CHAPTER 5 Section 5.1 (page 161) 1. Yes, the sequence values look ike they wll converge Q | (25,625) (24,576) _ (23,529) Ax s 4 3 ay | 25 176 129 Ay/dx | 45 “4 48 O_| 22,484) _@1, 440) Ar 2 1 ay a 4 Ayias | 42 41 12, =(25, 625) (24,576) (Q,=(21, 441) P=(20, 400) Figure 6.1.1 ‘3, Since the slope ofthe tangent Line forthe function y ‘ay ts value atthe point x = 3 is 6, Therefore the equation for tae tangent line, written inthe form y = m+ by is +b y Since this line passes through the point x = 3, y = 9 the value b must satisfy the equation 9= 6G) +b eb ‘and so the equation forthe tangent line is y=6r-9 Figure §.1.3 Section 5.2 (page 168) 1. (@) re) = im, SEAN iy BEAN =SI=Be=3) = da rs as = dae ©) fe = © = fim 2+ Anat = ae = ti 38+ BeAr + AxD? — 3 = da a tin 22 HORAN + 3x? 32? = ta ae Student's Solutons Manual $13. a (25,625) (24576) (23,529) Ax 5 4 3 ay 2s (176 9 w=sou| 0 10 120 « MI% 9.1% 7.0% (22,484) (1,441) As 2 1 ay a 41 dy=fiaddx | 80 40 « 48% 24% ‘The size of the error, in absolute valve, from using the Aiferental as an estimate of the actual change in y falls as one takes smaller changesin x. Of couse, for some functions this will not be a monotonic relaonship but the reduction in the error will occu at least evertually as Ax — 0. Section 5.3 (page 173) 1. (@) othe left ofthe point x = 5 the function is defined by the equation f(x) = 3x -+ 2 and so tim L280 - Se) ahh Re Ba +A 421-1421 ae. ar while to the right of the point x = 5 the function is fined by the equation f(x) = x-+ 12 and so Set An~ fo) _ war tim (PAD + IL +12) abe Bx ‘Since the left-hand and righthand derivatives are not ‘equal atx = 5, the function is nt differentiable at this point (©) othe left ofthe point x = 0 the function is defined by the equation f(x) = —x and so tim LEEAD= SO) _ wa tim EAD at. ar While to the right of the point x = 0 the function is, defined by the equation /(x) = x and so Lert as)— fis) _ a Be = 52 Chapter tm @tS0=" atthe a ‘Since the left-hand and righthend derivatives are not ‘equal atx =O, the function isnot difereniable at this point, 1 (©) To he loft of the point x = 2 the function is defined by the equation f(x) = 4x + 1 and so fet an~ fo _ ah a While to the vight of the point x = 2 the function is efined by the equation f(x) = 11 ~ « and so Le) tim WIL G + ANI= f=} abig,, 7 Since the left-hand and right-hand derivatives are not ‘equal at x = 2, the function isnot diferentiable at this point. Let T(9) represent the income tax schedule for this example. ‘The marginal tax rate depends on income aceording to the following schedale: 0 ford 46,000 (@) The tax function is ° for < y <6,000 roy = | 0291200 for 6,000 « y = 16,000 =) 3y—2,800 for 16,000 < y < 46,000 Oy 7.400 for y > 46,000 To) oy rmarginaltax TO) an tax =O 1000 -marginal thx rate = 0.3 marginal taX rate = 0.2 ’ ‘ood 20.00 30,000 0.00 {50,000 6.0 16000 46000 Figure 5.3.3 (a) (b) The points of nondifferentabilty occur each time there is an increase in the marginal x rate. These occur at income levels y = 6,000, y = 16,000, and y = 46,000. ‘The slope ofthe tax schedule tothe left and the right of each of these points differs.(€) The marginal tax function is given in part (a) while the average tx function is AT(y) ° 0.2—1,200/y for 6,000 = y < 16,000 0.3 -2,800/y for 16,000 < y = 46,000 04 —7,400/y for y > 46,000 ATO) (o) "10,000 ,20.000 30,000 40,000 50.000 PS) 400 + 0.255 5,000 10,000 15,000 20,000 25,000 30,000. 5 Figure 5:35 ‘There isa single point of nondlffereniability at S = ),000. This cecurs because at $ = $10,000 the com- ‘mission rate jumps from 10% on any sales less than {$10,000 to 20% on all sales in excess of $10,000. Thus the left- and right-hand derivatives of the function P(S) shot ' ifr at dha point 16,000 46,000 | meee Section 5.4 (page 205) 1. (@) fl) = L > PL) = 10> FL) =O. The Second derivative, which gives the slope ofthe derivative Ary function, is zeo.. ‘This means thatthe rate at which os ATO) ‘output ise with respect to more input being used does rot change. This is illustrated by figures 5.4.1 (a, 03 sl) @) = 10L wo Lo on 119100042160 30,000 x00 0000 > $56,000 46,000 Figure 6.3.3 (c)ii L 5. (a) The function relating sales, S, to pay, P, is 600, 0 P(S) =} 600+0.15, <5 < 10,000 600 +-0.18 +0.1(5 ~ 10,000), 5 = 10,000 Which can be simplified to 600, s 6004015, 0 F'C) = (-16/9)L-% < 0. ‘The second derivative, ‘which gives the slope ofthe derivative function, is nega tive, This means thatthe rate at which output rises with ‘Student's Solutions Manual $3respect to more input being used is decreasing in L. ‘This is consistent with the so-called law of diminishing ‘marginal product of labor and is illustrated by figures 5.4.1 0), 1 s=su* Figure 6.4.1 (oy! ro ro=($)0%* L Figure 5.4.1 (by (©) fl) = 314 > fr) = 1208 > fr) = 361? > (0. The second derivative, which gives the slope of the derivative Faneton, is postive. This mean thatthe rate at which outpt rises with respect to more inp being used is increasing in L. This is inconsistent withthe so-called law of diminishing marginal product of labor and isilustrated by figures 5.4.1 (). fay Sas Figure 5.4.1 (o)i 54° Chapters 3. (@) O) fo Figure 6.4.1 (chi ‘The supply carve for each firm is simply the inverse of its marginal cost curve, and so MC" = dC4/dq = 10+ 4g => p = 10+ 4g is A's supply crve in its inverse form (ie, qf = 0.25p ~ 2.5 is firm A's supply curve with qf 20 = p = 10). MC® = d0¥/dg = 15-4 2g > p = 15 + 2g is B's supply cuve in its inverse form (ie, q? = 0.5p ~ 75 is firm B's supply caurve with 42 = O'=> p = 15) These functions are differentiable on every point of teie domains (g = 0), asis seen in igure 54.3 (0. > gf =0.25p -25 28 af =05p-75 20: Figure 5.4.3 (a) ‘To get total supply of the two firms we have to add the supplies fromeach frm ateach price, Firm A will supply positive output as soon as price exceeds 10 while firm BB will supply positive output as soon as price exceeds 15. Thus the joint supply for these two firms is o p<10 a=}ah | Wsp O for every x € Rand 4"(a) = 12x? = Oonly atthe single point x = 0. Therefore (8) = 2" a strcuy convex function. 3. yaa = x= yPandsoC(y) = ay+ry!, The pratuction function y = x" isstrcly concave, since $$ =~} < 0. The cost function is strictly convex since C"(y) = 6y > 0. ¥ (output) Gina) Flgure 6.5.31 eos) > Coutput) Figure 5.5.3 ‘The stict concavity of the production function means that an extra unit of output requires more input th greater is the scale of output, as indicated by the accompanying figures. ‘Thus, to produce one more unit of output requires a lager Students Solutions Manual 85‘nerement of input be used, and hence higher cost, the greater isthe seate of ouput. 5. x) = 45y - Q" — 99? + 60y + 10) > x6) = -15y - 1 +992 ~ 10. Upon differentiating twice, we get x'()) = 15 = 3y* + 18 and 2"(y) = ~6y + 18 Thus we have (Gaiety convex)x(Q) > 0 ~6y + 18> 0 y <3 (stitly concaveysn"(y) < 0 4 ~6y +18 <0.@ y >3 ‘Thos, on the interval (0,3), the profit function is strily con- ‘ex and onthe interval (3, +00) the profit functions strictly » | 20) | #0) | x0) 18 2 6 0 ~6 -12 =18 —24 30 =36 42 10 “1s 10) 20 Figure 5.5.5 Section 5.6 (page 223) 4. Taking successive derivatives of f(x) =e gives us See, Payee, £0) FOG) =e" ‘Thus we have £0) = (Cte and since -® = & = 1, we have FO = I" Using this result, andthe result chat (0) = —1, wecan give the Taylor series expansion for e-* evaluated abou te point x =0as follows: i ea $6 Chapter § Where |Ry| = £"/n! and & is between 0 and x. Thus, if x € (0, 1], then € [0,1] and so &" < 1. Therefore, to be correct to within 0,001, we simply need to choose » large ‘enough to ensure that [Ry| < 0.001. That i, 4 0.001 or nt = 1,000 “The smallest value of for which this holds is m = 7. (Sinee 6! = 720 while 7! = 5,040,) 3. For: = 2 the Taylor series formula can be written $0) ~ Fa) = fear ~19) + POE" which sin the form ayndyte where « = Lit=8 ste error term when using dy a an tstimate of Ay. So, forthe fanction f(x) = x", we have F') = 1/22'? and f"(x) = =1/42°?, and so (=n mS and so Ay dy or dy > Ay. Therefore, using the toal differential leads oan overestimate of he impact of achange ins on ya illustrated in gure 5.63, fe) ° Figure 5.6.3. Review Exercises (page 224) 1 100 = fin, SEAL) em (HADES HA =A) — U0? $3 8) aa fm ERMA H A e343 23x = my ar tim ZEAE AN 3M = aro ae = fimpetareda 20433. (@) f(L) = GAL" > fl) = 6b > fL) = ae 121-7 < 0, The second derivative, which gives the slope ofthe derivative function, is negative. This means that the rate at which output rises with respect to more input being used is decreasing in L. Ths is consistent ‘withthe so-called law of diminishing marginal product of labor and is illustrated by the graphs below. This is illustrated by figures 5.83 (aici J@ S264 i Figure 6.A.3 (o)h (©) f@) = 513 > fy = 15? + FW = 30> '. The second derivative, which gives the slope ofthe 0 Led sl)=2A-6L} =0 Las <0 L>4 i ForL < 4thesecond derivative isposiive, which means Figure 5.7.3 (b)i that the rate at which output rises with respect to more input being used is increasing. For L > 4, te second derivative of /(L) is negative, which means thatthe ate at which output rises with respect to more input ‘Student's Soluions Manual $71g used is decreasing. Thus this production function is consistent eventually (ie., for sufficiently large L) ‘with the so-called law of diminishing marginal product of labor. These results are illustrated in figures SR.3 (iri sy 48 L Figure 5.7.3 (ai PD sw 0 > 1 Figure 5.R.3 (chil ro) oor iD Figure 5.R.3 (dill 5. ¢=—4.£, and so forthe demand function y = 200 — 5p, veges © (=) ~58 = 52, Upon substinting fry gives w5 c= Sgglqp. Thus we have that, esl @ esl e ° ele © lop> 20% p> 20 Noting that y = 100 when p = 1, we canillastrate the above results onthe following graph. $88 Chapters 100200 9 Figure 5.7.5 7. Since q(L) = ab*, b > 0 isthe production fanction; its inverse is L(g) =" (g/a)", and so the cost function is, C(q) = e+ wla/a)!. ‘The derivative ofthe production function is 4a _ yyy 2 B= abi = 2, Ib < |, then dg/aL is decreasing in L. If 6 > 1, then dq /aL. is inereasing in L, If 6 = 1, then dg/aL is con- stant (.e, iis neither decreasing nor inereasing in ). The Gerivative ofthe cost function is aC _ (WN (1Y nya _ (ola y(1/0) aq = (aia )\5 0 = Ga Ifo < 1,then(1/6)=1 > 0,andsodC dg isinereasinging. 16> Inthen (1/6) ~1 < OvandsodC dq is decreasing n 4. b= Iythen (1/6) ~ 1 = 0.24 dC/da = (w/a)a? = t/a), and sod /da is nether incretsing nor decreasing in 4. Thus the relationships sated in the question are satisfied. 9. Cy) = 3y? — 24y + 50 and C"(y) = 6y — 24. (strictly convex): C"(y) > 0 = 6-24 > O= y > 4 (strictly concave): C%G) <0 6y-24 <0 y <4 “Thus, on the interval (0, 4), the cost function is strily con- cave, and on the interval (4, +00), the cost function is strictly y Lew few | cr o| 2] so] -2 1] sof 29] 8 2] | wm] 2 3] vw] s| 6 4] a2] 2] 0 s| 9s} s| 6 6] 14) um} 7| s| 2) 18 s] i] so] 24 9| 27) mm] 30 wo | 30] 0] 36 1292 + 50) +20 Figure 5.7.9