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Tutorial 5 - Derivative of Multivariable Functions

1) This tutorial covers partial derivatives of multivariable functions, total differentials, marginal rates of technical substitution, and applications to utility maximization and production functions. 2) Key concepts include finding first and second order partial derivatives, using total differentials to estimate changes, and evaluating marginal products and rates of technical substitution. 3) Applications include estimating changes in utility from changes in consumption levels, estimating changes in production from changes in factor inputs, and setting marginal rates of substitution equal to price ratios.

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Ибрагим Ибрагимов
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401 views

Tutorial 5 - Derivative of Multivariable Functions

1) This tutorial covers partial derivatives of multivariable functions, total differentials, marginal rates of technical substitution, and applications to utility maximization and production functions. 2) Key concepts include finding first and second order partial derivatives, using total differentials to estimate changes, and evaluating marginal products and rates of technical substitution. 3) Applications include estimating changes in utility from changes in consumption levels, estimating changes in production from changes in factor inputs, and setting marginal rates of substitution equal to price ratios.

Uploaded by

Ибрагим Ибрагимов
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Mathematics for Economic Analysis, 4ECON007C Semester 1, 2017-2018

`Tutorial 5 Derivative of Multivariable Functions

Key terms Notes Key terms Notes


Partial derivative Total differential
Second-order partial Marginal rate of
derivative technical substitution
Cross-price elasticity Utility
Income elasticity Marginal utility

Section Mathematics

1) Find the first-order partial derivatives of the following functions:


a) z = 5x4 y2 bH) z = 3x4y3 + 10y/x cH) z = 8x2y/(x3 y) d) z = (2x 5y)3

2) Find the second-order partial derivatives of the following functions. What do you notice?
a) z = 5x4 y2 b) f (x, y) = 2xy4 + 7x3y cH) f (x, y) = (y + 1)ln(x3y)

3) Find the total differential of: a) z = 8x2 + 18xy + 5y2 bH) z = ye5x + 2y cH) f (a, b, c) = sin(abc)

4) If z = xy 5x + 2y, then
a) Evaluate z/x and z/y at the point (2, 6).
b) Use the total differential formula to estimate the change in z as x decreases from 2 to 1.9 and
y increases from 6 to 6.1.
c) Confirm your estimate of part (b) by evaluating z at (2, 6) and (1.9, 6.1).

5H) If z = 4x2y2 3y2 + 7xy2, then evaluate zx and zy at the point (2, 3). Hence estimate the change in z as
x increases by 0.2 and y decreases by 0.1.

6) Find the partial derivatives of the following functions:


a) xy y3 + y = 0 bH) y4 = x2y + 12 c) x + x2z3 + yz = 0 dH) x2y3z5 + zlnx = 0

2U 2U 2U
2 2
7H) Show that U(x, y, z) = (x + y + z ) 2 -0.5
satisfies + + = 0.
x2 y2 z2
Section Economics

8) A student chooses between two brands of juice, apple (x) and orange (y), and has a utility function U =
xy + x + y + 2. Estimate:
a) the value of utility when the student consumes 10 bottles of apple juice and 15 bottles of orange
juice during a month.
b) the values of marginal utility of apple juice and marginal utility of orange juice when x = 10 and y =
15. Interpret your findings.
c) the change in utility resulting from a 3-unit increase of apple juice from 10 to 13 bottles and a 2-unit
decrease of orange juice from 15 to 13 bottles.

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Mathematics for Economic Analysis, 4ECON007C Semester 1, 2017-2018

9H) An individuals utility function is given by U = 900a + 350b + 4ab 2a2 b2 where a is the amount
of leisure measured in hours per week and b is earned income measured in dollars per week.
a) Determine the value of the marginal utilities when a = 138 and b = 400.
b) Estimate the change in the utility if the individual works for an extra hour, which increases his
earned income by $12 per week.

10) Given the demand function Q = 200 2P PA + 0.1Y2, where P = 10, PA = 15 and Y = 100, find:
a) Price elasticity of demand b) Cross-price elasticity of demand c) Income elasticity of demand
d) Estimate the percentage change in demand if the price of the alternative good rises by 3%. Is the
alternative good substitutable or complementary?
e) If income falls by 5%, calculate the corresponding percentage change in demand. Is the good
inferior or superior?

11H) Given the demand function Q = Y2PA/P where PA = 16, Y = 3 and P = 12,
a) Find and interpret the income elasticity of demand.
b) Estimate the percentage change in Y needed to raise Q by 5% assuming that PA and P are fixed.

12) Evaluate MPL and MPK for the production function Q = 2LK + L given that the current levels of K
and L are 7 and 4, respectively. Hence, write down the value of MRTS and estimate the increase in
capital needed to maintain the current level of output given a one-unit decrease in labor.

13H) If Q = 4K + L3K2, find an expression for MRTS. Given that L = 1, find the value of K for which
MRTS = 1.5.

14) Given the production function Q = 4(KL)1/2,


a) Estimate the effect on production of a two-unit increase in K and a one-unit decrease in L when K =
50 and L = 450.
bH) Confirm your estimate of part (a) by evaluating Q at (K, L) = (50, 450) and (K, L) = (52, 449).
cH) Find and interpret the marginal rate of technical substitution when K = 50 and L = 450.

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