Mathematics for Business II

2nd G. A. D. E. – 2012/13 Academic Year

Exercises Unit 2 Convexity and concavity

1. Analyse if the following sets are convex:

(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)

(i)

(j)

2. Does point belong to the convex envelope of points

, and ? And point ?
And point p3  (3/ 2,3,0,9 / 2) ?

3. Consider the hyperplane

 
H  ( x1, x2 , x3 , x4 , x5 )  5 / 4 x1  3x2  x3  5 x4  x5  21

Determine in which of the two semi-spaces determined by H each of the following

points may be found: , , and
.

4. Study the convexity or concavity of the following functions:

(a)
(b)
 (c)
(d)
(e)
(f)
(g) .

5. Study the concavity of the Cobb-Douglas production function

f ( x, y)  x y1 , where x, y  0 are the production factors and 0    1 .

6. Study the concavity of the CES (Constant Elasticity of Substitution) production

function f ( x, y)  k ( x  y )1/  where x, y  0 are the production factors and

0    1.

7. Study the convexity or concavity of

based on the and parameters.

8. Consider the function given by .

Answer the following:
(a) Confirm that is neither concave nor convex in . Is there any
convex set in where is concave or convex?
(b) Study the optimums of in set .

9. Consider the function .

(a) Study the convexity and the concavity of in set

(b) Determine the point of in which the maximum of the function

over this set is reached. Also indicate the maximum value of in .

10. Study the global extremes of the following functions:

(a)
(b)
(c)
11. Calculate the global optimums of function
in set .

12. Find the minimum of function

in set .

13. Consider the function . Respond and rationalise

the following questions:
(a) Is convex over any subset of ? If the answer is affirmative, then:
I. Determine the largest subset of over which is convex.
II. Explain why is convex over this set.
III. Find the absolute minimum of in the aforementioned set.

(b) Is concave over any subset of ? If the answer is affirmative, then:

I. Determine the largest subset of over which is concave.
II. Explain why is concave over this set.
III. Find the absolute maximum of in the aforementioned set.

14. On the production function of a production process, based on the capital

invested during the month, , and manpower hours employed, , we know that
it is a concave function and that the combinations and
provide the maximum possible level of production. Would
it be possible to find another combination of the production factors where
manpower hours is no more than 400/month, while guaranteeing that production
remains at its maximum levels?

15. We know that is the production function of a certain firm, where is

the invested capital, in thousand Euros, and is the weekly manpower hours
employed. We know is a concave function and that points and
provide the maximum production value, specifically:

The firm’s manager has decided that employees have to work 40 hours a week.
 In this case, how much capital would you recommend that the firm invest? And,
for that capital, what production would be required?

16. A firm manufactures the same product in two different factories. The
production cost of x units in the first factory is

and the production cost of y units in the second factory is

If the product is sold at 150 per unit (independent on the factory where it was
produced), find the amount that must be produced in each factory to maximise
total profit.

17. A firm produces two goods in perfect competition the price of which are
and . If and are the amount produced of such goods and
the cost function is

Calculate the production levels that generate the maximum profit for the firm.

18. We know that the marginal production profit of a firm in relation to , and
of three manufactured goods are, respectively:

Assuming that all manufactured units of the three goods are sold, study the
combination of the amounts , and that generate the greatest profit for the
firm.

19. The production function of a firm is given by the equation:

where and are the capital and work production factors. Indicate to the firm,
in a reasoned manner, the values of and of that it should used and the reason
why it should follow your advice.
20. The cost function of a firm is determined by two parameters and in the
following way:

Knowing that could take on any real value but that must be at least 1: is
there any combination of values and that would enable the firm to achieve
the least possible cost?

21. A firm manufactures on a daily basis x tons (T) of product A and y tons of
product B. The expression of manufacturing costs according to the x and y
amounts manufactured is as follow:

Taking into account that the firm’s policy is to manufacture at least 1T daily of
each of the products, prepare a brief report for the firm indicating the amounts
that it should produce of A and of B as well as the cost that the firm would incur
in this situation. Justify your recommendations to the firm.

22. Consider the next sets in 2

: 
A1  ( x, y)  2 / x  0, y  0 and

 
A2  ( x, y)  2 / x  0, y  0 . Let A  A1 A2 be the union of A1 and A2 .

Answer the next questions:

a) Is A1 a convex set? And A 2 ? And A ?

b) Study the convexity and concavity of the function f(x,y)=(x-y-3)2 on

A1 .

c) Study the convexity and concavity of the same function on A 2 .

d) Study the convexity and concavity of the function f(x,y)=(x-y-3)2 on A .