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8 Optimization
(Maximization or Minimization)
of Single Variable Functions
one independent variable
constraint is closed interval [a0,b0]
inner solution of maximization problem or
minimization problem
y=f(x)
a1
a2
a3
a4
f ( x) f (a) f (a)( x a) x
f (a) 0 f ( x) f (a) x
f (x) is maximized at x=a
the maximum is f (a)
f(x)
f(a)+(x1-a)f (a)
f(x1)
x1
x2
f ( x) f (a) f (a)( x a) x
f (a) 0 f ( x) f (a) x
f (x) is minimized at x=a
the minimum is f (a)
f(a)+(x1-a)f (a)
f(a)
f(x2)
f(a)+(x2-a)f (a)
f(x)
x1
x2
f(a)
f (a)
d y
2
dx
xa
d f ( x)
2
dx
x a
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12
13
Exercises
f ( x) ax bx c
f ( x) 2a
f ( x) 2ax b
If a 0, then concave; if a 0, then convex.
(1)
f ( x) e
ax
2 ax
f ( x) ae
f ( x) a e
2
ax
a 0 and e 0 convex
(2)
ax
14
Exercises
a
f ( x)
x
a
2
a
(3)
f ( x) 2
f ( x) 3
x
x
a x 0 convex, a x 0 concave
(4)
f ( x) a log x
a
a
f ( x)
f ( x) 2
x
x
2
Since x 0, a 0 concave, a 0 convex
15
16
17
derivative f (x)
fluctuation
local
max
Local
min
function f(x)
f(a)
f(b)
f (a) 0
f (b) 0
18
b
19
20
21
q
f () marginal product
22
df () f ()d
total differential
23
Exercises
f ( )
1
f ()
2
1
df ()
d
2
(1)
f ()
1
3
4
decreasing
24
Exercises
f () a log( 1) (a 0)
a
a
f ()
0
f ()
2
( 1)
1
decreasing
a
df ()
d
1
(2)
25
Exercises
(3)
f ( ) 1 e
f () ae
df () ae
f () a e
2 a
al
decreasing
26
C
marginal cost MC C (q)
q
27
28
labor input
product q (variable)
production function q f ()
profit pq w
maximization
30
f (q) h(q)
function h(q) is a strictly convex h''(q)>0
Example : q h(q) q 2 (q 0)
1
1
q
0, q
0
2 0
3
2
2
32
C (q) w h(q)
h(q) is strictly convex C''(q)=wh''(q)>0
Example : q
C (q) wq 2 (q 0)
necessary minimum
labor inputs
total cost
function
h( q) f ( q)
TVC( q) wh( q)
TVC ( q)
AVC ( q)
q
TFC ( q)
AFC ( q)
q
37
38
C(q)
E
D
A
c0
q0
q1
q2
q
39
MC
ATC
AVC
AFC
0
q0
q1 q2
q
40
41
C(q)
C,R
R=pq
c0
0
q**
q*
-c0
(q)
42
p
MC
ATC
AVC
p3
p2
p4
p1
A : break-even point
B : shutdown point
p5
q3'
q0 q5 q1 q2 q3
q4
q
44
45
x y
xy
2
( x y ) 2 xy ( x ) ( y ) 2 x y
2
( x y) 0
2
46