1. Let A = [-1, 0) and B = (0, 1].

Examine whether each of the following statements is true or false,

and briefly explain your answer.
a. A ∪ B is compact.

Ans: TRUE. Both sets are both open and close. Their union is bounded. Therefore, it is compact.

b. A + B = {x + y | x ∈ A, y ∈ B} is compact.

Ans: FALSE. The set of the sum of each element in A and B would yield to an open interval

(-1,1). Therefore, it is not compact.

c. A ∩ B is compact.

Ans: TRUE. A ∩ B = {}. An empty set is finite, therefore it is compact since every finite set is
compact.

2. Use the Farkas lemma to decide if the following system has a nonnegative solution:
𝑥1
4 1 −2 𝑥 −2
[ ] [ 2] = [ ]
1 0 5 𝑥 3
3

Since we are interested in non-negative solutions of this system, the Farkas alternative is:

[𝑦1 𝑦2] [4 1 −2 0
] ≥ [ ] (1)
1 0 5 0
−2𝑦1 + 3𝑦2 < 0 (2)

From (1):

4𝑦1 + 𝑦2 ≥ 0 (3)

𝑦1 ≥ 0 (4)

−2𝑦1 + 5𝑦2 ≥ 0 (5)

Since 𝑦1 ≥ 0 then, from (2) 𝑦2 should be less than 0.

But from (3), 𝑦2 should be greater than 0.

Hence, no 𝑦 vector exists => Ax=b, x≥ has no solution.

3. Let there be 15 voters, where an alternative that obtains the plurality vote wins. When there are
three alternatives, there are three pairs of alternatives and 23 = 8 possible aggregate pairwise
rankings. Present concrete profiles that yield each of the eight aggregate pairwise rankings so that
in each of the pairs, the electorate prefers the selected one.

n=3.

There are 3 alternatives and 8 possible aggregate pairwise rankings:

R1=12 R3=21 R5=31 R7=21

R2=13 R4=23 R6=32 R8=21
4. Use the Weierstrass Theorem to show that a solution exists to the expenditure minimization
problem, i.e.,

Minimize px subject to x ∈ X(u0 ),

where X(u0) = {x ∈ ℜ+n|u(x) ≥ u0 },

as long as

(i) the utility function u is continuous on ℜ+n and

(ii) the price vector p satisfies p >> 0.

What if one of these conditions fails?

Solution:

Claim:

5. Let f :ℜ+ ×ℜ be defined by

f(a, x) = (x −1)−(x − a)2 , (a, x) ∈ ℜ+2 .

Define the correspondence D :ℜ+ → P(ℜ+) by

D(a) = {y∈ℜ+ | y ≤ a}, a∈ℜ+.

Let

f *(a) = max{ f (a, x) |x ∈ D(a)}.

Let D*(a) be the set of maximizers of f on D(a).

Do the hypotheses of the Maximum Theorem hold for this problem?

Verify, through direct calculation, whether the conclusions of the Maximum Theorem hold.

6. Consider the following optimization problem:

Maximize / Minimize f (t)+ log(1+ t) such that 0 ≤ t ≤ 2,

t2 - 2t, if 0 ≤ t <1
where f (t) = {
2t - t2, if 1 ≤ t ≤2

(i) Can you use the Weierstrass Theorem to determine the maximum and minimum
solution? Briefly explain.
Ans: Yes, since the function is continuous and compact
(ii) Can you use the Generalized Weierstrass Theorem to determine the existence of a
maximum and minimum solution? Briefly explain.
(iii) Does a solution to the problem exist? Briefly explain.