PS1Answers

PS1Answers - UCLA Economics 11 Fall 2009 Professor Mazzocco...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
UCLA Economics 11 – Fall 2009 Professor Mazzocco Problem Set 1 Due by 1. Unconstrained Optimization (1 exogenous variable) Find the value of x that maximizes y =100−(4−7 x ) 2 . Make sure it is a maximum by checking the Second Order Conditions and plotting the function. Answer F.O.C * 4 14(4 7 ) 0. . 7 y x so x x S.O.C 2 2 98 y x  for any value of x. Therefore, it is a maximum 2. Unconstrained Optimization (2 exogenous variables) Find the values of ( x 1 , x 2) that maximizes the expression y = 9x 1 1/3 x 2 1/3 –3 x 1 – 3x 2 Answer The F.O.C. are now a system of two equations with two unknowns: 2/3 1/3 12 1 2 3 3 0 3 3 0 y xx x y x     Now, we need to solve the system. For example, solve for x 2 in the first equation, and plug that in the second equation to get x 1 =1, then x 2 =1. 3. Constrained Optimization (2 exogenous variables) Find the values of ( x 1 , x 2) that maximizes the expression y=20x 1 1/2 x 2 1/2 subject to the following constraint: x 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/19/2010 for the course ECON Econ 11 taught by Professor Mcdevitt during the Fall '07 term at UCLA.

Page1 / 3

PS1Answers - UCLA Economics 11 Fall 2009 Professor Mazzocco...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online