P = (A I)1 = 1 0 1 , so that A = [(A I)2 ]1 = P2 . The matrix P also works.
0 1 0
16.7
2. The determinant is 72. The cofactors are
0 3 6 3 6 0
C11 = = 3, C12 = = 18, C13 = =6
1 1 4 1 4 1
3 2 2 2 2 3
C21 = = 5, C22 = = 6, C23 = = 14
1 1 4 1 4 1
3 2 2 2 2 3
C31 = = 9, C32 = = 18, C33 = = 18
0 3 6 3 6 0
C C21 C31 3 5 9
1 11 1
so the inverse is C12 C22 C32 = 18 6 18 .
|A| 72
C13 C23 C33 6 14 18
4. Let B denote the n p matrix whose ith column has the elements b1i , b2i , . . . , bni . The p systems of
n equations in n unknowns can be expressed as AX = B, where A is n n and X is n p. Following
the method illustrated in Example 2, exactly the same row operations that transform the n 2n matrix
(A : I) into (I : A1 ) will also transform the n (n + p) matrix (A : B) into (I : B ), where
B is the matrix with elements bij . (In fact, because these row operations are together equivalent to
premultiplication by A1 , it must be true that B = A1 B.) When k = r, the solution to the system is
.
x1 = b1r , x2 = b2r , . . . , xn = bnr
16.8
2. The determinant of the system is equal to 10, so the solution is unique. The determinants in (2) are here
b1 1 0 3 b1 0 3 1 b1
D1 = b2 1 2 ,
D2 = 1 b2 2 ,
D3 = 1 1 b2
b 3 1 2 b3 1 2 3 b3
3
Expanding each of these determinants by the column (b1 , b2 , b3 ), we find that D1 = 5b1 + b2 + 2b3 ,
D2 = 5b1 3b2 6b3 , D3 = 5b1 7b2 4b3 . Hence, x1 = 21 b1 101
b2 51 b3 , x2 = 21 b1 + 10
3
b2 + 53 b3 ,
7
x3 = 21 b1 + 10 b2 + 25 b3 .
16.9
2. (a) No sector delivers to itself. (b) The total amount of good i needed to produce one unit of each good.
(c) This column vector gives the number of units of each good which are needed to produce one unit of
good j . (d) No meaningful economic interpretation. (The goods are usually measured in different units,
so it is meaningless to add them together.)
4. The Leontief system for this three-sector model is as follows:
0.9x1 0.2x2 0.1x3 = 85
0.3x1 + 0.8x2 0.2x3 = 95
0.2x1 0.2x2 + 0.9x3 = 20
which does have the claimed solution.
6. The quantity vector x0 must satisfy () (In A)x0 = b and the price vector p0 must satisfy ()
p0 (In A) = v . Multiplying () from the right by x0 yields v x0 = (p0 (In A))x0 = p0 ((In A)x0 ) =
p0 b.
12. (a) For a 6 = 1 and a 6= 2, there is a unique solution. If a = 1, there is no solution. If a = 2, there are
infinitely many solutions. (These are a special case of the results in (b).)
(b) Using Gaussian elimination (where we start by interchanging rows 1 and 3), we obtain the matrix
1 0 3 b3
0 1 a2 + 6 b2 2b3
0 0 a 2 + 3a 2 b1 b2 + (2 a)b3
2b 2a + 3 2a + b 9 2ab 2a 2b 3 7 2a
x= , y= , z= , u=
a(b 2) b2 a(b 2) b2
must be zero. Then, of course, the primal can be solved from simultaneous equations. This is an important
technique for solving (and setting) examination questions! Next, it is shown that the KuhnTucker conditions
discussed in Chapter 14 can be applied to LP problems, and imply complementary slackness. This is important
in linking the results of Chapters 17 and 14. Finally, there is a brief discussion of what happens when some
constraints in the primal must hold with equality. Then the signs of the corresponding dual variables are no
longer constrained to be nonnegative.
17.1
2. (a) A graph shows that the solution is at the intersection of the lines 2x1 + 3x2 = 6 and x1 + x2 = 5.
Hence max = 98/5 for (x1 , x2 ) = (9/5, 16/5).
(b) The solution satisfies 2x1 + 3x2 = 13 and x1 + x2 = 6. Hence max = 49 for (x1 , x2 ) = (5, 1)
(c) The solution satisfies x1 3x2 = 0 and x2 = 2. Hence max = 10/3 for (x1 , x2 ) = (2, 2/3)
4. (a) No maximum exists. Consider Fig. M17.1.4. By increasing c, the dashed level curve x1 + x2 = c
moves to the north-east and so this function can take arbitrarily large values.
(b) Yes, the maximum is at P = (1, 0). The level curves are the same as in (a), but the direction of
increase is reversed. x2
x1 + x2 = 1
4
x 1 + x2 = c
x1 + 3x2 = 3
3
x1
1 1 2 3 4 5 6
1
Figure M17.1.4
3x + 5y 3900
6. The LP problem is: max 700x + 1000y subject to x + 3y 2100 x 0, y 0
2x + 2y 2200
A figure showing the admissible set and an appropriate level line for the criterion function will show that
the solution is at the point where the two lines 3x + 5y = 3900 and 2x + 2y = 2200 intersect. Solving
these equations yields x = 800 and y = 300. The firm should produce 800 sets of type A and 300 of
type B.
17.2
u1 + 2u2 + u3 8
2. min 8u1 + 13u2 + 6u3 subject to u1 0, u2 0, u3 0
2u1 + 3u2 + u3 9
17.3
10x1 + 25x2 10 000
2. max 300x1 + 500x2 subject to x1 0 , x2 0
20x1 + 25x2 8 000
The solution can be found graphically. It is x1 = 0, x2 = 320, and the value of the criterion function is
160 000, the same value found in Example 17.1.2 for the optimal value of the primal criterion function.
17.5
2. (a) Figure M17.5.2 shows the relevant portion of the feasible set with the different constraints numbered,
as well as two dashed level curves for the criterion function Z = y1 + 2y2 . We see that the minimum is
attained at the point (y1 , y2 ) = (3, 2).
y2
(4)
10
(3)
5
(2) y1 + 2y2 = Z0
(3, 2)
(1)
y1
5 10 15
Figure M17.5.2
x1 + x2 x3 + x4 1
(b) The dual: max 15x1 + 5x2 5x3 20x4 s.t. , xj 0, j = 1, . . . , 4.
6x1 + x2 + x3 2x4 2
Because y1 and y2 are both positive, both constraints are satisfied with equality. Furthermore, the two last
constraints in the primal problem are satisfied with strict inequality at the optimum. Hence x3 = x4 = 0.
The system therefore reduces to the system x1 + x2 = 1, 6x1 + x2 = 2, so x1 = 1/5 and x2 = 4/5.
The maximum is thus at (x1 , x2 , x3 , x4 ) = (1/5, 4/5, 0, 0).
(c) If the constraint is changed to y1 + 6y2 15.1, the solution to the primal is still at the intersection of
the lines (1) and (2) in Fig. M17.5.2, but with (1) shifted up slightly. The solution to the dual is completely
unchanged. The optimal values in both problems increase by (15.1 15) x1 = 0.02.
4. (a) For x3 = 0, the solution is x1 = x2 = 1/3. For x3 = 3, the solution is x1 = 1 and x2 = 2.
(b) Let zmax denote the maximum value of the objective function. If 0 x3 7/3, then zmax (x3 ) =
2x3 + 5/3 for x1 = 1/3 and x2 = x3 + 1/3. If 7/3 < x3 5, then zmax (x3 ) = x3 + 4 for x1 = x3 2
and x2 = 5 x3 . If x3 > 5, then zmax (x3 ) = 9 for x1 = 3 and x2 = 0. Because zmax (x3 ) is increasing,
the maximum is 9 for x3 5.
(c) The solution to the original problem is x1 = 3 and x2 = 0, with x3 as an arbitrary number 5.