Notes-Chapter 9 - Chapter 9: OPTIMIZATION: A Special...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 9: OPTIMIZATION: A Special Variety of Equilibrium Analysis Alpha Chiang, Fundamental Methods of Mathematical Economics 3 rd edition
Background image of page 1

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

View Full DocumentRight Arrow Icon
Optimum Values and Extreme Values Economics is by and large a science of choice. common criterion of choice among alternative in economic is the goal of maximizing something or minimizing something optimization – means quest for the best maximum and minimum as mathematical concepts – collective term is extremum. Optimization: delineate an objective function independent variables are choice variables eg. π is the object of maximization and Q is the choice variable.
Background image of page 2
Relative Maximum and Minimum : First Derivative Test: Given ( ), the first derivative ( ) plays a major role in the search for extreme values. y f x f x = We assume that ( ) is continuous and possesses a continuous derivative. y f x = ( ) 0 is a necessary condition for relative extremum. It is necessary but not sufficient to establish a relative extremum. f x =
Background image of page 3

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

View Full DocumentRight Arrow Icon
First Derivative Test 0 0 0 0 First derivative test for relative extremum: If the first derivative of a function ( ) at is ( ) 0, then the value of the function at
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 14

Notes-Chapter 9 - Chapter 9: OPTIMIZATION: A Special...

This preview shows document pages 1 - 5. Sign up to view the full document.

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