Bachelor in Economics

Bachelor in Business Administration

Mathematics II

Problem set 3: Functions of several variables

Departament d’Economia i d’Història Econòmica

1.- Consider the function:

(a) f (x, y) = x2 − sin xy; (b) g(x, y, z) = (x − y, y + ln z)

Determine f (1, 0), f (a, b); g(0, −1, e), g(t, t + 1, t − 1)

2.- Find the (natural) domain of the following functions and describe these sets:
p √ √
(a) f (x, y) = x2 − ln xy; (b) f (x, y) = x2 + y 2 − 1; (c) f (x, y) = x + y
√ p
(d) f (x, y) = x − y; (e) f (x, y) = xsin y; (f) f (x, y) = ex/y
x
(g) f (x, y) = ln ; (h) f (x, y) = xe1/y
y

3.- Determine analytically (using symbols) and geometrically (using a graph)

the contour lines of the following functions from IR2 into IR

(a) f (x, y) = x + y; (b) f (x, y) = x − 2y; (c) f (x, y) = x2 − 2y

(d) f (x, y) = x − y 2 ; (e) f (x, y) = x2 + y 2 ; (f) f (x, y) = x2 − y 2

(g) f (x, y) = min{x, y}; (h) f (x, y) = ln(x2 + y 2 ); (i) f (x, y) = x2 y

4.- One of the main uses of contour lines is to understand the domain of the
function. Draw the contour lines for the following functions on a given set.
Does the result guarantee the existence of a maximum and/or minimum? If
so, how do we find them?

(a) f (x, y) = 3x − y on A = {(x, y) ∈ IR2 |x ≥ 0, y ≥ 0, y + x − 5 ≤ 0}

(b) f (x, y) = 2x − y on A = {(x, y) ∈ IR2 |x2 + y 2 = 4}

(c) f (x, y) = x + y on A = {(x, y) ∈ IR2 |y − 3x − 9 ≥ 0}

(d) f (x, y) = min{x, y} on A = {(x, y) ∈ IR2 |x ≥ 0, y ≥ 0, y + 5x − 10 ≤ 0}

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5.- Let f : IR2 \ (0, 0) → IR be f (x, y) = 1/(x2 + y 2 ). Show why the function
has a minimum and a maximum on the subset A = {(x, y) ∈ IR2 |(x − 5)2 +
y 2 ≤ 1}. Find them.

6.- Use level curves and the Weierstrass theorem to geometrically find the ab-
solute minimum and maximum of the following functions in the proposed
domains.

(a) f (x, y) = xy en el conjunt x + y ≤ 1, x, y > 0

(b) f (x, y) = x − y 2 en el conjunt x2 + y 2 ≤ 2

(c) f (x, y) = min{x, y} en el conjunt x + 2y ≤ 1, x, y > 0

7.- Mathematics may help to think about economic problems systematically.

Try to express the following economic problems in mathematical terms.

(a) A bakery specializes in three different types of bread: ciabatta, olive

baguette and wholegrain. Each ciabatta sells for 1 e, olive baguettes
for 2 eand each wholegrain bread for 1.5 e. The owner wants to
determine the optimal amount of production to get the maximum daily
benefit. However, there are budget and time constraints. The cost of
a piece of ciabatta is 0.25 e, a piece of olive baguette is 0.75 eand
a wholegrain bread is 0.50 e. Daily expenditures must be lower than
300 e.

However, the preparation and cooking time varies with the type of
bread. To make 5 bars of ciabatta it takes 8 minutes to, to make 3
olive baguettes 10 minutes and to make 2 wholegrain breads it takes
9 minutes. And the total time that can be used to prepare all products
must not exceed 4 hours.

(b) A company has decided to reduce the costs of their employees because

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 it is having a bad time. Instead of reducing the privileges of their
employees such as the coffee machines or free tickets for lunch, it has
decided to reduce the workforce. There are three types of workers
who are classified with respect to their level of education: Masters,
Bachelors, and Interns. There are 100 Bachelors, 150 Masters and 50
Interns. Costs for each type are respectively 10 e, 20 e and 15 e.
The revenues are: 20 e for Bachelors, 25 e for Master and 15 e for
Interns.

The company needs to take measures to make profits of at least 8000

e. This measure should not affect more than 100 people. How many
employees of each type should the firm fire?

8.- Consider an economy with two goods x, y. An individual in this economy

has a utility function
1 1
U (x, y) = x 2 y 2

Suppose that the prices of the two goods are (px , py ) = (1, 2). Suppose
also, that the individual has income of w = 50e.

(a) Draw the contour lines of the utility function; Draw also the budget
constraint.

(b) Find the bundle (x, y) that maximizes the utility of the individual.

9.- Consider a firm that using one input (labor, l) to produce a consumption
good y. The technology is described by a production function y = f (l).
Suppose f is continuous and strictly concave. Let w be the price of one
hour of labor (wage). Let p be the prices of the output. Both p and w are
exogenous. The problem of the firm is to determine the hours of work to
maximize profits.

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 (a) Represent graphically the problem of the firm.

(b) Compute analytically the optimal hours of work to hire.

10.- A firm uses two inputs (k.l) to produce a consumption good. Let y = f (k, l)
denote the production technology. In accordance with the instructions re-
ceived in the general assembly of shareholders, the objective of the firm is
to produce y units of the good. The problem of the firm is to achieve that
objective with the minimum cost. Let (r, w) denote the prices of the in-
puts (k.l) respectively. Suppose that firm faces a fixed cost c0 . Suppose the
technology f generates strictly convex isoquants.

(a) Represent graphically the problem of the firm.

(b) Compute analytically the optimal demand of inputs.