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Assignment 3: 1 Find The First Order and Second Order of Derivatives of The Following Functions

This document provides instructions for 6 optimization problems involving maximizing functions subject to constraints. Students are asked to: 1) Find derivatives of various functions. 2) Calculate marginal and average functions. 3) Optimize functions by finding critical values and testing second order conditions. 4) Determine optimal hiring and production levels to maximize profit for a firm. 5) Determine the optimal pricing decision for a monopoly firm to maximize profit. 6) Solve and take derivatives of a utility maximization problem subject to a budget constraint.

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Nooxay Phoomsuwan
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29 views2 pages

Assignment 3: 1 Find The First Order and Second Order of Derivatives of The Following Functions

This document provides instructions for 6 optimization problems involving maximizing functions subject to constraints. Students are asked to: 1) Find derivatives of various functions. 2) Calculate marginal and average functions. 3) Optimize functions by finding critical values and testing second order conditions. 4) Determine optimal hiring and production levels to maximize profit for a firm. 5) Determine the optimal pricing decision for a monopoly firm to maximize profit. 6) Solve and take derivatives of a utility maximization problem subject to a budget constraint.

Uploaded by

Nooxay Phoomsuwan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Assignment 3

August 11, 2020

1 Find the first order and second order of derivatives of the following
functions
1. y (x) = −Ax−4
2. p (q) = 6q 5 − 3q 3

3. f (x) = 5x4 (3x − 7)


(10x8 −6x7 )
4. f (x) = 2x

5. f (x) = (3x − 4) (5x+1)


2x+7
PT
6. f (x) = i=1 β i (axa + bZ)a
1
7. f (x) = (axγ + (1 − a) Z γ ) γ

2 Concept of marginal
Find (1) the marginal and (2) the average functions for each of the following total functions.
1. T C(Q) = aQ2 + bQ + c
2. π(Q) = aQ−1/ǫ Q − cQ
3. T R(Q) = aQ − Q2

3 Optimization
Optimize the following functions by (1) find the critical values at which function is optimized (2) test the second
order condition to distinguish the relative maximum or minimum.
1. y = 7 + 112x − 54
2. y = −9x2 + 72x − 13
3. y = x3 − 6x2 − 135x + 4
4. y = ax3 + bx2 + c, a > 0, b < 0

1
4 Optimal hiring/production
Suppose the production function is y = ALα M̄ , where M̄ is the size of land, L is the labor. The firm owns the
land. To produce the goods, the firm has to hire the labor. The wage rate is w. The product price is p. The firm’s
profit’s profit is given by
π = py − wL

1. To maximize profit, how much labor to hire and how much goods to produce?
2. How does p affect the equilibrium employment?
3. How does A affect the equilibrium employment?

5 Optimal pricing decision


A monopoly firm faces the demand function Q = ap−e . To produce each unit of goos, the firm has to pay the unit
cost c. This firm’s profit is given by
π = p × Q(p) − cQ
Answer the following questions:
dQ/Q
1. Compute the elasticity of demand E = dP/P

2. What is the marginal cost?


3. To maximize profit, what is the optimal pricing decision?

6 Constrained optimization

max U (x, y) = Axα y 1−α − M


x,y

s.tPx x + Py y = I
dx dx
Solve x, y that maximizes U (x, y).Compute dI , dpx .

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