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Mathematics For Economics. Problem Set 8

Single variable optimization Mathematics problem set

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13 views2 pages

Mathematics For Economics. Problem Set 8

Single variable optimization Mathematics problem set

Uploaded by

alissakerroll
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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Mathematics for economists, 2022

Problem set 8 : Single variable optimization


Exercise 1
Find the stationary points of each function on the given interval and
classify them :
x
1. f (x) = x3 − 6x2 + 9x + 8 5. f (x) =
x2 +1
2. f (x) = 3x2 − x3
3. f (x) = x4 − 4x3 + 4x2 1
4. f (x) = (x2 − 1)2 6. f (x) =
x2 + 1

Exercise 2
Ms. Meyer, candidate to the White House, estimates that by campai-
gning in a state for x days, she will gain 2x (thousand) votes, but her
campaign expenses will be 5x2 + 500 dollars. She wants to campaign for
the number of days that maximizes the number of votes per dollar, f (x) =
2x
. For how many days should she campaign ?
5x2 + 500

Exercise 3
1. Find the global maximum and global minimum of the function f (x) =
x3 − 15x2 + 63x on the interval [0, 10].
2. Same question but on the interval [0, 8].
3. Again, same question but on the interval [2, 8].
4. Can you find a domain such that the minimum occurs at a critical
number and the maximum at an endpoint ?

Exercise 4
Consider the following functions :

ln(x)
f (x) =
x
f (x) = 3x2 e−x
f (x) = xln(x)
1
f (x) =
e1−x2

1
Mathematics for economists, 2022

f (x) = (1 + x2 )ex
ex
f (x) = (much more tricky than it looks...)
x
For each function :
1. Give the domain of the function.
2. Find any zeros of the function.
3. Find all stationary points and classify them. Also, find where the func-
tion is increasing and where it is decreasing.
4. Find where the function is convex and where it is concave. Find any
inflection point.
5. Give the range of the function.
6. Sketch a graph of the function.

Exercise 5
Mr. Duffman’s firm wants to bid for the monopoly franchise to sell beers
at a hockey game. He estimates the inverse demand function for beer as
p = 5−0, 5x, where p is the price in euros and x is sales of beers in thousands.
He also estimates that he can supply the beers at a constant unit cost of 0,5
euros per beer.
1. What is the largest bid he would make for the franchise ?
2. Suppose now that the stadium owner decides to levy a royalty of 0,25
euros per beer sold. Show the effect that this has on your answer.
3. Now suppose that in addition to the royalty the stadium owner sets
up an upper limit of 2 euros on the price that can be charged for a
beer. Show the effect on the maximum bid for the franchise.

Exercise 6
Show that the tax per unit τ that maximizes the total tax revenue is
equal to 7,5 in the following market :

D = 50 − 2pB , S = −10 + pS

where pB is the price paid by the consumers inclusive of tax and pS is the
price received by producers after the
tax has been passed to the government.
(Hint : what is the relationship between PS , PB and τ ?)

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