UNIT FOUR

CONSTRAINED OPTIMIZATION

INTRODUCTION

Dear colleague! In the previous unit we studied the optimization of functions with out the
existence of constraints. However, in business and economics studies there are many situations in
which complete freedom of action is impossible. For example, a firm can maximize output
subject to the constraint of a given budget for expenditures on inputs, or it may need to minimize
cost subject to a certain minimum out put being produced. Such functions which involve
constraints are called constrained functions and the process of optimization is referred as
constrained optimization. This unit explains the ways of solving constrained optimization
problems with equality and inequality constraints.

Unit Objective

Up on the completion of this unit, you are expected to

 describe what constrained function is
 describe the order condition for the optimization of constrained function
 explain the Lagrange multiplier
 describe how functions with inequality constraints are solved
 describe the Kuhn - Tucker theorem
 solve objective function subject to mixed constants

Section 4.1 One Variable Constrained Optimization with Non - Negative Constraint

After completing this section, you should be able to

- describe optimization of the objective function at a given

point
- explain the first order conditions that must be met
- describe the second order condition that must be met for
optimization

i) With equality constraint

Maximize y = f(x), subject to x  x . In this case y   f (x )

It simply involves determining the value of the objective function at the given point in the
domain.

ii) With non - negativity constraints

Maximize subject to x  0

88
 (a)

At x  0, f ( x)  0
For the above function the unconstrained maximum attained when x < 0 at point b as shown in
the above figure where as y attains its constrained optimum at point a.

y   f ( 0)

(b)

In this case the constrained and unconstrained maximum value of the function lie at the same
point, i.e., they coincide at point a as shown above. y   f (x) .

(c)

In this case, similar to that of b, the constrained and unconstrained maximum value of the
function reside on the same point,
y   f ( 0)
f ( x )  0
Dear colleague! Please try to minimize y  f (x) , subject to x  0 in a similar way.

Given the function y  f (x) subject to the x  0

For maximization,

f ( x)  0 if f ( x)  0, x  0
if f ( x)  0, x  0

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For minimization

f ( x)  0 if f ( x)  0, x  0
if f ( x)  0, x  0

Example

Maximize the objective function y = - 3x2 - 7 x + 2 subject to x  0.

First order condition for maximization
f ( x)  6 x  7 = 0
6x= - 7
7
x=
6

Second order condition for maximization

f ( x)  6  0
7
Thus, the unconstrained maximum value of the function locates at x= , i.e., x < 0 but the
6
constrained maximum, at x  0, f (0)  7  0 Thus the constrained maximum is the function is
y  2.

2. Minimize y = x2 + 2x+ 5, subject to X  0

First order condition
f ( x)  2 x  2  0
x  1  0
Second order condition
f ( x)  2  0
Thus the function actives it’s unconstrained minimum at x = -1, i.e., y = 4 However, at
x  0, f ( x)  2  0 . Therefore, the minimum value of the constrained function is y = f (0) = 5.

Dear colleague! By now you have completed the first section of this unit. Thus, try to do the
following self - test questions to examine your understanding of this section.

Self - Test 4.1

Solve the following questions based on the information in the above section.
1. Maximize y = -x 2 + 5x + 6, subject to x  2 ,
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--------------------------------
2. Maximize y = - 2 x2 + 3 x + 4, subject to x  0
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-----------------------------------
3. Find the maximum value of the function y = -3x 2 + x + 7, subject to x  0
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-----

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4. Minimize the function y = x2 + 3 x + 4, subject to x  0
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--------------------------
5. Find the minimum value of the function y = 2x2 + x + 7 , subject to x  0
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Dear colleague! Have you answered these questions? If no, Please rereads this section and try to
do them. If yes, good go to the next section.

Section 4. 2. Two Variable Problems with Equality Constraints

Up on the completion of this section, you should be able to

- describe the order condition for optimizing these functions

- explain the method of optimization by Substitution
- describe the Lagrange multiplier method
- interpret the Lagrange multiplier
- optimize multivariable functions
Dear Colleague! In this section we will see two method of constrained optimization. These are.
 Constrained optimization by substitution
 Lagrange multiplier method

A. Constrained Optimization by Substitution

Dear colleague where can we apply this method? Please discuss with your friends and try
to answer this question. And write your answer on a rough paper. Have you answered it? Ok
good. Try to relate your answer with the following analysis.

This method is mainly applicable for problems where the objective function with only two
variables is maximized or minimized subject to one constraint.

Consider a firm that wants to maximize output given the production function Q = f (K, L) and
suppose PK and PL prices of K and L respectively and a fixed budget B. Then, we can determine
the amount of K and L that optimize Q using the method of substitution.

Example
1.A firm faces the production function Q= 12K 0.4 L 0.4 and assume it can purchase K and L at
pries per unit of 40 birr and 5 Birr respectively and it has a budget of 800 Birr. Determine the
amount of K and L which maximizes output.

Solution
The problem is Maximize Q= 12K 0.4 L 0.4
Subject to 40K +5L = 800

According to the theory of production, the optimization condition is written in such away that the
ratio of marginal product of every input to its price must be the same. That is

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 MPK MPL

PK PL
The marginal products can be obtained by the method of partial differentiation as follows.

MPK = 4.8 K -0.6 L 0.4....................................... (1)

MPL =4.8 K 0.4 L 0.6 ......................................... (2)
Substituting these marginal products and the given prices in the constraint function gives us

4.8 K 0.6 L0.4 4.8 K 0.4 L0.6


40 5

K -0.6 L 0.4 = 8 K 0.4 L -0.6

Multiplying both sides by K 0.6 L 0.6

L = 8k..................................................................... (3)
Substituting (3) in the budget constraint we get

40K + 5(8K) =800

40K+ 40K = 800
80k =800
K=10
Thus, L= 8(10) =80
There fore, this firm should employ 10 units of capital and 80 units of labor in the production
process to optimize its output.

2. Suppose the utility function of the consumer is given by U  4 xy  y 2 and the budget
constraint is 2x+y = 6. Determine the amount of x and y which will optimize total utility of the
consumer.

Solution
MU X MU y
Utility is maximized when 
Px Py
In our example, MU x = 4y, MU y = 4x-2y.Therefore, at the point of equilibrium
4y 4x  2 y

2 1
4y = 8x-4y
4y + 4y = 8x
8y = 8x
x  y ---------------------------------------- (4)

Substituting (4) above in the budget constraint gives us

2x +x= 6
3x=6
x=2=y
Therefore, this consumer can optimize his utility when it consumes 2 units of good x and 2 units
of good y.

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B. Lagrange Multiplier Method

Dear colleague! What is Lagrange Multiplier Method? What are the steps to use this
method? How do you interpret the Lagrange multiplier?
---------------------------------------------------------------------------------------------------------------------
------------------------Have you answered it? Ok, try to relate your answer with the following
analysis. The essence of this method is to change a constrained optimization problem in to a form
such that the first order condition of the unconstrained optimization problem can still be
applicable. This method can be used for most type of constrained optimization problems. Given
the function Z= f (x, y) subject to g (x, y) = P x X+ PYY =M, to determine the amount of x and y
which maximize the objective function using the Lagrange Multiplier Method, we should involve
the following steps.

Step 1 Rewrite the constraint function in its implicit form as

M  xPx  yPy  0
Step 2 Multiply the constraint function by the Lagrange multiplier 
 (M- x P x- y P y) = 0

Step 3 Add the above constraint to the objective function and thereby we get the Lagrange
function that is a modified form of the objective function which includes the constraints as
follows:
L( x, y,  )  Z ( x, y )   ( M  xPx  yPy ) ------------------- (5)
Necessary condition, i.e. the first orders condition for maximization is that the first order partial
derivatives of the Lagrange function should be equal to zero.

Differentiating L with respect to x, y, and  and equating it with zero gives us.
L z
  Px  0 ----------------------- (6)
x x
L z
  Py  0 ----------------------- (7)
y y
L
 M  xPx  yPy  0 ------------------------- (8)

From equation (6) and (7) we get
Zx Zy
 = and  =
Px Py
Zx Zy Zx P
This means,   or  x
Px Py Zy Py
Sufficient condition -To get the second order condition, we should partially differentiate
equations (6), (7) and (8). Representing the second direct partial derivatives by Z xx and Z yy and
the second cross partial derivatives by Z xy and Z yx, the border Hessian determinant bordered
with 0, g x and g y is
0 gx gy 0  Px  Py
H  gx L xx L xy   Px Z xx Z xy  o
gy L yx L yy  Py Z yx Z yy

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d 2 Z is referred to as positive definite subject to dg = 0 iff H <0,
d 2 Z is referred to as negative definite subject to dg = 0 iff H > 0 .

2
Negative definiteness of d Z implies that the function achieves its relative maximum point
where as a positive definite is a sufficient condition to satisfy the relative minimum of the
objective function.

Maximization

Example
Given the utility function of the consumer who consumes two goods x and y as
U (x, y) = (x+ 2) (y+1)
If the price of good x is P x = 4 birr, that of good y is P y = 6 Birr and the consumers has a fixed
budget of 130 birr. Determine the optimum values of x and y using the Lagrange multiplier
method,

Solution
Maximize U (x, y) = x y + x+ 2y + 2
Subject to 4x + 6y = 130

Dear colleague! Now we should formulate the Lagrange function to solve this problem. That is
L( x, y ,  ) = x y + x+ 2y + 2 +  (130 - 4x - 6y) --------------------------------- (9)
L L L
Necessary conditions for utility maximization are  0,  0, 0
x y 
L
 ( y  1)  4 = 0
x
y = -1 + 4  ------------------------------------- (10)
L
 ( x  2)  6  0
y
x  2  6 ---------------------------------- (11)
L
 4 x  6 y  130  0

4x+6y= 130----------------------------------- (12)
Substituting the value of x and y explained in equation (10) and (11) in to (12) enables us to
determine
4 (-2+ 6  ) + 6 (-1 +4  ) = 130
- 8 + 24  - 6 + 24  = 130
48  = 144
 =3
Therefore, x = -2+6(3)
x = -2 + 18 = 16
y = -1 + 4 (3)
y = 11
Second order sufficient condition for utility maximization is

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 0 gx gy
H  gx L xx L xy
gy L yx L yy

The second partial derivatives of the objective function and the first partial derivatives of the
constraint function are
2L
L xx = = 0, L yy = 0, L xy = L yx = 1
x 2
g g
ցx = = 4, and ց y = 6 =
x y
Therefore, the bordered Hessian determinant of this function is

0 4 6
H  4 0 1 = - 4(0-6) + 6 (4- 0) = 48 > 0
6 1 0

The second order condition, i.e., H > 0 is satisfied for maximization. Thus, the consumer
maximizes utility when he consumes 11 units of good y and 16 units of good x. The maximum
utility is U = (16+2) (11+1) = (18) (12) = 216 units which is similar to the value of the Lagrange
function at these values of x , y and  . The value of the Lagrange multiplier  is 3. It indicates
that a one unites increase (decrease) in the budget of the consumer increases (decreases) his total
utility by 3 units.

2. Suppose the monopolist sells two products x and y and their respective demand is
P x = 100 - 2 x and P y = 80 - y
The total cost function is given as TC = 20x + 20y, when the maximum joint product of the two
outputs 60 unit. Determine the profit maximizing level of each output and their respective price.

Solution
Dear colleague! We know that total profit (  ) = TR - TC, where TR represents total revenue
and TC represents total cost.
TR= x P x + y P y = (100x - 2x2) + (80y - y2)
Thus  = 100x - 2x2 + 80 y - y2 - 20x - 20 y
 = 80 x + 60 y – 2x2- y2
But this monopolist can maximize its profit subject to the production quota. Thus,
Maximize  = 80x + 60 y- 2x2- y 2
Subject to x+ y = 60
To solve this problem, we should formulate the Lagrange function,
L (x, y,  ) = 80x + 60y - 2x2 - y 2 +  (x+ y - 60) --------------- (13)
First order conditions for maximum profit are
L x = 80 - 4x +  = 0
- 4x = - 80 - 
 = 20 + 1
4  ------------------------------------------------ ------- (14)
L y = 60 - 2y+  = 0

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 - 2y = - 60 - 
1
y = 30 +  ----------------------------------------------------------- (15)
2
L  = x + y -60 = 0
X + y = 60------------------------------------------------------------ (16)
Substituting equation (14) and (15) in equation (16), we get
1 1
20 +  + 30+  = 60
4 2
3
50 +  = 60
4
3
 = 10
4
40

3
1 40 1 (40)
Thus, x = 20 + ( ) y = 30 +
4 3 2 3
= 20+ 3.33 = 30+6.67
x = 23.33 y = 36.67
Second order condition for maximum profit is
L xx = - 4, L y y = -2, L x y = L y x = 0
g x = 1, g y = 1
Therefore, the bordered Hessian determinant of the given function is
0 1 1
H = 1 -4 0 = -1 (-2 - 0) + 1 (0+4) = 6> 0
1 0 -2

The second order condition is satisfied for maximization of functions.

Px  100  2( 23.33) Py  80  36.67
Px  53.34 Py  43.33
Therefore, the monopolist maximizes its profit when it sells 23.33 of good x at a price of 53.34
40
birr per unit and 36.67 units of good y at a price of 43.33 birr per unit.  = shows that a one
3
40
unit increase in total expenditure on inputs increases total profit of the monopolist by units.
3
In other words, if the constant of the constraint relaxes by one unit that is x  y  61 , then the
value of the objective function increases by the value the Lagrange multiplier .

Minimization

Dear colleague! As we know, the firm can determine the least cost combination of inputs for the
production of a certain level of output Q. Given the production function Q= f (L, K) and the cost
function of the firm is C = LPL + KP k Where L = labor, K = capital, Q = output. Suppose the
price of both input to be exogenous, we can formulate the problem of minimizing the cost as
Minimizes C = PL L + P k k
Subject to Q = f (L, K)
To determine the amount of labor and capital that should be employed initially we should
formulate the Lagrange function. It is

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 L  LPL  KPK   (Q  f ( L, K ) --------------------------- ---- (17)
First order conditions for a minimum cost are
LL  PL  QL  0
P P
  L  L ---------------------------------------------- (18)
QL MPL
LK  PK  Qk  0
P P
  K  K ------------------------------------------- (19)
QK MPK
L  Q  f ( K , L)  0 --------------------------------------------- (20)
Where Q L and Qk represents marginal product of labor and capital respectively.
From equation (17) and (18), we get
PL P
  K -------------------------------------------------- (21)
MPL MPK

Equation (21) indicates that, at the point of optimal input combination the input - price ratio and
the marginal product ratio have to be the same for each input. This ratio shows the amount of
expenditure per unit of the marginal product of the input under consideration. Thus, the
interpretation the Lagrange multiplier is the marginal cost of product at the optimal condition. In
other words, it indicates the effect of change in output on the total costs of production, i.e., it
measures the comparative static - effect of the constraint constant on the optimal value of the
objective function.

The first order condition indicated in equation (21) can be analyzed in terms of isoquants and
isocosts as
PL MPL
 = = --------------------------------------------- (22)
Pk MPk
MPL
The represents the negative of the slope of the isoquant, which measures the marginal
MPK
rate of technical substitution of labor to capital (MRTS Lk ).
PL
The ratio shows the negative of the slope of the isocost. An isocost is a line which
PK
indicates the locus of input combinations which entail the same total cost. It is shown by the
equation
C PL
C= PL L + P k K or K = - L
PL Pk
PL MPL
= indicates the fact that the isocost and isoquant lines are tangent to each other at
Pk MPk
the point of optimal input combination.

Second order condition for minimization of cost.

Dear colleague! As you know, a negative bordered Hessian determinant is sufficient to say the
cost is at its minimum value. That is

97
 0 QL QK
H  QL LLL LLK
QK LKL LKK
Example

Suppose a firm produces an output Q using labor L and capital K with production function
Q  10 K 0.5 L0.5 . If the output is restricted to 200 units, price of labor is 10 birr per unit, the
price of labor is 10 birr per unit and Price of capital is 40Birr per unit, and then determines the
amount of L and K that should be employed at minimum cost. Find the minimum cost.

The problem is Minimize C = 10 L + 40K

Subject to 200  10 K 0.5 L0.5
Formulating the Lagrange function
L( L, K ,  )  10 L  40 K   (200  10 K 0.5 L0.5 ) ---------------------- (23)
First order conditions
LL  10  5K 0.5 L0.5  0
2 L0.5
  0.5 ------------------------------------------------------------- (24)
K
LK  40  5K 0.5 L0.5  0
8 K 0.5
 ------------------------------------------------------------- (25)
L0.5
L  200  10 K 0.5 L0.5  0
10 K 0.5 L0.5  200 ----------------------------------------------------- (26)

From equation (24) and (25), we get

2 L0.5 8k 0.5
=
k 0.5 L0.5
2L = 8K
L= 4K ------------------------------------------------------- (27)
Substituting equation (27) in to (26) gives us
K 0.5 ( 4 K ) 0.5  20 ------------------------------------------------ (28)
2K = 20
K = 10 and L = 4(10) = 40,  = 4

Second order condition

Dear colleague! Now we should check the second order condition to verify that cost is least at K
= 10 and L = 40.
For cost minimization the determinant of the bordered Hessian matrix must be less than zero.

0 QL QK
H  QL LLL LLK < 0
QK LKL LKK

At L = 40 and K = 10

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 Q K 10
(5)  (5)  2.5
QL = L =
L 40
Q L 40
(5)  (5)  10
Q k= k =
K 10
LLL = 2.5 K 0.5 L1.5 = 2.5( 4)(10) 0.5 ( 40) 1.5
= 0.125
L kk = 2.5 K 1.5 L0.5 = 2.5( 4)(10) 1.5 ( 40) 0.5
=2
LKL  LLK  2.5K 0.5 L0.5  2.5(4)(10) 0.5 ( 40) 0.5

Therefore, the determinant of the bordered Hessian matrix is

0 2 .5 10
H  2 .5 0.125  0 .5
10  0 .5 2

= - 2.5 (5+5) +10(-1.25 -1.25)

= - 2.5 (10) + 10 (-2.5)
H = -50 < 0

Thus, the firm can minimize its cost when it employs 10 units of capital and 40 units of labor in
the production process and the minimum cost is
C = 10 (40) + 40 (10)
Min. C = 400 + 400 = 800 birr
In this problem K, L and  are endogenous. The Lagrange multiplier  measures the
responsiveness of the objective function to a change in the constant of the constraint function.

Dear colleague! What happens to the value of the Lagrangian function and the constrained
function when total output increases from 200 to 201? What about the amount of L and K?
Compare the value of the constrained function and that of the Lagrangian function at this point.
Interpret the value of 
.---------------------------------------------------------------------------------------------------------------------
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-------------------------------------------------.
Elasticity of Substitution
K PL
Dear colleague! What happens to the optimal input ratio L when the input price Pk
increases? Please discuss with your friends and try to answer this question.
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Have you answered it? Good. Try to relate your answer with the following analysis.
PL
Increase in the shows the fact that capital is relatively cheaper so that it will be substituted
Pk

for labor and the optimal input ratio K will increase. The extent of this substitution is
L

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measured by the elasticity of substitution which is represented by  (lower - case Greek letter
sigma).
k
relativechangein( )
 = L
relativechangein( Pl Pk )

K K
d( ) d( )
L L
K PL
( ) d( )
L  PK
 =
PL K
d( ) ( )
PK L
PL PL
( ) ( )
PK PK

The value of  lies in between 0 and +

When  = 0, the two inputs are used in a fixed proportion as complement to each other. When
 =  , the two inputs are perfect substitute to each other. As  increases, the substitutability
between the two inputs increases.

Optimization of n - variable case

Given the objective function

Optimize Z  f ( x1 , x 2 , x3 ...., x n )
Subject to g ( x1 , x 2 , x 3 ,...., x n )  c
Dear colleague! Similar to our earlier discussion we ought to first formulate the Lagrange
function. That is
L  f ( x1 , x 2 , x3 ...., x n )   (c  g ( x1 , x 2 , x3 ,..., x n ))

The necessary condition for optimization of this function is that

L  L1  L2  L3  L4      Ln = 0
The second order condition for optimization of this function depends on the sign of d 2L subject
to dg  g1 dx1  g 2 dx 2  g 3 dx3  .....  g n dx n  0 similar to our earlier discussion.
The positive or negative definiteness of d 2 L involves the bordered Hessian determinate test.
However, in this case the conditions have to be expressed in terms of the bordered principal
minor of the Hessian. Given the bordered Hessian as

0 g1 g2 gn
----------

g1 L11 L12 L1n

----------

H
= g2 L21 L22 L2 n
-----------

L3 n
- - ------------------

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 - - --------------------------
gn Ln1 Ln 2 Lnn
--------
The successive bordered principal minors are

0 g1 g2 0 g1 g2 g3
H2  g1 L11 L12 H3  g 1 L11 L12 L13
g2 L21 L22 g2 L21 L22 L23 etc.

g3
L31 L32 L33
However, H  H n . .
H 2 Shows the second principal minor of the Hessian bordered with 0, g 1 and g 2 .

d 2 L is positive definite subject to dg  0 if and only if H 2 , H 3 ,-----, H n  0 .

d 2 L is negative definite subject to dg  0 if and only if H 2  0, H 3  0, H 4  0 ,---.

A positive definite d 2 L is a sufficient condition for minimum value and negative definite d 2 L
is sufficient condition for maximization of the objective function.
In our analysis above H 2 is the one which contains L22 as the last element of its principal
diagonal. H 3 is the one which includes L33 as the last element of it's principal diagonal etc.

Optimization when there is more than one equality constraint

Let us consider the optimization problem involves three variables and two constraints.
Optimize Z  f ( x1 , x 2 , x3 )
Subject to g 1 ( x1 , x 2 , x3 )  c 1
g 2 ( x1 , x 2 , x3 )  c 2
As usual we should construct the Lagrange function by using the Lagrange multiplier  .Since we
have two constraint functions, we are required to incorporate two  s, i.e., 1 and 2 in our
analysis.
The Lagrange function is
L  f ( x1 , x 2 , x3 )   (c1  g 1 ( x1 , x 2 , x3 ))   (c 2  g 2 ( x1 , x 2 , x3 ))
First order conditions for optimization
L1  f1  1 g11  2 g12  0
L2  f 2  1 g 12  2 g 22  0
L3  f 3  1 g 31  2 g 32  0
L1  c 1  g 1 ( x1 , x 2 , x3 )  0
L 2  c 2  g 2 ( x1 , x 2 , x3 )  0
When there are n - variables and m - constraints, the Lagrange function becomes
m
L  f ( x1 , x 2 , x3 ,....., x n )   i (c j  g i ( x1 , x 2 , x3 ,..., x n ))
j 1

In this case we will have m+ n variables in the Lagrange function and we will have also m+ n
simultaneous equations.

First order conditions are

101
 Li  f i   j g ij  , (i = 1, 2, 3, ---, n) and (j= 1, 2, 3, --- m)
Li  c j  g i ( x1 , x 2 , x3 ,..., x n )  0

Second order conditions for optimization of three variables and two constraints problem are

0 0 g 11 g 12 g 31
0 0 g12 g 22 g 32
H = g 11 g12 L 11 L12 L13
1 2
g 2 g 2 L 21 L 22 L 23
1 2
g 3 g 3 L31 L 32 L 33

In this case, H3 = H . Thus for a maximum value,

H2 > 0, H3 < 0.
For a minimum,
< 0, H 3 < 0.
H2
With the existence of n - variables and m - constraints, the second order condition is explained as

0 0 0 -------- 0 g11 g 12 g 31 -------- g 1n

0 0 0 -------0 g12 g 22 g 32 ----- -- g n2
-- - - - - - - - - ----------------
0 0 0 ------ - 0 g1m g 2m g 3m ------ -- g nm
H =
g11 g 12 g 31 ----- - g 1n L11 L12 L13 L1n
----------

g12 g 22 g 32 ------ g n2 L21 L22 L23 --------- L2 n

g13 g 23 g 33 ------ g n3 L31 L32 L33 ------ L3 n
-- -- -- ------ -- -- - -- ----
g m
g g 3 - - - - g nm
mm
Ln1 Ln 2 Ln 3 Lnn
1 2 --------

Now we have divided the bordered Hessian determinant in to four parts. The upper left area
includes zeros only and the lower right area is simply a plain Hessian. The remaining two areas
j
include the g i derivatives. These derivatives have a mirror image relationship to each other
considering the principal diagonal of the bordered Hessian as a reference.

102
 We can create several bordered principal minors from H .It is possible to check the second
order sufficient condition for optimization using the sing of the following bordered principal
minors:
H m 1 , H m  2 ,----------, H n
The objective function can sufficiently achieve its maximum value when the successive bordered
principal minors alternate in sign. However, the sign of H m 1 is (-1) m+1 where as for
minimum value the sufficient condition is that all bordered principal minors have the same sign,
i.e., (-1) m. This indicates that if we have an odd number of constraints, then sign of all bordered
principal minors will be negative and positive with even number of constraints.

Dear colleague! By now you have completed the second section of this unit. Thus, try to do the
following self test questions to examine your understanding of this section.

Self - Test 4.2

Solve the following questions based on the information above.
1. What is constrained function?
---------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------
2. Explain elasticity of substitution
---------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------
3. What does the Lagrange multiplier indicate? -----------------------------------------------------------

4. Suppose a firm faces the production function Q = 120 L + 200K - L 2 - 2K 2 for positive
values of Q. If it can buy L at 5 birr per unit, K at 8 birr per unit and has a budget of 70 Birr,
determine the maximum output that it can produce using substitution
method.------------------------------------------------------------------------------------------------------------
---------------------------------
5.Suppose the prices of inputs K and L are 12 birr and 3 birr per unit respectively and the
production function of the firm is Q= 25K0.5 L 0.5 . Determine the minimum costs of producing
1,250 units of output using Lagrange multiplier
method.------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------
6. Suppose a consumer has a utility function of U = 40x 0.5 y0.5 .If the price of x is 20 birr per unit,
price of y is 5 birr unit and the consumer has a budget of 600 birr . Determine the amount of x
and y which maximize utility using the Lagrange multiplier method.
---------------------------------------------------------------------------------------------------------------------
-----------------------------------

Have you answered these questions? If your answer is no, reread this section and try to answer
them. If yes, good. Go to the next section.

Section 4.3 Inequality Constraints and Kuhn - tucker Theorems, and Mixed
Constraints
Up on the completion of this section you are expected to

- describe what nonlinear programming is

- describe the Kuhn - Tucker conditions
- explain about the constraint qualification
- describe the Kuhn - Tucker
103sufficiency theorem
- describe the case of Mixed constraints
- show economic application of this theorem
Nonlinear programming

Dear colleague! I think you know about the concept of linear programming in your
quantitative method for economists II (Econ. 236) studies. What is nonlinear programming?
Discuss with your friends and try to answer this question. Write the answer on a rough
paper.--------------------------------------------------------------------------------------------------------------
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-----------
Have you answered this question? Ok, Good. Evaluate your answer with the following analysis.
The problem of optimization of an objective function subject to certain restrictions or constraints
is a usual phenomenon in economics. Mostly, the method of maximizing or minimizing a
function includes equality constraints. For instance, utility may be maximized subject to a fixed
income that the consumer has and the budget constraint is given in the form of equation. Such
type of optimization is referred to as classical optimization. But objective function subject to
inequality constraints can be optimized using the method of mathematical programming. If the
objective function as well as the inequality constraints is linear, we will use a method of linear
programming. However, if the objective function and the inequality constraints are nonlinear, we
will apply the technique of nonlinear programming to optimize the function.

Maximization problem of non - linear programming

Maximize  = f ( x1 , x 2 , x3 ,....., x n )
Subject to g ( x1 , x 2 , x3 ,..., x n )  k1
1

g 2 ( x1 , x 2 , x3 ,..., x n )  k 2
g 3 ( x1 , x 2 , x3 ,..., x n )  k 3
: : :
g ( x1 , x 2 , x3 ,..., x n )  k m
m xj  0 ( j  1,2,3....., n)
and ,

The minimization Problem can be expressed in the form of

Minimize C = f ( x1 , x 2 , x3 ,....., x n ) )
Subject to g ( x1 , x 2 , x3 ,..., x n )  k1
1

g 2 ( x1 , x 2 , x3 ,..., x n )  k 2
g 3 ( x1 , x 2 , x3 ,..., x n )  k 3
: : : :
g ( x1 , x 2 , x3 ,..., x n )  k m ,
m x j  0 ( j  1,2,3....., n)
Where C- represents total cost which is the objective function.
x j - is the amount of output produced
k i - is the constant of the constraint function
g i - is the constraint function.

104
We have observed from the above expression that the nonlinear programming also includes three
ingredients. These are
- the objective function
- a set of constraints ( inequality )
- non - negativity restrictions on the choice variable

The objective function as well as the inequality constraints is assumed to be differentiable with
respect to each of the choice variables. Like linear programming we apply on  constraints for
maximization and minimization problem involves only  constraints.

Example1
1.Find the values of x and y of the following function graphically.
a) Minimize C  x 2  y 2
Subject to x y  25
x, y  0
Dear colleague! First we should convert the inequality constraint in to equality as xy  25 and
draw the graph of this constraint function on the xy plane.

x 1 2 3 4 5 6 7 ...............................25
y 25 12.5 8.3 8.3 5 4.6 3.57 ..........................1

Fig.(a)

The shaded region in the above figure represents the feasible region. Let us evaluate the objective
function C at points A, B, C, D and E on the graph.

At point a (1, 25), C=12+ 252 = 1+ 625 = 626

At point B (4, 6.3), C = 42 + (6.3) 2 - 16+ 39.69 = 55.69
At point c (5, 5), C = 52 + 52 = 25 + 25 = 50

105
At point d (6, 4.6) C = 62 + (4.6) 2 = 36 + 21.16 = 57.16
At point E (25, 1) , C = ( 25) 2 + 12 = 625 + 1 = 626

Therefore, the value of x and y which minimizes the objective function are 5 and 5 respectively.
The minimum value is C = 50.

b) Maximize  = x2 + (y - 2) 2
Subject to 5x + 3y  15
And x, y  0

Solution
Similar to that of problem a, we should convert the inequality constraint in to equality constraint
and draw its graph in the x y plane. It is 5x + 3y = 15

X 0 1 2 3
Y 5 3.3 1.67 0

Fig.(b)

The shaded region of the above figure represents the feasible region as every point in this
feasible region satisfies the inequality constraint 5 x + 3y  15.

Evaluating the objective function at points A, B, C and D of the above graph (fig. b),
At point A (0, 5),  = 02 + (5 - 2)2 = 0 + 9 = 9
At point B (1, 3.3),  = 12+ (3.3 - 2) 2 = 1+ 1.69 = 2.69
At point C (2, 1.67),  = 22 + (1.67 - 2)2 = 4 + 0.1089 = 4.1089
At Point D (3, 0),  = 32 + 9 (0 - 2)2 = 9+ 4 = 13
Therefore, the objective function is maximized when x = 3 and
y = 0. The maximum profit is  = 13

In general, we can distinguish the nonlinear programming from that of linear one based on the
following points.
1.In nonlinear programming the field of choice not necessarily locates at its extreme points.
2. The number of constraints may not be the same with the choice variables.
3. Following the same direction in a movement may not lead to a continually increasing or
(decreasing) value of the objective function.

4. The feasible region may not be a convex set.

5. A local optimum may not be a global optimum.

106
Kuhn - Tucker Conditions

Dear colleague! In the previous sections of this unit, we have discussed about optimization
problems of the objective function with equality constraints and without explicitly restricting the
sing of the choice variables. In this case, the first order condition is satisfied provided that the
first order partial derivative of the Lagrange function with respect of each choice variable and
with respect to the Lagrange multiplier is zero. For instance, in the problem

Maximize  = f ( x, y )
Subject to g ( x, y )  k
The Lagrange function is
L  f ( x, y )   ( k  g ( x, y ))
The first order condition states that
L x  L y  L  0

In non-linear programming, there is a similar first order condition which is referred to as Kuhn -
Tucker conditions. As we discussed previously, in classical optimization process, the first order
condition is a necessary condition. However, a certain condition should be fulfilled for the Kuhn -
Tucker conditions to be necessary conditions.

Dear colleague! Now let us discuss Kuhn - Tucker conditions in two steps for the purpose of
making the explanation easy to understand.

Step 1
In the first step, let us take a problem of optimizing the objective function with non negativity
restrictions and with no other constraints. In economics, the most common inequality constraint is
non negativity constraint.
Maximize  = f(x)
Subject to x  0
provided that the function is supposed to be continuous and smooth. Based on the restriction x
 0, we may have three possible results. As shown in the following figures.

107
When the local maximum resides in side the shaded feasible region as shown above at point B of
fig (i), then we have an interior solution. In this case, the first order condition is similar to that of
d
the classical optimization process, i.e., = 0.
dx

Diagram (ii) shows that the local maximum is located on the vertical axis indicated by point C. At
d
this point, the choice variable is 0 and the first order derivative is zero, i.e. = 0, at point C
dx
we have a boundary solution.

Diagram (iii) indicates that the local maximum may locate at point D or point E with in the
d
feasible region. In this case, the maximum point is characterized by the inequality <0
dx
because the curves are at their decreasing portion at these points.

Therefore, from the above discussion it is clear that the following three conditions have to be met
so as to determine the value of the choice variable which gives the local maximum of the
objective function.

f ( x)  0 , and x > 0 (point B)

f ( x )  0 , and x = 0 (point C)
f ( x )  0 , and x = 0 (point D and E)
Combining these three condition in to one statement given us
f ( x)  0 x0 and xf ( x )  0

d
The first inequality indicates the information concerning . The second inequality shows the
dx
non negativity restriction of the problem. The third part indicates the product of the two quantities
x and f (x) .The above statement which is a combination of the three conditions represents the
first order necessary condition for the objective function to achieve its local maximum provided
that the choice variable has to be non negative.

If the problem involves n - choice variables like

Maximize   f ( x1 , x 2 , x3 ,...x n )
Subject to xi  0
The first order condition in classical optimization process is
f 1 = f 2 = f 3 = -------= f n = 0
The first order condition that should be satisfied to determine the value of the choice variable
which maximizes the objective function is
fi  0 xi  0 and x i f i = 0 (i =1, 2, 3, -------, n)
Where f i is the partial derivative of the objective function with respect to xi , i.e.,

fi  .
xi
Step 2

108
 Dear colleague! Now we continue to the second step. To do this, let us attempt to incorporate
inequality constraints in the problem. In order to simplify our analysis, let us first discuss about
maximization problem with three choice variables and two constraints as shown below.
Maximize  = f ( x1 , x 2 , x3 )
Subject to g ( x1 , x 2 , x 3 )  k1
1

g 2 ( x1 , x 2 , x3 )  k2
And x1, x2, x3  0

Using the dummy variables s1 and s2 we can change the above problem in to
Maximize  = f ( x1 , x 2 , x3 )
Subject to g ( x1 , x 2 , x3 )  s1  k1
1

g 2 ( x1 , x 2 , x3 )  s 2  k 2
And x1, x2, x 3  0 and s1, s2  0

We can formulate the Lagrange function using the classical method provided that the non
negativity constraints of the choice variables are not existed as
L  f ( x1 , x 2 , x3 )  1 [k1  g 1 ( x1 , x 2 , x3 )  s1 ]   2 [ k 2  g 2 ( x1 , x 2 , x3 )  s 2 ]

It is possible to derive the Kuhn Tucker conditions directly from the Lagrange function.
Considering the above 3-variable 2-constraints problem
The first order condition is

L L L L L L L
= = = = = = =0
x1 x 2 x 3 s1 s 2  2 1

However, x j and s i variable are restricted to be non negative. As a result, the first order
conditions on these variables ought to be modified as follows.
L L
x j
 0 xj  0 and x j
x j
=0

L
L
0 i 
and i s i = 0
s s
s i 0

L
i = 0 Where (i = 1, 2 and j= 1, 2, 3)
However, we can combine the last two lines and thereby avoid the dummy variables in the above
L
first order condition as shown below. As  i , the second line shows that
s i
 i  0, , S i  0 and – S i  i = 0
or
i  0, S i  0 and S i  i = 0

But, we know that si  k i  g ( x1 , x 2 , x3 ) . By substituting it in place of s i , we can get

i

k i  g i ( x1 , x 2 , x3 )  0 , i  0 and i [ k i  g i ( x1 , x 2 , x3 ) ] =0
Therefore, the first order condition without dummy variables in expressed as

109
 L L
x j  0 x j  0 and x j
x j
=0

L
= k i  g ( x1 , x 2 , x3 )  0 i  0 and i [ k i  g i ( x1 , x 2 , x3 ) ]
i
i
=0
These are the Kuhn - tucker conditions for the given maximization problem.

Dear colleague! How can we solve minimization problem? Discuss with your friends and
try to answer this question.
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---------------------------------------------------------------------------------------------------
Have you answered this question? Ok good. Read the upcoming discussion and evaluate your
answer with reference to it. One of the methods to solve this problem is changing it in to
maximization problem and then applies the same procedure with maximization.
Minimizing C is similar to maximizing (  C ). However, keep in mined the fact that we have
to multiply each constraint inequalities by (  1 ).We can directly apply the Lagrange multiplier
method and determine the minimization version of Kuhn - Tucker condition instead of converting
the inequality constraints into equality constraints using dummy variables as
L L
x j  0 and x j
x j 
0 =0
x j
L L
i
 0  i 0 and i
i
= 0 (minimization)

Example
2. Let us check whether the solutions of our example 1 satisfy the Kuhn - Tucker conditions or
not

a) Minimize C= x2+ y2
Subject to x y  25
and x, y  0

The Lagrange function for this problem is

L = x2 + y2 +  (25 – x y)
It is a minimization problem. Therefore, the appropriate conditions are
L L
= 2x -  y  0 , x  0 and x =0
x x
L L
= 2 y - x  0 , y  0 and y =0
y y
L L
= 25 – x y  0,   0 and  =0
 
Dear colleague! Can we determine the non negative value  which will satisfy all the above
conditions together with the optimal solution x and y? The optimal solutions in our earlier
L
discussion are x = 5 and y = 5, which are nonzero. Thus, the complementary slackness ( x
x
L L L
= 0, y = 0) shows that  0. and = 0.
y x y

110
 Thus, we can determine the value of  by substituting the optimal values of the choice variables
in either of these marginal conditions as
L
= 2x - y = 0
x
2(5) -  (5) = 0
10 - 5  = 0
 =2>0
L L L
This value  = 2, x = 5 & y = 5 imply that = 0, = 0, = 0 which fulfils the
x y 
marginal conditions and the complementary slackness conditions. In other words, all the Kuhn -
Tucker conditions are satisfied.

3. Maximize Z  10 x  x 2  180 y  y 2
x  y  80
Subject to x, y  0
Solution

Dear colleague! First we should formulate the Lagrange function assuming the equality constraint
and ignoring the non negativity constraints.
L  10 x  x 2  180 y  y 2   (80  x  y )
The first order conditions are
L
 10  2 x    0    10  2 x              (1)
x
L
 180  2 y    0    180  2 y            ( 2)
y
L
 80  x  y  0  x  y  80                (3)

Taking equation (1) and (2) simultaneously
10  2 x  180  2 y
2 y  2 x  170
2 y  170  2 x
y  85  x                                (4)
If we substitute equation (4) in to (3), we get
x  85  x  80
2 x  5  x  2.5
However, the value of the choice variables is restricted to be non negative. x   2.5 is
infeasible. We must set x= 0 since it has to be non negative. Now we can determine the value of
y by substituting zero in place of x in equation (3) .
0  y  80
y   80
Therefore,   180  2(80)  20
The possible solutions are x   0, y   80,   20
However, we must check the inequality constraints and the complementary slackness conditions
to decide whether these values are solutions or not.
1) Inequality constraints
i) The non negativity restrictions are satisfied since x  0, y  80,   20  0
ii) Inequality constraints

111
 x  y  80
0  80  80
2) Complementary Slackness conditions
L L
i) x  0, x  0   0 as the problem is maximization.
x x
L
 10  0
x
L L
ii) y  0, y  80  0  0
y y
L
 180  2(80)  20  0
y
L L
  0,   20  0  0
 
iii)
L
 80  0  80  0

All the Kuhn Tucker conditions are satisfied. Thus, the objective function is maximized when
x   0, y   80,   20 .

Constraint Qualification

We have studied that the Kuhn Tucker conditions are necessary conditions if and only if a
particular precondition is fulfilled. This precondition is referred to as constraint qualification and
it imposes some restriction on the constraint function of nonlinear programming so as to avoid
some irregularities on the boundary of the feasible region that would affect the fulfillment of the
Kuhn-Tucker condition at the optimal solution.

There will be not a boundary irregularity provided that a certain constraint qualification is met.
In order to describe it, let us say x  ( x1 , x 2 , x3 ,...., x n ) be boundary points on the feasible
region and suppose dx  (dx1 , dx 2 , dx 3 ,..., dx n ) indicates a specific direction of movement
from the boundary point. Thus, we have a vector dx . By now let us put two requirements on
vector dx .
1. dx j  0 if x j  0
2. dg ( x )  g1 dx1  g 2 dx 2  ....  g n dxn  0 for maximization if g ( x )  k i .
i i i i i

 0 for minimization if g i ( x )  k i .
If the vector dx fulfils these two conditions, it is referred to as the test vector. When there is a
differentiable arc which
 originates from x
 included in the feasible region
 is tangent to the given test vector , it is known as a qualifying arc for the given test
vector.
The existence of this qualifying arc for each test vector dx at any point x on the boundary of the
feasible region satisfies constraint qualification.

Kuhn Tucker Sufficiency Theorem

Dear colleague! As we have discussed in the classical approach the sign of the second order
derivative of the function provides the sufficient condition for maximum and minimum of a

112
function. These conditions have intimacy with the concept of convexity and concavity of a
function. In nonlinear programming, we can express the sufficient condition for the optimum of
the function in terms of convexity and concavity of a function.

Given the problem

Maximize   f (x )
Subject to g ( x )  k i (i=1, 2, 3… n) and x  0
i

The Kuhn - Tucker sufficient conditions are satisfied provided that

1) the objective function is differentiable and concave in non negative orthant.

2) each constrain function is differentiable and convex in the negative orthant
3) the point x satisfies the Kuhn -Tucker maximum condition

For minimization problem you can easily add the Kuhn - Tucker minimum condition on
condition (1) and ( 2) above to determine whether the Kuhn - Tucker sufficient condition is
satisfied or not.

Proof
Given the problems
Maximize   f (x )
Subject to g ( x )  k i
i

and x  0
The Lagrange function is shown as
m
L= f(x) +   [k
i 1
i i  g i ( x)]

If we give specific value for the Lagrange multiplier i , L will be a function of x. According to
condition (1) and (2) above, assume f(x) as concave and g i (x) as convex when we multiply it by
(-1) gives us  g i (x ) ) that is concave. Therefore, The L functions will be concave function (sum
of two concave functions) in x.
The Lagrange function L is concave means that
n
L
L( x )  L ( x )   (x j  x j )
j 1 x j

L
When x represents some particular point in the domain refers to the partial derivative
x j
L
examined at x . Now let’s choose the value of the choice variable x and the value of the
x j
Lagrange multiplier in line with condition (3) above, i.e. which satisfy the Kuhn tucker maximum
condition. If we decompose terms in the summation we get
n
L n
L n
L
j 1 x j
( x j  x j )  j 1 x j
x j  
j 1 x j
xj

By the application of complementary slackness at point x j , this expression is reduced to

n
L

j 1 x j
xj

113
 L
From this expression we know that  0 (marginal condition) and x j  0 as it is a choice
x j
variable. As a result the reduced expression is non positive. Thus we can conclude that
L( x)  L ( x ) . This indicates that x is the optimal solution.

Economic Application

Example
4. Given the revenue and cost conditions of a firm as R  32 x  x 2 and C  x 2  8 x  4 , where
x output is. Suppose the minimum profit is  0  18 .Determine the amount of the out put which
maximizes revenue with the given minimum profit. In this case, the revenue function is concave
and the cost function is convex.
The Problem is
Maximize R  32 x  x 2
Subject to x 2  8 x  4  32 x  x 2  18
And x  0

Under these situations the Kuhn - Tuck en conditions are necessary and sufficient conditions as
all of the above three conditions, i.e., (1), (2), 4(3), are satisfied.

The Lagrange function of this problem is

L  32 x  x 2   (22  2 x 2  24 x)                (1)
Thus,
L
 32  2 x  4x  24  0                  (2)
x
L
 22  2 x 2  24 x  0                    (3)

 22  2 x 2  24 x  0
From equation (3)
2 x 2  24 x  22  0                      ( 4)
3 1
Solving (4) we get, x  1 or x  11 .   0r  
2 2
However, we must check the inequality constraints and the complementary slackness conditions
to decide whether these values are the solutions or not
L L
 0, x0 and x  0, -----------------------------(5)
x x
L L
 0, 0 and   0, -----------------------------(6)
 
At X=1
L L 3
At this point x  0 this implies that  0, Thus  30  20  0    .It does not
x x 2
satisfy equation (6).
L L 1
At X=11, x  0 this implies that  0, Thus  10  20  0    . It satisfies both
x x 2
equation (5) and (6). This means, the Kuhn Tucker conditions are fulfilled at x  11 .Therefore,
revenue is maximized when x  11 .

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Mixed constraints

Dear colleague! An optimization problem with mixed constraints can be reformulated either as
maximization or minimization problem. This procedure incorporates the following conditions.
i) Maximizing the objective function Z (x) is equivalent to the problem of Minimizing
 Z (x ) or vice versa-
ii) The constraint g ( x)  c can be presented as  g ( x)  c .
iii) The constraint g ( x )  c is equivalent to the double constraint g ( x)  c and
 g ( x )  c
iv) The non negativity constraint x  o can be denoted by a new constraint g ( x )   x  0 .

Dear colleague! By now you have completed this section. Therefore, try to do the following
questions.

Self - Test 4.3

Solve the following questions based on the information above.

1. Describe non linear programming
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2. Explain the difference between linear programming and non lines one
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3. What are the ingredients of non linear programming problems?
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4. Write the Kuhn - Tucker condition of the problem

Maximize U  U ( x1 , x 2 , x 3 ,...., x n )
Subject to p1 x1  p 2 x 2  p3 x3  ..... p n x  B
And x1 , x 2 , x 3 ,.....x n  0
When xi represents goods consumed and p i represent the respective price of these goods.
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5. Check whether the Kuhn - Tucker conditions are satisfied or not for the problem given in
example 1 (b) at the optimal values of x and y.
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6. Minimize C = x2 + y2
Subject to x+ y  2
And x, y  0
Write out the Kuhn - Tucker conditions and use them to find the optimal solution by trial and
error, what are the values of x and y?

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7. Given the demand function of the firm is given as

1
P  12  x And the cost function is C  x 2 when the minimum profit is   24 , then
2
Maximize R  f (x )
Subject to C ( x)  R ( x)  24
And x 0
 Is the Kuhn - Tucker condition satisfied or not?
 Determine the value of x using trial and error.

Dear colleague! Have you answered these questions? If no, please reread this section and try to
do them. If yes, go to the next section.

Check List

Write √ inside the box which corresponds to the problem that you can solve easily.
1. Can you explain constrained function? ------------------------------------------------------- -----
2. Describe what constrained optimization is ----------- ---------------------------------------------
3. Describe the order condition for the optimization of constrained function. -------------------
4. Explain the Lagrange multiplier----------------------------------------------------------------- ----
5. Describe how functions with inequality constraints are solved----------------------------------
6. Describe the Kuhn - Tucker theorem----------------------------------------------------------------
7. Solve objective function subject to mixed constants----------------------------------------------
8. Describe bordered Hessian determinant--------------------------------------------------------------
9. Explain nonlinear programming problem-----------------------------------------------------------

Dear colleague! Is there any box in which you didn't tick? If yes, please reread this unit and try to
do it. If no, very good Go to then next unit

Unit Summary

In business and economics studies there are many situations in which complete freedom of action
is impossible. For example, a firm can maximize output subject to the constraint of a given
budget for expenditures on inputs, or it may need to minimize cost subject to a certain minimum
out put being produced. Such functions which involve constraints are called constrained functions
and the process of optimization is referred to as constrained functions and the process of
optimization is referred to as constrained optimization.

The problem of optimization of an objective function subject to certain restrictions or constraints

is a usual phenomenon in economics. Mostly, the method of maximizing or minimizing a
function includes equality constraints. For instance, utility may be maximized subject to a fixed
income that the consumer has and the budget constraint is given in the form of equation. Such
type of optimization is referred to as classical optimization. But objective function subject to
inequality constraints can be optimized using the method of mathematical programming. If the
objective function as well as the inequality constraints is linear, we will use a method of linear

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programming. However, if the objective function and the inequality constraints are nonlinear, we
will apply the technique of nonlinear programming to optimize the function.

In non-linear programming, there is a similar first order condition which is referred to as Kuhn -
Tucker conditions. As we discussed previously, in classical optimization process, the first order
condition is a necessary condition. However, a certain condition should be fulfilled for the Kuhn -
Tucker conditions to be necessary conditions

Important points

Constrained function
Constrained optimization
Constraints
Lagrange Multiplier
Bordered Hessian determinant
Positive definite
Negative definite
Minimization
Maximization
Non linear Programming
Kuhn Tucker theorem
Non negativity constraint
Constraint Qualification

Answers for Self Test Questions

Self Test 4.1

1. The constrained maximum of the function is y  2 at x=2.
3
2. The function is maximized at x  .
4
27 1
3. y  At x 
4 6
4. y  4 At x  0
5. y  7 At x  0

Self Test 4.2

4) L  4.47, K  5.79;&Q  1,637.28

5) K  12.6 & L  21
6) TC  600birr
7) x  15 & y  60

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Self Test 4.3
6) x  1 & y  1 7) x  4

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