Praveen Kumar Jha and Khushboo Jha

9311377321, 9811377321
CHAPTER – 17.1
1. A firm produces two different types A and B of a commodity. The daily
cost of producing x units of A and y units of B is C(x,y) = 0.04x2 +
0.01xy + 0.01y2 + 4x + 2y + 500. Suppose that the firm sells all its
output at a price per unit of $15 for A and $9 for B. Find the
production levels x and y that maximize profit.
Ans. x = 100, y = 300, π = 1100
2. Let the production function be F(K,L) = 6K1/2L1/3 with P = 0.5, r = 0.1
and w = 1. Find the maximum profit in this case.
Ans. π = 1687.5, L = 3375, K = 50625.
3. A firm has three factories each of which produces the same item. Let
x,y and z denote the respective number of units that are produced at
the three factories in order to cover a total order for 20000 units.
x2
C1 (x) = 200 +
100
y3
C2 (y) = 200 + y +
300
C3 (z) = 200 + 10z
Ans. x = 500, y = 30, z = 1470, C = 17920
4. Find the smallest value of x2 + y2 + z2 when we require that
4x + 2y – z = 5. Find the point in the plane 4x + 2y – z = 5 that is
closest to the origin.
20 10 525
Ans. x = , y = , Min z =
21 21 441
5. Find the maximum value of the product P = xyz where x, y, z satisfy x
+ 3y + 4z = 108.
Ans. x = 36, y = 12, z = 9, P = 3888
6. Find the values of x and y and z that maximize the function Axaybzc
such that Px + qy + rz = m. the constants A, a, b, c, p, q and r are all
positive and a + b + c ≤ 1. (use substitution).
am bm cm
Ans. x= , y= ,z=
(a + b + c)p (a + b + c)q (a + b + c)r

7. Find the values of x,y,z that maximizes the function x a + ya + z a such

that . (p,q,a,r are positive and a < 1)

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mp − K mq − K mr − k
Ans. x= , y= ,z=
Q Q Q
8. Find the maximum or minimum values (or show that they do not
exist) by a direct argument
(a) F(x,y) = (x + 1)2 + (y – 3)2 – 10

(b) F(x,y) = 3 – 2 − (x 2 + y 2 )

Ans. (a) min = –10 at (–1,3) (b) max = 3, min 3 − 2 at (0,0)

1  x 2 + y2 − 2x − ( x 2 + y2 − 2x ) 
9. max = e −e when (x,y) ∈ S
2 
Ans. max x2 + y2 – 2x
10. F(x, y) = 4x − 2x 2 − 2y 2 , S = {(x, y) : x 2 + y 2 ≤ 25}

Ans. max 2 at (1,0); min –70 at (–5,0)

11. find max/min over S for following
(a) F(x, y) = x 3 + y3 − 9xy + 27 such that 0 ≤ x ≤ 4
Ans. min 91 at (0,4), (4,0) and min 0 at (3,3)
(b) F(x, y) = x 2 + 2y 2 − x such that x 2 + y 2 ≤ 1

( ) (
Ans. max 9/4 −1/ 2, 3 / 2 and −1/ 2, − 3 / 2 min –1/4 at (1/ 2, 0 ))
(c) F(x, y) = 3 + x 3 − x 2 − y2 such that x 2 + y 2 ≤ 1 and x ≥ 0
Ans. Max 3 at (0,0) and at (1,0)
Min 2 at (0,–1) and at (0,1)
12. Max(x 3 + y2 )1/4 such that x ≥ 0, y ≥ 0, x + y ≤ K, where K is a positive
number.
Ans. Max 1 at (0,1) and (1,0) when k = 1
Max K3/4 at (k,0) for k ∈ (1, ∞)
Max k at (0, k) for k ∈ (0,1)
13. Find all the stationary points of the following function and examine
what the second derivative says about them
(a) F(x, y) = x 3 + y3 − 3xy (b) F(x, y) = x 2 − xy + y 2 + 3x − 2y + 1

(c) F(x, y) = x 2 y3 (6 − x − y) (d) F(x, y) = 1 − x 2 − y 2 + x 2 − 2y 2

(e) F(x, y) = x 4 + 2y 2 − 2xy (f) F(x, y) = ln(1 + x 2 + y)

Ans. (a) (0,0) saddle point, (1,1) minima

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(b) (–1/3, 1/3) local minimum
(c) (2,3) local maximum, (a, 0) and (0, b) no decision
3
(d) (0,0) saddle point, (a,0), (–a, 0) local maxima where a =
2
(e) (0,0) saddle point, (1/2, 1/4) and (–1/2, –1/4) local minima
(f) (0, b) no decision (no second derivative)
but (0, b) max if b < 0
saddle point if b = 0
min if b > 0.
14. (a) Determine values of the constants a, b, c such that
F(x,y) = ax2y + bxy + 2xy2 + C has a local minimum at point
(2/3, 1/3) with local minimum value –1/9.
Ans. a = 1, b = –2 c = 1/27
(b) With the values of a, b, c found in part (a). Find the max and
min values of F over the domain in the xy plane determined by
the inequalities x ≥ 0, y ≥ 0 and 2x + y ≤ 4.
193 1
Ans. max at (2/3, 8/3), Min = − at (2/3, 1/3)
27 9
15. The production function for a firm depends on capital K and the
number of whether of worker L. It is given by

F(K, L) = K+ L
The price per unit of the product is P, the cost of capital is r, and the
wage rate is w. Find max profit
w 2L
Ans. K = , L = 2−8/3 p 4/3 w −4/3r 2/3 (r + w)−2/3
r2
16. C(x, ) = 6x 2 − 9x − 3xy − 7y + 5y 2 + 20 , where C is the cost function of x and
y units. Find Min C(x,y) and x and y also ?
Ans. Min = 12 at x = 1 and y = 1
17. A firm produces two items x1 and x2. The market prices are given by
P1 = 100 – 2x1 and P2 = 125 – 3x2. The cost of production is
12x1 + 11x2 + 4x1x2 for producing X1 and X2 items. Find how many
items of each should be produced to have the joint profit maximum ?
Ans. x1 = 9, x2 = 13
18. A monopolist firm produces commodities of two types X1 and X2 at
constant average cost Rs.2.50 and Rs.3.00 per item respectively. If P1

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and P2 are the prices charged and the market demands are
x1 = 5(P2 – P1), x2 = 32 + 5P1 – 10P2. Find the prices of two
commodities for maximum joint monoply profit.
Ans. P1 = 4.45, P2 = 4.70
19. Suppose a monopolist is practicing price discrimination in the sale of
a product by charging different prices in two separate markets. In
market I the demand function is P1 = 100 – x1 and in II it is
P2 = 84 – x2 where x1 and x2 are the quantities sold per week in I and
II and P1 and P2 are the respective prices per unit. If the monopolist's
cost function per unit. If the monopolist's cost function is
C = 600 + 4(x1 + x2). How much should be sold ine ach market to
maximize profit ? What selling prices give this max profit ? Find the
max profit.
Ans. P = 3304 for P1 = 52 and P2 = 44
20. A monopolist discriminates prices between two markets and the
average revenue function for the markets are AR1 = 53 – 4Q1,
AR2 = 29 – 3Q2 and his total cost function is C = 20 + 5Q. Find the
profit maximizing outputs and prices in the two markets. What are
these values when there is no price discrimination.
Ans. Q1 = 7.714, Q2 = 2.285, P = 22.14
21. Find the critical points and classify them as local maxima, local
minima and saddle point for the function F(x, y) = (x 2 + 2y).e − ( x + y2 )
2
(2018)
Ans.
22. Find the Maxima and Minima of the function
−x
.(2y − 1)e( y − 2)
2 2
g(x, y) = (2x + 4)e x (2018)

 −3 − 17 1   −3 + 17 1 
Ans.  ,  or  , 
 4 2   4 2

 3
(–2, –1) and  −2, −  are critical points.
 2
23. Let F(x,y) = 2x2 – 4x + y2 – 4y + 1 be defined over the area bounded by
the straight lines x = 0, y = 2 and y = 2x. Find and classify all the
extreme points of this function. Also find the extreme values of the
function F(x,y) (2017)
Ans. Min is –5 at (1,2), Max is 1 at (0,0)

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24. Find all the local extreme points and/or saddle points for the following
1
function F(x,y) = x3 + 3y3 – x 2 – 2x – 9y (2017)
2
 2   2 
Ans.  − , −1 maxima  − , −1 saddle point
 3   3 
(1, 1) minima (1, –1) saddle point

25. Find the extreme points and extreme values for F(x,y) defined over S
− y2
; S = {(x, y) : x 2 + y 2 ≤ 1}
2
when F(x, y) = e x (2016)

Ans. Max is e at (1,0) or (–1,0)

Min is e–1 at (0,1) or (0-, –1)
26. Max Z = –(x4 + y4). Find the strict maxima. What is the problem in
applying the condition that the Hessain matrix is definite negative ?
(2015)
Ans. Max is 0 at (0,0)
27. Let Z = 3x4 – 4x2y + y2. Show that on every line y = mx, the function Z
has a minima at (0,0). (2105)
Ans.
28. Let Z = x2 + 2xy – 4x + 8y. Find the extreme point of the function Z
defined over the area bounded by the rectangle formed by the lines
x = 0, y = 0, x = 1 and y = 2. (2015)
Ans. Max 17 at (1,2), Min –4 at (2,0)
29. Find the max, min values of F(x,y) = –x2 – y2 on the set –1 ≤ x ≤ 1,
–1 ≤ y ≤ 1. (2013)
Ans. Min Max
30. Find and classify the stationary points of
1
F(x, y) = 8xy − (x + y)4 (2013)
4
Ans.
CONVES SETS, CNNCAVE CONVEX FUNCTIONS, QUASI–CONCAVE AND
QUASI–CONVEX.
31. Decide which of the following sets are convex by drawing each in x – y
plane
(a) {(x, y) : x 2 + y 2 < 2} (b) {(x, y):x ≥ 0, y ≥ 0}

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(c) {(x, y) : x 2 + y 2 > 8} (d) {(x, y) : x ≥ 0, y ≥ 0, xy ≥ 1}

(e) {(x, y):x, y ≤ 1} {

(f) (x, y) : x + y ≤ 2 }
Ans. Only (a) and (d) are convex

Define the function F for all x ∈ Rn by F(x) = x = ( x12 + ... + x n2 ) . Show

1/ 2
32.
that F is a convex function.
Hint. Use triangle inequality
33. Prove that F(x,y,z) = (x + 2y + 3z)2 is convex.
Sol. Note. A concave (convex) function of a linear function is concave
(convex).
So, here F = u2 where u = x + 2y + 3z. So, F is a convex function of a linear
function. Hence, is convex.
34. Let F(x,y) = 2x – y – x2 + 2xy – y2 for all (x,y). Is F concave/Comvex ?
Ans. Concave
35. Show that CES function F defined for K > 0, L > 0 by
F(K, L) = A(δK −ρ + (1 − δ)L−ρ )−1/ ρ (A> 0, ρ ≠ 0, 0 ≤ δ ≤ 1)
is concave for ρ ≥ –1 and convex for ρ ≤ –1.
36. Show that the Cobb-Douglas function Y = AKaLb defined for all K > 0
and
L > 0 is concave if A > 0, a ≥ 0, b ≥ 0 and a + b ≤ 1 and is strictly
concave if a and b are positive with a + b < 1.
37. (a) Show that F is concave where F(x,y) = x – y – x2.
(b) Show that –e–F(x,y) is concave.
38. Decide for which values of the constant a the following function is
concave, convex or neither
F(x, y) = −6x 2 + (2a + 4)xy − y 2 + 4ay

Ans. Concave iff −2 − 6 ≤ a ≤ −2 + 6

39. Examine the convexity / concavity of the following functions
(a) F(x, y) = x + y − e x − e x + y
3 1
(b) g(x, y) = e x + y + e x − y − x − y
2 2
Ans. (a) strictly concave (b) convex (strictly)

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40. Define the function F over [–1,1] by F(–1) = F(1) = 2 and F(x) = |x| for
|x| < 1. Draw the graph of F and explain why F is convex. Note that F
is dicontinuous at x = –1 and at x = 1 and not differentiable at x = 0.
Ans. convex
41. Find the largest convex domain 5 in the xy–plane on which the
function
F(x, y) = x 2 − y 2 − xy − x 3 is concave

 5
Ans. S = (x, y) : x ≥ 
 12 

Show that F(x) = e − x is quasi–concave. Let F1(u) = ln u and u > 0 and

2
42.
1
F2 (u) = for u > 0. Try this
4
43. The Cobb–doughlas function is defined for all x1 > 0, …, xn > 0 by
z = Ax1a1 x a22 ...x ann (a1, a2, …, an and A are positive). Show that this is
quasi–concave.
x if 0 ≤ x ≤ 1

44. F(x) = 1 if 1 < x ≤ 2
x − 1 if x > 2

[Hint. The function F is quasi–concave because it is increasing] Check
whether it is quasiconcave with graph.
45. Decide which of the following functions are quasi–concave
(a) F(x) = 3x + 4 (b) F(x,y) = yex (y > 0)
(c) F(x,y) = –x2y3 (x > 0, y > 0)
(d) F(x) = x3 + x2 + 1 if x < 0, F(x) = 1 if x ≥ 0
Ans. (a) F is linear so quasi–concave
(b) quasi cocnave
(c) not quasi–concave so quasiconvex
(d) quasi–concave
46. Is the sum of the two quasi–concave functions, necessarily quasi–
concave ? (2018)
Sol. The sum of two quasi–concave functions is not in general quasi–
concave.
For e.g.

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1 − x for x ≤ 1
Let F1 ( x ) = 
0 for x > 1

− x − 1 for x + 2 ≤ 1
F2 (x) = 
0 for x + 2 > 1

Then F1 and F2 are quasiconcave but F1 + F2 is not.

47. Show that any increasing (ore decreasing) function of one variable
defined on an interval is quasi–concave.
Sol. If F is increasing or deceasing, then the upper level sets :x : F(x) ≥ a}
are all intervals. Which are convex sets so F is quasi–concave.
48. Verify whether the sets A and B are convex :
A = {(x, y) | x 2 + y 2 ≤ 16, x 2 + y 2 ≥ 4}

 2x + 5 
B = (x, y)| y ≥ , x > 0 (2018)
 x+2 
Ans. A is not convex but B is convex
49. Consider the Cobb–Doughlass production function F(x,y) = xayb (a, b
are constants) defined for x > 0 and y > 0. Prove that F is concave iff it
exihibits constant or decreasing returns to scale. (2017)
50. A set S in R2 is said to be convex if x ∈ S, y ∈ S and λ ∈ [0,1]
⇒ (1 – λ)x + λy ∈ S. Using this definition verify whether the following
set is convex (A diagram is not a sufficient answer)
x + y ≤ 1 , x ≥ 0, y ≥ 0 (2017)

d2 y
Hint. (Find and show it ≥ 0)
dx 2
51. Decide which of the following functions are quasiconcave. Give
reasons
(a) y = 5x + 7
(b) z = ln(x1a1 x a22 ) (where x2 > 0, x1 > 0, a1 > 0, a2 > 0)
Ans. (a) quasi concave as linear

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(b) z = a1 ln x1 + a 2 ln x 2 quasi concave

52. A set S in R2 is said to be convex if x ∈ S, y ∈ S and λ ∈ [0, 1]

⇒ (1 – λ)x + λy ∈ S. Using this definition, verify whether the following
set is convex (A diagram is not a sufficient answer)
S = {(x, y) : xy ≤ 2, x > 0, y ≤ 0} (2016)

d2 y
Sol. Hint. Find assuming xy = 2
dx 2
53. With the help of an example, show that a function
z = F(x, y)
that is strictly quasiconcave need not be concave. (2015)
Ans. Let F(x) = x2 on R+
F'(x) = 2x > 0 ∀ x ∈ R+
Hence, it is strictly increasing. So in quasi concave , but it is not
concave as F"(x) = 2 > 0 (So F(x) is convex).
54. Examine the concavity and convexity of the following function :
(i) F(x, y) = x α + yβ ; x, y > 0 , α > 0, β < 1
(ii) g(x,y) = (x + y)1/2, x,y > 0
Ans. (i) convex (ii)
55. Show that firm is concave. For x1 > 0, x2 > 0, F ( x1 , x 2 ) = 12x1v3 x 2v3 . Show
that F is concave. For firm price input prices are P1 and P2 output
price is q. (2012)
Ans. Show πprofit is concave
56. Let D be the set of points (x,y) with –1 < x < 1 and –1 < y < 1 and let
1
F(x, y) = (x − y)4 − (x − y) 2 − (x + y)2
2
(a) Show that F is neither convex nor concave in D
(b) Find the subset of D at which F is concave (2011)
Ans. (b) x < 2 + y or x > y − 2

57. Prove that F(x, y) = e − x 1 + y 2 is strictly convex for y < 1 . (2011)

58. If F(x1 , x 2 ) = ax12 + bx 22 + 2cx1 x 2 + d for what values of a,b,c and d F is

concave ?
Ans. a, b ≤ 0, c,d ∈ R
*******************

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