ECON 104: Mathematics for Economics

SMU School of Economics; Fall 2021

Homework Assignments
Instructor: Takashi Kunimoto
October 30, 2021

Throughout the semester, you are supposed to upload your work (in pdf
file) at “Assignments” at our class website (on eLearn) by 5:00pm on the date
specified below.

1 Homework 1 (Due Date: Aug 26 (Thu), 2021)

Question 1.1 (20 points) Let A = {2, 3, 4}, B = {2, 5, 6}, C = {5, 6, 2}, and
D = {6}. Answer the following questions.

1. Determine each of the following statements is true or false: 4 ∈ C; 5 ∈ C;

A ⊆ B; D ⊆ C; B = C; and A = B.

2. Find A ∩ B; A ∪ B; A\B; B\A; (A ∪ B)\(A ∩ B); A ∪ B ∪ C ∪ D; A ∩ B ∩ C;

and A ∩ B ∩ C ∩ D.

Question 1.2 (20 points) Consider the proposition 2x+5 ≥ 13. Answer the
following questions.

1. Is the condition x ≥ 0 necessary or sufficient, or both necessary and

sufficient for the inequality to be satisfied?

2. Answer the same question when x ≥ 0 is replaced by x ≥ 50.

3. Answer the same question when x ≥ 0 is replaced by x ≥ 4.

Question 1.3 (20 points) In each case below, find the slope of the tangent
to the graph of f at the specified point:

1. f (x) = 3x + 2, at (x, y) = (0, 2)

1
 2. f (x) = x2 − 1 at (x, y) = (1, 0)

3. f (x) = 2 + 3/x, at (x, y) = (3, 3)

4. f (x) = x3 − 2x, at (x, y) = (0, 0)

5. f (x) = x + 1/x, at (x, y) = (−1, −2)

6. f (x) = x4 , at (x, y) = (1, 1)

Question 1.4 (20 points) Let f (x) = ax2 + bx + c where a, b, c are nonzero
constants. Answer the following questions.

1. Show that
f (x + h) − f (x)
= 2ax + b + ah.
h
0
2. Using the previous result, show that f (x) = 2ax + b.
0
3. For what value of x is f (x) = 0?

Question 1.5 (20 points) Let f (x) = −x3 + 4x2 − x − 6. Examine where
f (x) is nondecreasing and/or nonincreasing.

2 Homework 2 (Due Date: Sep 2 (Thu), 2021)

Question 2.1 (4 points) Find the limit below precisely:

x2 + 7x − 8
lim .
x→1 x−1
Question 2.2 (12 points) Find the derivatives of the following functions,
where a, p, q, and b are constants.

1.
1
y=
(x2 + x + 1)5
2. r
√
q
y= x+ x+ x

3.
y = xa (px + q)b .

2
Question 2.3 (5 points) Let

t2
g(t) = .
t−1
00
Find g (2).
√
Question 2.4 (10 points) Let U (x) = x and g(u) = u3 . Then, show that
U (x) is a concave function but f (x) = g(U (x)) is “not” a concave function.

Question 2.5 (8 points) Find the first-order derivatives of the following func-
tions.

1. y = ex + x2

2. y = 5ex − 3x3 + 8

3. y = x/ex

4. y = (x + x2 )/(ex + 1).

Question 2.6 (15 points) Find the intervals where the following functions
are nondecreasing:

1. y = x2 /e2x

2. y = ex − e3x

3. y = e2x /(x + 2)

Question 2.7 (8 points) Compute the first and second derivatives of the fol-
lowing functions:

1. y = ln x + 3x − 2

2. y = x2 − 2 ln x

3. y = x3 ln x

4. y = (ln x)/x

Question 2.8 (12 points) Find the equation for the tangent to the graph of
the following functions:

1. y = ln x at the three points with x-coordinates: 1, 1/2, and e

3
 2. y = xex at the three points with x-coordinates: 0, 1, and −2

Question 2.9 (10 points) Suppose F is a differentiable function of one vari-

0
able, with F (0) = 0 and F (0) 6= −1, and that y is defined implicitly as a
differentiable function of x by the equation

x3 F (xy) + exy = x.
0
Find an expression for y at the point (x, y) = (1, 0).

Question 2.10 (16 points) Consider the extended standard macroeconomic

model which accommodates international trade as follows:
0
(i) Y = C + I¯ + X̄ − M ; (ii) C = f (Y ), with 0 < f (Y ) < 1; (iii) M = g(Y ).

Here X̄ is an exogenous constant that denotes exports, whereas M denotes the

volume of imports. The function g in (iii) is called an “import function,” which
0 0
is assumed to satisfy 0 < g (Y ) < f (Y ). Answer the following questions.

1. Obtain an equation that defines Y as a function of exogenous investment

¯
I.

2. Find an expression for dY /dI¯ by implicit differentiation.

¯
3. Discuss the sign of dY /dI.

4. Find an expression for d2 Y /dI¯2 .

3 Homework 3 (Due Date: Sep 9 (Thu), 2021)

Question 3.1 (12 points) Find dx/dy of the following functions:

1. y = e−x−5

2. y = ln(e−x + 3)

3. xy 3 − x3 y = 2x.

Question 3.2 (9 points) Find the linear approximations to the following func-
tions about x = 0:

1. f (x) = (1 + x)−1

2. f (x) = (1 + x)5

4
 3. f (x) = (1 − x)1/4

Question 3.3 (9 points) Let f (x) = 10 − 10e−x/2 be defined for all x ∈ R.

Answer the following questions.

1. Show that f (x) has an inverse function g(x).

2. What is the domain of g?

0
3. Note that f (0) = 0. Compute g (0).

Question 3.4 (10 points) Let f be defined for all x by

 2
x − 1 if x ≤ 0
f (x) =
−x2 if x > 0

Answer the following questions.

1. Draw a graph of the function f .

2. Is f continuous at x = 0?

Question 3.5 (12 points) Evaluate the following limits:

1.
lim (x2 − 3x + 2)
x→3−

2.
x2 − 3x + 14
lim +
x→−2 x+2
3. √
3− x + 17
lim
x→−1 x+1
4.  
1 5
lim − 2
x→3 x − 3 (x − x − 6)

Question 3.6 (12 points) Let f1 (x) = x, f2 (x) = x, f3 (x) = x2 , and f4 (x) =
1/x. Compute the following:

1. limx→∞ (f1 (x) + f2 (x))

2. limx→∞ (f1 (x) − f3 (x))

5
 3. limx→∞ f1 (x)/f3 (x)

4. limx→∞ f1 (x)f2 (x)

5. limx→∞ f1 (x)f4 (x)

6. limx→∞ f3 (x)f4 (x)

√
Question 3.7 (6 points) Compute the differential of f (x) = 1 + x3 . What
is the approximate change in f (x) when x changes from x = 2 to x = 2 + dx,
where dx = 0.2.
√
x
Question 3.8 (6 points) Prove that f (x) = e − 3 has a unique zero in the
interval (1, 4).

Question 3.9 (9 points) Find the domain of the following functions.

1. f (x, y) = 1/(ex+y − 3)

2. f (x, y) = ln(x − a)2 + ln(y − b)2 , where a, b ∈ R are constants.

3. f (x, y) = 2 ln(x − a) + 2 ln(y − b), where a, b ∈ R are constants.

Question 3.10 (9 points) Find all the first-order and second-order deriva-
tives (including cross derivatives) of the following functions.

1. f (x, y) = x7 − y 7

2. f (x, y) = x5 ln y

3. f (x, y) = (x2 − 2y 2 )5 .

Question 3.11 (6 points) Let

1
f (x, y) = ln(x3 − y) + 3(x − 1)y + (x + 1)y.
7
Show that the two points (x, y) = (e, 0) and (x, y) = (2, 7) are both on the same
level curve of f .

6
4 Homework 4 (Due Date: Sep 16 (Thu), 2021)
Question 4.1 (10 points) Find dz/dt for the following cases:

1. z = F (x, y) = x ln y + y ln x; x = t + 1; and y = ln t.

2. z = F (x, y) = ln x + ln y; x = Aeat ; and y = Bebt where A, B, a, b are

nonzero constants.

Question 4.2 (10 points) Find ∂z/∂t and ∂z/∂s for the following cases:

1. z = F (x, y) = x + y 2 , where x = t − s and y = ts.

2. z = F (x, y) = 2x2 + 3y 3 , where x = t2 − s and y = t + 2s3 .

Question 4.3 (16 points) Let u = ln(x3 + y 3 + z 3 − 3xyz). Answer the

following questions.

1. Show that
∂u ∂u ∂u
x +y +z = 3.
∂x ∂y ∂z
2. Show that  
∂u ∂u ∂u
(x + y + z) + + = 3.
∂x ∂y ∂z

Question 4.4 (16 points) A curve in the xy-plane is given by the equation
2x2 + xy + y 2 − 8 = 0. Answer the following questions.
0 00
1. Find y , y and the equation for the tangent at the point (x, y) = (2, 0).

2. Which points on the curve have a horizontal tangent?

Question 4.5 (12 points) Suppose that a firm has a single√input L and a
single output Q. The production function is Q = f (L) = L. This firm
maximizes its profit π(L), given that p (output price) and w (wage for a worker)
√ parameters given by the market. Then, we have π(L) = pQ − wL =
are
p L − wL. Answer the following questions.
0
1. Find L∗ such that π (L∗ ) = 0.

2. Express L∗ obtained in the previous question as a function p and w, that

is, L∗ (p, w). Find ∂L∗ (p, w)/∂w. Interpret the sign of ∂L∗ (p, w)/∂w.

3. Find ∂L∗ (p, w)/∂p. Interpret the sign of ∂L∗ (p, w)/∂p.

7
Question 4.6 (12 points) Let f (x, y) = 3x2 + xy − y 2 . Answer the following
questions.

1. Compute f (1.02, 1.99) exactly.

2. Let f (1.02, 1.99) = f (1 + 0.02, 2 − 0.01) and use a linear approximation

around (1, 2) to find an approximate numerical value for f (1.02, 1.99).
How large is the approximation error?

Question 4.7 (12 points) Let

       
2 4 −2 4 2 3 1 1
A= ; B= ; C= ; and D = .
1 2 1 −2 6 9 1 3

Calculate 3A + 2B − 2C + D, AB, and C(AB).

Question 4.8 (12 points) Let

   2 
p q 0 p 2pq q 2
T =  p/2 1/2 q/2  and S =  p2 2pq q 2 
0 p q p2 2pq q 2

be two matrices where p, q are constants such that p + q = 1. Answer the

following questions.

1. Prove that T S = S.

2. Prove that T 2 = T /2 + S/2.

3. Prove that T 3 = T /4 + 3S/4.

5 Homework 5 (Due Date: Sep 23 (Thu), 2021)

Question 5.1 (12 points) Use Cramer’s rule to solve the following system
of equations.

x1 − x2 + x3 = 2
x1 + x2 − x3 = 0
−x1 − x2 − x3 = −6.

Question 5.2 (12 points) Prove that each of the following determinants is
zero:

8
 1.  
 1 2 3 
 
 2 4 5 .
 
 3 6 8 

2.  
 1 a b+c 
 
 1 b c+a ,
 
 1 c a+b 
where a, b, c are constants.

3.  
 x − y x − y x2 − y 2 
 
 1 1 x+y ,
 
 y 1 x 
where x, y are constants.

Question 5.3 (15 points) Calculate the following determinants. Please leave
all the details of the process of derivation for determinants.

1.  
 1 2 4 
 
 1 3 9 
 
 1 4 16 

2.  

 1 2 3 4 

 0 −1 0 11 

 2 −1 0 3 
 −2 0 −1 3 

3.  

 2 1 3 3 


 3 2 1 6 


 1 3 0 9 

 2 4 1 12 

Question 5.4 (12 points) Find the inverse of

 
−2 3 2
A =  6 0 3 .
4 1 −1

You are asked to leave all the details of the process of derivation for A−1 .

9
Question 5.5 (8 points) Let A be a 2 × 2 matrix as follows:
 √ 
1 −1 − 3
A= √ .
2 3 −1

Answer the following questions.

1. Show that A3 = I.

2. Use the previous result to find A−1 .

Question 5.6 (5 points) Suppose that X is an m×n matrix and that |X T X| =

6
T −1 T
0. Let A be defined as A = Im − X(X X) X , where Im denotes the m × m
identity matrix. Show that A2 = A.

Question 5.7 (10 points) Find a matrix X that satisfies AB + CX = D,

where
 
  3 1    
−2 0 1 1 2 −9 3
A= ; B=  0 1 ; C=
 ; and D = .
1 −1 5 3 4 −8 17
−1 2

Question 5.8 (12 points) Consider the following homogeneous system of equa-
tions:

ax + by + cz = 0
bx + cy + az = 0
cx + ay + bz = 0,

where a, b, c are constants. Prove that this system has a nontrivial solution if
and only if a3 + b3 + c3 − 3abc = 0.

Question 5.9 (4 points) Express the vector (4, −11) as a linear combination
of (2, −1) and (1, 4).

Question 5.10 (10 points) Find the equation for the plane going through the
points (1, 0, 2), (5, 2, 1), and (2, −1, 4).

6 Homework 6 (No Need for Submission)

Question 6.1 The two equations u2 v − u = x3 + 2y 3 and eux = vy define u
and v as differentiable functions of x and y around the point P = (x, y, u, v) =
(0, 1, 2, 1). Answer the following questions.

10
 1. Find the differentials of u and v expressed in terms of the differentials of
x and y.

2. Find ∂u/∂x and ∂v/∂x at P .

3. Find ∂u/∂y and ∂v/∂y at P .

4. If x increases by 0.1 and y decreases by 0.2 from their values at P , what

are the approximate changes in u and v?

Question 6.2 Show that f (x, y) = x3 +xy is “not” homogeneous of any degree.
(Hint: Use the proof by contradiction by focusing on a particular point (x, y) =
(1, 1) and two particular values of t = 2, 4.)

Question 6.3 Let f (x, y) = xy/(x2 + y 2 ). Answer the following questions.

1. Show that the function f is homogeneous.

2. Explicitly check Euler theorem holds in this case.

Question 6.4 The following system of equations defines x = x(u, v) and y =

y(u, v) as differentiable functions of u and v around the point P = (x, y, u, v) =
(1, 4, 1, −1).

y 2 + 2u2 + v 2 − xy = 15
2y 2 + u2 + v 2 + xy = 38.

Think of u and v as exogenous (i.e., independent) variables and x and y as

endogenous (i.e., dependent) variables. Answer the following questions.

1. Find the differentials of x and y expressed in terms of the differentials of

u and v.

2. Use Cramer’s rule to find ∂x/∂u and ∂y/∂u at P .

3. Use Cramer’s rule to find ∂x/∂v and ∂y/∂v at P .

4. Compute the approximate values of x and y that correspond to u = 0.9

and v = −1.1.

Question 6.5 We consider the function f (x, y) = y 3 + 3x2 y. Answer the

following questions.

1. Determine the degree of homogeneity of f .

11
 2. Find the slope of the tangent line to the level curve f (x, y) = −13 at an
arbitrary point on the curve, and find in particular the equation of the
tangent line at the point (2, −1).

3. Examine whether the level curve f (x, y) = −13 is convex or concave

around the point (2, −1).

4. Show that no point on the level curve f (x, y) = −13 lies above the x-axis.

Question 6.6 Consider the following maximization problem:

1
max f (x) = − x3 + 2x2 − 2x − 72,
x∈D 3
where D = {x| x ≥ 0} is the constraint set. Then, obtain the solution to
this maximization problem. You are required to obtain this answer analytically
without resorting to any graphical method.

Question 6.7 Let  

a11 a12 a13
A =  a21 a22 a23 
a31 a32 a33
be a 3×3 matrix where aij is a constant for each i, j = 1, 2, 3. Let |A| denote the
determinant of a matrix A and Aij denote the cofactor corresponding to (i, j)
component of the matrix A. Assume |A| = 6 0. A linear system of 3 equations
and 3 unknowns is given as follows:

a11 x1 + a12 x2 + a13 x3 = b1

a21 x1 + a22 x2 + a23 x3 = b2 (∗)
a31 x1 + a32 x2 + a33 x3 = b3 ,

where bj is a constant for each j = 1, 2, 3. We begin by assuming that (c1 , c2 , c3 )

is a solution to (∗) so that

a11 c1 + a12 c2 + a13 c3 = b1

a21 c1 + a22 c2 + a23 c3 = b2 (∗∗)
a31 c1 + a32 c2 + a33 c3 = b3 ,

Answer the following questions

1. Show that for each j, k = 1, 2, 3 with j 6= k,

a1k A1j + a2k A2j + a3k A3j = 0.

12
 2. We multiply the first equation in (∗∗) by the cofactor A11 ; multiply the
second equation in (∗∗) by A21 ; and finally multiply the third equation
in (∗∗) by A31 . Then, we add all the equations so obtained. The result
is

(a11 A11 + a21 A21 + a31 A31 )c1 + (a12 A11 + a22 A21 + a32 A31 )c2
+ (a13 A11 + a23 A21 + a33 A31 )c3 = b1 A11 + b2 A21 + b3 A31 .

Show that c1 = A1 /|A|, where

 
 b1 a12 a13 
 
A1 =  b2 a22 a23 .

 b3 a32 a33 

3. Show that c2 = A2 /|A| and c3 = A3 /|A|, where

   
 a11 b1 a13   a11 a12 b1 
  
A2 =  a21 b2 a23  and A3 =  a21 a22 b2  .
 a31 b3 a33   a31 a32 b3 

In doing so, you are required to provide the whole derivation process
which justify your answer.

Question 6.8 Let a and b be positive constants and α be a constant such that
0 < α < 1. Let f (x) = ln(αax + (1 − α)bx ). Answer the following questions.
0
1. Using the notion of limits, provide the precise definition of f (x).
0
2. Compute f (x).
0
3. Compute f (0).

4. Compute the following:

1
lim αah + (1 − α)bh h .

h→0

HINT: Use the following relation: X = eln X where X = (αah + (1 −

α)bh )1/h .

Question 6.9 Find local maximum/minimum points for the following func-
tions:

1. y = (x + 2)e−x

13
 2. y = ln x + 1/x

3. y = x3 e−x .

Question 6.10 Find the values of x that maximizes/minimize the following

functions:

1. f (x) = ex + e−2x

2. f (x) = 9 − (x − a)2 − 2(x − b)2 , where a, b are constants.

3. f (x) = ln x − 5x, where x > 0.

Question 6.11 Find the maximum and minimum of each function over the
indicated interval.

1. f (x) = −2x − 1 over [0, 3]

2. f (x) = x3 − 3x + 8 over [−1, 2]

3. f (x) = (x2 + 1)/x over [1/2, 2]

Question 6.12 Consider a firm that produces a single commodity to maximize

its profit. The total revenue generated in a certain period by producing and
selling Q units is R(Q) = 10Q − Q2 /1000 dollars for Q ∈ [0, 10000], whereas
C(Q) = 5000 + 2Q for Q ≥ 0 denotes the associated total dollar cost. Find the
value of Q that maximizes profit.

Question 6.13 Find local maximum/minimum points and inflection points

for the following functions.

1. f (x) = (ln x)/x2

2. f (x) = e2x − 2ex

3. f (x) = (x2 + 2x)e−x

Question 6.14 Let f (x) = x2 /(x2 + 2). Answer the following questions.
0
1. Compute f (x) and determine where f (x) is increasing/decreasing.

2. Find possible inflection points.

3. Determine the limit of f (x) as x → ±∞.

14
7 Homework 7 (Due Date: Oct 21 (Thu), 2021)
Question 7.1 (10 points) Investigate the definiteness of the following quadratic
forms.

1. Q(x1 , x2 ) = −x21 + 2x1 x2 − 6x22

2. Q(x1 , x2 ) = 4x21 + 2x1 x2 + 25x22

Question 7.2 (10 points) Investigate the definiteness of the following sym-
metric matrices.

1.  
2 3
A=
3 7

2.  
2 4
B=
4 7

Question 7.3 (12 points) Annual profits for a firm are given by

π(x, y) = −x2 − y 2 + 22x + 18y − 102,

where x is the amount spend on research, and y is the amount spent on adver-
tising. Answer the following questions.

1. Find the profit when (x, y) = (10, 8).

2. Find the profit when (x, y) = (12, 10).

3. Find the only possible values of x and y that can maximize profits, and
the corresponding profit.

Question 7.4 (12 points) A firm produces two different kinds, A and B, of
a commodity. The daily cost of producing x units of A and y units of B is

C(x, y) = 2x2 − 4xy + 4y 2 − 40x − 20y + 514.

Suppose that the firm sells all its output at a price per unit of $24 for A and
$12 for B. In what follows, you can assume that there is a solution to the profit
maximization problem. Answer the following questions.

1. Find the daily production levels x and y that maximize profit.

15
 2. The firm is required to produce exactly 54 units per day of the two kinds
combined What is the optimal production plan now?

Question 7.5 (12 points) Consider the function f defined for all (x, y) by
f (x, y) = 5 − x2 + 6x − 2y 2 + 8y. Answer the following questions.

1. Find its all partial derivatives of first and second order.

2. Find the only stationary point and classify it by using the second-derivative
test.

Question 7.6 (12 points) Consider a firm that sells a product in two iso-
lated geographical areas. If it wants to, it can charge different prices in the
two different areas because what is sold in one area cannot easily be resold
in the other. Suppose that this monopolist faces two inverse demand func-
tions P1 (Q1 ) = 200 − 2Q1 and P2 (Q2 ) = 180 − 4Q2 , and the cost function is
C(Q1 , Q2 ) = 20(Q1 + Q2 ). Answer the following questions.

1. How much should be sold in two markets to maximize total profit? What
are the corresponding prices?
2. How much profit is lost if it becomes illegal to discriminate prices?

Question 7.7 (16 points) Find the maximum and minimum points for the
following problems.

1. f (x, y) = x3 + y 3 − 9xy + 27 subject to 0 ≤ x ≤ 4 and 0 ≤ y ≤ 4.

2. f (x, y) = x2 + 2y 2 − x subject to x2 + y 2 ≤ 1.

Question 7.8 (16 points) A firm uses capital K, labor L, and land T to
produce Q units of a commodity, where

Q = K 2/3 + L1/2 + T 1/3 .

Suppose that the firm is paid a positive price p for each unit it produces, and
the positive prices it pays per unit of capital, labor, and land are r, w, and q,
respectively. Answer the following questions.

1. Express the firm’s profit as a function π of (K, L, T ).

2. Find the values of K, L, and T , as functions of the four prices, that
maximizes the firm’s profit. Here we assume that a maximum exists.
3. Let Q∗ denote the optimal number of units produced and K ∗ the optimal
capital stock. Show that ∂Q∗ /∂r = −∂K ∗ /∂p.

16
8 Homework 8 (Due Date: Oct 28 (Thu), 2021)
Question 8.1 (25 points) Consider the following problem:

max xy subject to x + 3y = 24.

(x,y)∈R2

Answer the following questions.

1. Use Lagrangian method to find the uniuqe solution candidate.

2. Show whether the solution candidate found in previous question is indeed

a solution or not.

Question 8.2 (25 points) Consider the following minimization problem with
an equality constraint:

min x2 + y 2 subject to x + 2y = a,
(x,y)∈R2

where a is a constant. Answer the following questions.

1. Solve this constrained minimization problem. Do not use the Lagrangian

method for this question.

2. Show that the Lagrangian method leads to the same solution you ob-
tained in the previous question.

3. Verify that the derivative of the optimal value of the objective function
with respect to a is equal to the Lagrange multiplier.

4. Does the corresponding maximization problem with the same equality

constraint have a solution? If so, solve it. If not, argue why.

Question 8.3 (25 points) Consider the problem

max xy subject to x + y = 2.
(x,y)∈R2

Answer the following questions.

1. Solve the problem by transforming it into an unconstrained optmization

problem with one variable.

2. Show that the Lagrangian method leads to the same solution.

17
 3. Show that the unique solution you obtain does “not” maximize the La-
grangian with the associated Lagrangian multiplier. Does this matter?
Provide your argument.

Question 8.4 (25 points) We revisit Question 8.2.

min 2 x2 + y 2 subject to x + 2y = a,
(x,y)∈R

where a is a constant. Answer the following questions.

1. Define the bordered Hessian matrix of this problem.

2. Compute the determinant of bordered Hessian matrix defined in the pre-

vious question.

3. Is each stationary point you obtained using the Lagrangian method in

Question 8.2 a local maximum or minimum point?

9 Homework 9 (Due Date: Nov 4 (Thu), 2021)

Question 9.1 (25 points) Let f (x, y) = 3+x3 −x2 −y 2 and D be the domain
of f which is given by points in the x−y-plane satisfying x2 +y 2 ≤ 1 and x ≥ 0.
We consider the problem:

max or (min(x,y)∈R2 ) f (x, y) subject to (x, y) ∈ D.

(x,y)∈R2

Answer the following questions.

1. Show that the domain D is compact.

2. Define the set of all interior points of D (we simply call it the interior
of D) and the set of all boundary points of D (we simply call it the
boundary of D).

3. Find the stationary points of the function f , and classify them.

4. Find the global extreme points of f in D.

Question 9.2 (20 points) Let f (x, y) = 24x − x2 + 16y − 2y 2 and g(x, y) =
x2 + 2y 2 . Consider the problem

max f (x, y) subject to g(x, y) = 44.

(x,y)∈R2

Answer the following questions.

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 1. Solve this problem.

2. What is the approximate change in the optimal value of f (x, y) if 44 is

changed into 45?

Question 9.3 (15 points) Each week an individual consumes quantities x

and y of two goods, and works for l hours. These three quantities are chosen
to maximize the utility function

U (x, y, l) = α ln x + β ln y + (1 − α − β) ln(L − l),

which is defined for 0 ≤ l < L and for x, y > 0. Here α and β are positive
parameters satisfying α + β < 1. The individual faces the budget constraint
px + qy = wl, where p is the unit price of good x; q is the unit price of good
y; and w is the wage per hour. Define γ = (α + β)/(1 − α − β). Find the
individual’s demands x∗ , y ∗ , and labour supply l∗ as functions of p, q, and w.
Assume that the solution to this constrained optimization problem exists.

Question 9.4 (25 points) Consider the problem:

max f (x, y, z) = x + 2y + ln(1 + z) subject to x2 + y 2 − az = 0,

(x,y,z)∈R3

where a is a constant. Answer the following questions.

1. Write down the necessary conditions for this problem.

2. Show that this problem has no solution when a = 0.

3. Show that this problem has no solution when a = 1.

4. Assume that the necessary conditions for this problem (which you are
supposed to derive in part 1 of this question) suffice to guarantee the
existence of solutions to this problem. Then, find the range of values of
a for which there is a solution to this problem.

Question 9.5 (15 points) Consider the following constrained maximization

problem:
max −x2 − y 2 subject to 3y − x ≥ 10
x,y

Solve this problem.

10 Homework 10 (Due Date: Nov 11, 2021)

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