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Michael Carter
1.1
{ 1, 3, 5, 7 . . . } or { 𝑛 ∈ 𝑁 : 𝑛 is odd }
1.2 Every 𝑥 ∈ 𝐴 also belongs to 𝐵. Every 𝑥 ∈ 𝐵 also belongs to 𝐴. Hence 𝐴, 𝐵 have
precisely the same elements.
1.3 Examples of finite sets are
∙ the letters of the alphabet { A, B, C, . . . , Z }
∙ the set of consumers in an economy
∙ the set of goods in an economy
∙ the set of players in a game.
Examples of infinite sets are
∙ the real numbers ℜ
∙ the natural numbers 𝔑
∙ the set of all possible colors
∙ the set of possible prices of copper on the world market
∙ the set of possible temperatures of liquid water.
1.4 𝑆 = { 1, 2, 3, 4, 5, 6 }, 𝐸 = { 2, 4, 6 }.
1.5 The player set is 𝑁 = { Jenny, Chris }. Their action spaces are
𝐴𝑖 = { Rock, Scissors, Paper } 𝑖 = Jenny, Chris
1.6 The set of players is 𝑁 = {1, 2, . . . , 𝑛 }. The strategy space of each player is the set
of feasible outputs
𝐴𝑖 = { 𝑞𝑖 ∈ ℜ+ : 𝑞𝑖 ≤ 𝑄𝑖 }
where 𝑞𝑖 is the output of dam 𝑖.
1.7 The player set is 𝑁 = {1, 2, 3}. There are 23 = 8 coalitions, namely
𝒫(𝑁 ) = {∅, {1}, {2}, {3}, {1, 2}, {1, 3}, {2, 3}, {1, 2, 3}}
10
There are 2 coalitions in a ten player game.
1.8 Assume that 𝑥 ∈ (𝑆 ∪ 𝑇 )𝑐 . That is 𝑥 ∈ / 𝑆 ∪ 𝑇 . This implies 𝑥 ∈ / 𝑆 and 𝑥 ∈ / 𝑇,
or 𝑥 ∈ 𝑆 𝑐 and 𝑥 ∈ 𝑇 𝑐. Consequently, 𝑥 ∈ 𝑆 𝑐 ∩ 𝑇 𝑐 . Conversely, assume 𝑥 ∈ 𝑆 𝑐 ∩ 𝑇 𝑐 .
This implies that 𝑥 ∈ 𝑆 𝑐 and 𝑥 ∈ 𝑇 𝑐 . Consequently 𝑥 ∈ / 𝑆 and 𝑥 ∈ / 𝑇 and therefore
𝑥∈/ 𝑆 ∪ 𝑇 . This implies that 𝑥 ∈ (𝑆 ∪ 𝑇 )𝑐 . The other identity is proved similarly.
1.9
∪
𝑆=𝑁
𝑆∈𝒞
∩
𝑆=∅
𝑆∈𝒞
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Solutions for Foundations of Mathematical Economics All rights reserved
𝑥2
1
𝑥1
-1 0 1
-1
1.10 The sample space of a single coin toss is { 𝐻, 𝑇 }. The set of possible outcomes in
three tosses is the product
{
{𝐻, 𝑇 } × {𝐻, 𝑇 } × {𝐻, 𝑇 } = (𝐻, 𝐻, 𝐻), (𝐻, 𝐻, 𝑇 ), (𝐻, 𝑇, 𝐻),
}
(𝐻, 𝑇, 𝑇 ), (𝑇, 𝐻, 𝐻), (𝑇, 𝐻, 𝑇 ), (𝑇, 𝑇, 𝐻), (𝑇, 𝑇, 𝑇 )
𝑌 ∩ ℜ𝑛+ = {0}
where 0 = (0, 0, . . . , 0) is the production plan using no inputs and producing no outputs.
To see this, first note that 0 is a feasible production plan. Therefore, 0 ∈ 𝑌 . Also,
0 ∈ ℜ𝑛+ and therefore 0 ∈ 𝑌 ∩ ℜ𝑛+ .
To show that there is no other feasible production plan in ℜ𝑛+ , we assume the contrary.
That is, we assume there is some feasible production plan y ∈ ℜ𝑛+ ∖ {0}. This implies
the existence of a plan producing a positive output with no inputs. This technological
infeasible, so that 𝑦 ∈
/ 𝑌.
1.12 1. Let x ∈ 𝑉 (𝑦). This implies that (𝑦, −x) ∈ 𝑌 . Let x′ ≥ x. Then (𝑦, −x′ ) ≤
(𝑦, −x) and free disposability implies that (𝑦, −x′ ) ∈ 𝑌 . Therefore x′ ∈ 𝑉 (𝑦).
2. Again assume x ∈ 𝑉 (𝑦). This implies that (𝑦, −x) ∈ 𝑌 . By free disposal,
(𝑦 ′ , −x) ∈ 𝑌 for every 𝑦 ′ ≤ 𝑦, which implies that x ∈ 𝑉 (𝑦 ′ ). 𝑉 (𝑦 ′ ) ⊇ 𝑉 (𝑦).
1.13 The domain of “<” is {1, 2} = 𝑋 and the range is {2, 3} ⫋ 𝑌 .
1.14 Figure 1.1.
1.15 The relation “is strictly higher than” is transitive, antisymmetric and asymmetric.
It is not complete, reflexive or symmetric.
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Next, we show that the equivalence classes are either disjoint or identical, that is
∼(𝑎) ∕= ∼(𝑏) if and only if f∼(𝑎) ∩ ∼(𝑏) = ∅.
First, assume ∼(𝑎) ∩ ∼(𝑏) = ∅. Then 𝑎 ∈ ∼(𝑎) but 𝑎 ∈
/ ∼(𝑏). Therefore ∼(𝑎) ∕= ∼(𝑏).
Conversely, assume ∼(𝑎) ∩ ∼(𝑏) ∕= ∅ and let 𝑥 ∈ ∼(𝑎) ∩ ∼(𝑏). Then 𝑥 ∼ 𝑎 and by
symmetry 𝑎 ∼ 𝑥. Also 𝑥 ∼ 𝑏 and so by transitivity 𝑎 ∼ 𝑏. Let 𝑦 be any element
in ∼(𝑎) so that 𝑦 ∼ 𝑎. Again by transitivity 𝑦 ∼ 𝑏 and therefore 𝑦 ∈ ∼(𝑏). Hence
∼(𝑎) ⊆ ∼(𝑏). Similar reasoning implies that ∼(𝑏) ⊆ ∼(𝑎). Therefore ∼(𝑎) = ∼(𝑏).
We conclude that the equivalence classes partition 𝑋.
1.18 The set of proper coalitions is not a partition of the set of players, since any player
can belong to more than one coalition. For example, player 1 belongs to the coalitions
{1}, {1, 2} and so on.
1.19
𝑥 ≻ 𝑦 =⇒ 𝑥 ≿ 𝑦 and 𝑦 ∕≿ 𝑥
𝑦 ∼ 𝑧 =⇒ 𝑦 ≿ 𝑧 and 𝑧 ≿ 𝑦
Transitivity of ≿ implies 𝑥 ≿ 𝑧. We need to show that 𝑧 ∕≿ 𝑥. Assume otherwise, that
is assume 𝑧 ≿ 𝑥 This implies 𝑧 ∼ 𝑥 and by transitivity 𝑦 ∼ 𝑥. But this implies that
𝑦 ≿ 𝑥 which contradicts the assumption that 𝑥 ≻ 𝑦. Therefore we conclude that 𝑧 ∕≿ 𝑥
and therefore 𝑥 ≻ 𝑧. The other result is proved in similar fashion.
1.20 asymmetric Assume 𝑥 ≻ 𝑦.
𝑥 ≻ 𝑦 =⇒ 𝑦 ∕≿ 𝑥
while
𝑦 ≻ 𝑥 =⇒ 𝑦 ≿ 𝑥
Therefore
𝑥 ≻ 𝑦 =⇒ 𝑦 ∕≻ 𝑥
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Solutions for Foundations of Mathematical Economics All rights reserved
𝑦 ∼ 𝑧 ⇐⇒ 𝑦 ≿ 𝑧 and 𝑧 ≿ 𝑦
Transitivity of ≿ implies
𝑥 ≿ 𝑦 and 𝑦 ≿ 𝑧 =⇒ 𝑥 ≿ 𝑧
𝑧 ≿ 𝑦 and 𝑦 ≿ 𝑥 =⇒ 𝑧 ≿ 𝑥
Combining
𝑥 ≿ 𝑧 and 𝑧 ≿ 𝑥 =⇒ 𝑥 ∼ 𝑧
symmetric
𝑥 ∼ 𝑦 ⇐⇒ 𝑥 ≿ 𝑦 and 𝑦 ≿ 𝑥
⇐⇒ 𝑦 ≿ 𝑥 and 𝑥 ≿ 𝑦
⇐⇒ 𝑦 ∼ 𝑥
1.22 reflexive Every integer is a multiple of itself, that is 𝑚 = 1𝑚.
transitive Assume 𝑚 = 𝑘𝑛 and 𝑛 = 𝑙𝑝 where 𝑘, 𝑙 ∈ 𝑁 . Then 𝑚 = 𝑘𝑙𝑝 so that 𝑚 is a
multiple of 𝑝.
1
not symmetric If 𝑚 = 𝑘𝑛, 𝑘 ∈ 𝑁 , then 𝑛 = 𝑘𝑚 and 𝑘 ∈
/ 𝑁 . For example, 4 is a
multiple of 2 but 2 is not a multiple of 4.
1.23
[𝑎, 𝑏] = { 𝑎, 𝑦, 𝑏, 𝑧 }
(𝑎, 𝑏) = { 𝑦 }
1.24
≿ (𝑦) = {𝑏, 𝑦, 𝑧 }
≻ (𝑦) = {𝑏, 𝑧 }
≾ (𝑦) = {𝑎, 𝑥, 𝑦 }
≺ (𝑦) = {𝑎, 𝑥 }
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𝑎1 = 𝑥1
{
𝑥𝑖 if 𝑥𝑖 ≻ 𝑎𝑖−1
𝑎𝑖 =
𝑎𝑖−1 otherwise
that is
≻(𝑥∗ ) = { 𝑥 : 𝑥 ≻ 𝑥∗ } = ∅
Similarly
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𝑥 ≻ 𝑦 if 𝑥𝑘 ≻𝑖 𝑦𝑘
𝑦 ≻ 𝑥 otherwise
𝑥 ∼ 𝑦 =⇒ 𝑥 ≿ 𝑦 and 𝑦 ≿ 𝑥
∼ (𝑥) = { 𝑦 ∈ 𝑋 : 𝑦 ∼ 𝑥 }
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1.44 1. 𝑥∨𝑦 is an upper bound for { 𝑥, 𝑦 }, that is x∨y ≿ 𝑥 and x∨y ≿ 𝑦. Similarly,
𝑥 ∨ 𝑦 is a lower bound for { 𝑥, 𝑦 }.
2. Assume 𝑥 ≿ 𝑦. Then 𝑥 is an upper bound for { 𝑥, 𝑦 }, that is 𝑥 ≿ 𝑥 ∨ 𝑦. If 𝑏 is
any upper bound for { 𝑥, 𝑦 }, then 𝑏 ≿ 𝑥. Therefore, 𝑥 is the least upper bound
for { 𝑥, 𝑦 }. Similarly, 𝑦 is a lower bound for { 𝑥, 𝑦 }, and is greater than any
other lower bound. Conversely, assume 𝑥 ∨ 𝑦 = 𝑥. Then 𝑥 is an upper bound for
{ 𝑥, 𝑦 }, that is 𝑥 ≿ 𝑦.
3. Using the preceding equivalence
𝑥 ≿ 𝑥 ∧ 𝑦 =⇒ 𝑥 ∨ (𝑥 ∧ 𝑦) = 𝑥
𝑥 ∨ 𝑦 ≿ 𝑥 =⇒ (𝑥 ∨ 𝑦) ∧ 𝑥 = 𝑥
𝑆 ∗ = { 𝑥 ∈ 𝑋 : 𝑥 ≿ 𝑠 for every 𝑠 ∈ 𝑆 }
𝑥 ∨ 𝑦 = sup{ 𝑥, 𝑦 } ≾ 𝑏
Therefore 𝑥 ∨ 𝑦 ∈ [𝑎, 𝑏]. Similarly, 𝑥 ∧ 𝑦 ∈ [𝑎, 𝑏]. [𝑎, 𝑏] is a lattice. Similarly, for any
subset 𝑆 ⊆ [𝑎, 𝑏] ⊆ 𝐿, sup 𝑆 ∈ 𝐿 if 𝐿 is complete. Also, sup 𝑆 ≾ 𝑏 = sup[𝑎, 𝑏]. Therefore
sup 𝑆 ∈ [𝑎, 𝑏]. Similarly inf 𝑆 ∈ [𝑎, 𝑏] so that [𝑎, 𝑏] is complete.
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Therefore, 𝑆1 ≿𝑆 𝑆3 .
2. 𝑆 ≿𝑆 𝑆 if and only if, for every 𝑥1 , 𝑥2 ∈ 𝑆, 𝑥1 ∨ 𝑥2 ∈ 𝑆 and 𝑥1 ∧ 𝑥2 ∈ 𝑆, which
is the case if and only if 𝑆 is a sublattice.
3. Let 𝐿(𝑋) denote the set of all sublattices of 𝑋. We have shown that ≿𝑆 is
reflexive, transitive and antisymmetric on 𝐿(𝑋). Hence, it is a partial order on
𝐿(𝑋).
1.50 Assume 𝑆1 ≿𝑆 𝑆2 . For any 𝑥1 ∈ 𝑆1 and 𝑥2 ∈ 𝑆2 , 𝑥1 ∨ 𝑥2 ∈ 𝑆1 and 𝑥1 ∧ 𝑥2 ∈ 𝑆2 .
Therefore
which implies that inf 𝑆2 ≾ inf 𝑆1 . Note that completeness ensures the existence of
sup 𝑆 and inf 𝑆 respectively.
1.51 An argument analogous to the preceding exercise establishes =⇒ . (Complete-
ness is not required, since for any interval 𝑎 = inf[𝑎, 𝑏] and 𝑏 = sup[𝑎, 𝑏]).
To establish the converse, assume that 𝑆1 = [𝑎1 , 𝑏1 ] and 𝑆2 = [𝑎2 , 𝑏2 ]. Consider any
𝑥1 ∈ 𝑆1 and 𝑥2 ∈ 𝑆2 . There are two cases.
Case 1. 𝑥1 ≿ 𝑥2 Since 𝑋 is a chain, 𝑥1 ∨ 𝑥2 = 𝑥1 ∈ 𝑆1 . 𝑥1 ∧ 𝑥2 = 𝑥2 ∈ 𝑆2 .
Case 2. 𝑥1 ≺ 𝑥2 Since 𝑋 is a chain, 𝑥1 ∨ 𝑥2 = 𝑥2 . Now 𝑎1 ≾ 𝑥1 ≺ 𝑥2 ≾ 𝑏2 ≾ 𝑏2 .
Therefore, 𝑥2 = 𝑥1 ∨ 𝑥2 ∈ 𝑆1 . Similarly 𝑎2 ≾ 𝑎1 ≾ 𝑥1 ≺ 𝑥2 ≾ 𝑏2 . Therefore
𝑥1 ∧ 𝑥2 = 𝑥1 ∈ 𝑆2 .
We have shown that 𝑆1 ≿𝑆 𝑆2 in both cases.
1.52 Assume that ≿ is a complete relation on 𝑋. This means that for every 𝑥, 𝑦 ∈ 𝑋,
either 𝑥 ≿ 𝑦 or 𝑦 ≿ 𝑥. In particular, letting 𝑥 = 𝑦, 𝑥 ≿ 𝑥 for 𝑥 ∈ 𝑋. ≿ is reflexive.
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1.53 Anti-symmetry implies that each indifference class contains a single element. If the
consumer’s preference relation was anti-symmetric, there would be no baskets of goods
between which the consumer was indifferent. Each indifference curve which consist a
single point.
1.54 We previously showed (Exercise 1.27) that every best element is maximal. To
prove the converse, assume that 𝑥 is maximal in the weakly ordered set 𝑋. We have to
show that 𝑥 ≿ 𝑦 for all 𝑦 ∈ 𝑋. Assume otherwise, that is assume there is some 𝑦 ∈ 𝑋
for which 𝑥 ∕≿ 𝑦. Since ≿ is complete, this implies that 𝑦 ≻ 𝑥 which contradicts the
assumption that 𝑥 is maximal. Hence we conclude that 𝑥 ≿ 𝑦 for 𝑦 ∈ 𝑋 and 𝑥 is a
best element.
1.55 False. A chain has at most one maximal element (Exercise 1.41). Here, uniqueness
is ensured by anti-symmetry. A weakly ordered set in which the order is not anti-
symmetric may have multiple maximal and best elements. For example, 𝑎 and 𝑏 are
both best elements in the weakly ordered set {𝑎 ∼ 𝑏 ≻ 𝑐}.
1.56 1. For every 𝑥 ∈ 𝑋, either 𝑥 ≿ 𝑦 =⇒ 𝑥 ∈ ≿(𝑦) or 𝑦 ≿ 𝑥 =⇒ 𝑥 ∈ ≾(𝑦) since
≿ is complete. Consequently, ≿(𝑦) ∪ ≺(𝑦) = 𝑋 If 𝑥 ∈ ≿(𝑦) ∩ ≾(𝑦), then 𝑥 ≿ 𝑦
and 𝑦 ≿ 𝑥 so that 𝑥 ∼ 𝑦 and 𝑥 ∈ 𝐼𝑦 .
2. For every 𝑥 ∈ 𝑋, either 𝑥 ≿ 𝑦 =⇒ 𝑥 ∈ ≿(𝑦) or 𝑦 ≻ 𝑥 =⇒ 𝑥 ∈ ≺(𝑦) since ≿ is
complete. Consequently, ≿(𝑦) ∪ ≺(𝑦) = 𝑋 and ≿(𝑦) ∩ ≺(𝑦) = ∅.
3. For every 𝑦 ∈ 𝑋, ≻(𝑦) and 𝐼𝑦 partition ≿(𝑦) and therefore ≻(𝑦), 𝐼𝑦 and ≺(𝑦)
partition 𝑋.
1.57 Assume 𝑥 ≿ 𝑦 and 𝑧 ∈ ≿(𝑥). Then 𝑧 ≿ 𝑥 ≿ 𝑦 by transitivity. Therefore 𝑧 ∈ ≿(𝑦).
This shows that ≿(𝑥) ⊆ ≿(𝑦).
Similarly, assume 𝑥 ≻ 𝑦 and 𝑧 ∈ ≻(𝑥). Then 𝑧 ≻ 𝑥 ≻ 𝑦 by transitivity. Therefore
𝑧 ∈ ≻(𝑦). This shows that ≿(𝑥) ⊆ ≿(𝑦). To show that ≿(𝑥) ∕= ≿(𝑦), observe that
𝑥 ∈ ≻(𝑦) but that 𝑥 ∈
/ ≻(𝑥)
1.58 Every finite ordered set has a least one maximal element (Exercise 1.28).
1.59 Kreps (1990, p.323), Luenberger (1995, p.170) and Mas-Colell et al. (1995, p.313)
adopt the weak Pareto order, whereas Varian (1992, p.323) distinguishes the two or-
ders. Osborne and Rubinstein (1994, p.7) also distinguish the two orders, utilizing the
weak order in defining the core (Chapter 13) but the strong Pareto order in the Nash
bargaining solution (Chapter 15).
1.60 Assume that a group 𝑆 is decisive over 𝑥, 𝑦 ∈ 𝑋. Let 𝑎, 𝑏 ∈ 𝑋 be two other states.
We have to show that 𝑆 is decisive over 𝑎 and 𝑏. Without loss of generality, assume
for all individuals 𝑎 ≿𝑖 𝑥 and 𝑦 ≿𝑖 𝑏. Then, the Pareto order implies that 𝑎 ≻ 𝑥 and
𝑦 ≻ 𝑏.
Assume that for every 𝑖 ∈ 𝑆, 𝑥 ≿𝑖 𝑦. Since 𝑆 is decisive over 𝑥 and 𝑦, the social
order ranks 𝑥 ≿ 𝑦. By transitivity, 𝑎 ≿ 𝑏. By IIA, this holds irrespective of individual
preferences on other alternatives. Hence, 𝑆 is decisive over 𝑎 and 𝑏.
1.61 Assume that 𝑆 is decisive. Let 𝑥, 𝑦 and 𝑧 be any three alternatives and assume
𝑥 ≿ 𝑦 for every 𝑖 ∈ 𝑆. Partition 𝑆 into two subgroups 𝑆1 and 𝑆2 so that
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Solutions for Foundations of Mathematical Economics All rights reserved
1.66 The usual way to model a cost allocation problem as a TP-coalitional game is
to regard the potential cost savings from cooperation as the sum to be allocated. In
this example, the total joint cost of 6530 represents a potential saving of 1530 over
the aggregate cost of 8060 if each region goes its own way. This potential saving of
1530 measures 𝑤(𝑁 ). Similarly, undertaking a joint development, AP and TN could
satisfy their combined requirements at a total cost of 6890. This compares with the
standalone costs of 7100 (= 1870 (AP) + 5330 (TN)). Hence, the potential cost savings
from their collaboration are 210 (= 7100 - 6890), which measures 𝑤(𝐴𝑃, 𝑇 𝑁 ). By
similar calculations, we can compute the worth of each coalition, namely
An outcome in this game is an allocation of the total cost savings 𝑤(𝑁 ) = 1530 amongst
the three players. This can be translated into final cost shares by subtracting each
players share of the cost savings from their standalone cost. For example, a specific
outcome in this game is (𝑥𝐴𝑃 = 370, 𝑥𝑇 𝑁 = 330, 𝑥𝐾𝑀 = 830), which corresponds to
final cost shares of 1500 for AP, 5000 for TN and 30 for KM.
1.67 Let
∑
𝐶 = {x ∈ 𝑋 : 𝑥𝑖 ≥ 𝑤(𝑆) for every 𝑆 ⊆ 𝑁 }
𝑖∈𝑆
1. 𝐶 ⊆ core Assume that x ∈ 𝐶. Suppose x ∈ / core. This implies there exists some
coalition 𝑆 and outcome y ∈ 𝑤(𝑆) such that y ≻𝑖 x for every 𝑖 ∈ 𝑆.
∑
∙ y ∈ 𝑤(𝑆) implies 𝑖∈𝑆 𝑦𝑖 ≤ 𝑤(𝑆) while
∙ y ≻𝑖 x for every 𝑖 ∈ 𝑆 implies 𝑦𝑖 > 𝑥𝑖 for every 𝑖 ∈ 𝑆. Summing, this
implies
∑ ∑
𝑦𝑖 > 𝑥𝑖 ≥ 𝑤(𝑆)
𝑖∈𝑆 𝑖∈𝑆
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1.68 The 7 unanimity games for the player set 𝑁 = {1, 2, 3} are
{
1 S = {1}, {1,2}, {1,3}, N
𝑢{1} (𝑆) =
0 otherwise
{
1 S = {2}, {1,2}, {2,3}, N
𝑢{2} (𝑆) =
0 otherwise
{
1 S = {3}, {1,3}, {2,3}, N
𝑢{3} (𝑆) =
0 otherwise
{
1 S = {1,2}, N
𝑢{1,2} (𝑆) =
0 otherwise
{
1 S = {1,3}, N
𝑢{1,3} (𝑆) =
0 otherwise
{
1 S = {2,3}, N
𝑢{2,3} (𝑆) =
0 otherwise
{
1 S=N
𝑢𝑁 (𝑆) =
0 otherwise
1.69 Firstly, consider a simple game which is a unanimity game with essential coalition
𝑇 and let 𝑥 be an outcome in which
𝑥𝑖 ≥ 0 for every 𝑖 ∈ 𝑇
𝑥𝑖 = 0 for every 𝑖 ∈
/𝑇
and
∑
𝑥𝑖 = 1
𝑖∈𝑁
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Since there are no veto players (𝑇 = ∅), 𝑤(𝑁 ∖ {𝑖}) = 1 for every player 𝑖 ∈ 𝑁 and
∑
𝑥𝑗 ≥ 𝑤(𝑁 ∖ {𝑖}) = 1
𝑗∕=𝑖
which implies that 𝑥𝑖 = 0 for every 𝑖 ∈ 𝑁 contradicting (1.15). Thus we conclude that
core = ∅.
1.70 The excesses of the proper coalitions at x1 and x2 are
x1 x2
{AP} -180 -200
{KM} -955 -950
{TN} -395 -380
{AP, KM} -365 -380
{AP, TN} -365 -370
{KM, TN} -180 -160
Therefore
𝑑(x1 ) = (−180, −180, −365, −365, −395, −955)
and
𝑑(x2 ) = (−160, −200, −370, −380, −380, −950)
d(x1 ) ≺𝐿 d(x2 ) which implies x1 ≻𝑑 x2 .
1.71 It is a weak order on 𝑋, that is ≿ is reflexive, transitive and complete. Reflexivity
𝑛
and transitivity flow from the corresponding properties of ≿𝐿 on ℜ2 . Similarly, for
𝑛
any x, y ∈ 𝑋, either d(x) ≾𝐿 d(y) or d(y) ≾𝐿 d(x) since ≿𝐿 is complete on ℜ2 .
Consequently either x ≿ y or y ≿ x (or both).
≿ is not a partial order since it is not antisymmetric
d(x) ≾𝐿 d(y) and d(y) ≾𝐿 d(x) does not imply x = y
1.72
∑
𝑑(𝑆, x) = 𝑤(𝑆) − 𝑥𝑖
𝑖∈𝑆
so that
∑
𝑑(𝑆, x) ≤ 0 ⇐⇒ 𝑥𝑖 ≥ 𝑤(𝑆)
𝑖∈𝑆
1.73 Assume to the contrary that x ∈ Nu but that x ∈ / core. Then, there exists a
coalition 𝑇 with a positive deficit 𝑑(𝑇, x) > 0. Since core ∕= ∅, there exists some y ∈ 𝑋
such that 𝑑(𝑆, y) ≤ 0 for every 𝑆 ⊆ Nu. Consequently, d(y) ≺ d(x) and y ≻ x, so
that x ∈/ Nu. This contradiction establishes that Nu ⊆ core.
1.74 For player 1, 𝐴1 = {𝐶, 𝑁 } and
(𝐶, 𝐶) ≿1 (𝐶, 𝐶)
(𝐶, 𝐶) ≿1 (𝑁, 𝐶)
Similarly for player 2
(𝐶, 𝐶) ≿2 (𝐶, 𝐶)
(𝐶, 𝐶) ≿2 (𝐶, 𝑁 )
Therefore, (𝐶, 𝐶) satisfies the requirements of the definition of a Nash equilibrium
(Example 1.51).
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1.75 If a∗𝑖 is the best element in (𝐴𝑖 , ≿′𝑖 ) for every player 𝑖, then
which implies that ā is a maximal element of ≿′𝑖 . To see this, assume not. That is,
assume that there exists some 𝑎˜𝑖 ∈ 𝐴𝑖 such that 𝑎˜𝑖 ≻′𝑖 𝑎
¯𝑖 which implies
𝑎𝑖 , a−𝑖 ) ≻𝑖 (¯
(˜ 𝑎𝑖 , a−𝑖 ) for every a−𝑖 ∈ 𝐴−𝑖
In particular
∣𝑥 − 𝑧∣ + ∣𝑧 − 𝑦∣ ≥ ∣𝑥 − 𝑧∣ = 𝑧 − 𝑥 ≥ 𝑦 − 𝑥 = ∣𝑥 − 𝑦∣
If 𝑥 ≤ 𝑧 ≤ 𝑦
∣𝑥 − 𝑧∣ + ∣𝑧 − 𝑦∣ = 𝑧 − 𝑥 + 𝑦 − 𝑧 = 𝑦 − 𝑥 = ∣𝑥 − 𝑦∣
and so on.
1.77 We show that 𝜌∞ 𝑥, 𝑦 = max𝑛𝑖=1 ∣𝑥𝑖 − 𝑦𝑖 ∣ satisfies the requirements of a metric,
namely
1. max𝑛𝑖=1 ∣𝑥𝑖 − 𝑦𝑖 ∣ ≥ 0
2. max𝑛𝑖=1 ∣𝑥𝑖 − 𝑦𝑖 ∣ = 0 if and only if 𝑥𝑖 = 𝑦𝑖 for all 𝑖.
3. max𝑛𝑖=1 ∣𝑥𝑖 − 𝑦𝑖 ∣ = max𝑛𝑖=1 ∣𝑦𝑖 − 𝑥𝑖 ∣
4. For every 𝑖, ∣𝑥𝑖 − 𝑦𝑖 ∣ ≤ ∣𝑥𝑖 − 𝑧𝑖 ∣ + ∣𝑧𝑖 − 𝑦𝑖 ∣ from previous exercise. Therefore
1.78 For any 𝑛, any neighborhood of 1/𝑛 contains points of 𝑆 (namely 1/𝑛) and points
not in 𝑆 (1/𝑛 + 𝜖). Hence every point in 𝑆 is a boundary point. Also, 0 is a boundary
point. Therefore b(𝑆) = 𝑆 ∪ {0}. Note that 𝑆 ⊂ b(𝑆). Therefore, 𝑆 has no interior
points.
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𝑋 =𝐴∪𝐵 𝐴∩𝐵 =∅
𝑥 = 𝑆 ∪ 𝑆𝑐
so that
b(𝑆) = 𝑆 ∩ 𝑆 𝑐 = 𝑆 ∩ 𝑆 𝑐 = ∅
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1.85 1. Let {𝐺𝑖 } be a (possibly infinite) collection of open sets. Let 𝐺 = ∪𝑖 𝐺𝑖 . Let
𝑥 be a point in 𝐺. Then there exists some particular 𝐺𝑗 which contains 𝑥. Since
𝐺𝑗 is open, 𝐺𝑗 is a neighborhood of 𝑥. Since 𝐺𝑗 ⊆ 𝐺, 𝑥 is an interior point of 𝐺.
Since 𝑥 is an arbitrary point in 𝐺, we have shown that every 𝑥 ∈ 𝐺 is an interior
point. Hence, 𝐺 is open.
What happens if every 𝐺𝑖 is empty? In this case, 𝐺 = ∅ and is open (Exercise
1.81). The other possibility is that the collection {𝐺𝑖 } is empty. Again 𝐺 = ∅
which is open.
Suppose { 𝐺1 , 𝐺2 , . . . , 𝐺𝑛 } is a finite collection of open sets. Let 𝐺 = ∩𝑖 𝐺𝑖 . If
𝐺 = ∅, then it is trivially open. Otherwise, let 𝑥 be a point in 𝐺. Then 𝑥 ∈ 𝐺𝑖
for all 𝑖 = 1, 2, . . . , 𝑛. Since the sets 𝐺𝑖 are open, for every 𝑖, there exists an open
ball 𝐵(𝑥, 𝑟𝑖 ) ⊆ 𝐺𝑖 about 𝑥. Let 𝑟 be the smallest radius of these open balls, that
is 𝑟 = min{ 𝑟1 , 𝑟2 , . . . , 𝑟𝑛 }. Then 𝐵𝑟 (𝑥) ⊆ 𝐵(𝑥, 𝑟𝑖 ), so that 𝐵𝑟 (𝑥) ⊆ 𝐺𝑖 for all i.
Hence 𝐵𝑟 (𝑥) ⊆ 𝐺. 𝑥 is an interior point of 𝐺 and 𝐺 is open.
To complete the proof, we need to deal with the trivial case in which the collection
is empty. In that case, 𝐺 = ∩𝑖 𝐺𝑖 = 𝑋 and hence is open.
2. The corresponding properties of closed sets are established analogously.
1.86 1. Let 𝑥0 be an interior point of 𝑆. This implies there exists an open ball 𝐵 ⊆ 𝑆
about 𝑥0 . Every 𝑥 ∈ 𝐵 is an interior point of 𝑆. Hence 𝐵 ⊆ int 𝑆. 𝑥0 is an
interior point of int 𝑆 which is therefore open.
Let 𝐺 be any open subset of 𝑆 and 𝑥 be a point in 𝐺. 𝐺 is neighborhood of 𝑥,
which implies that 𝑆 ⊇ 𝐺 is also neighborhood of 𝑥. Therefore 𝑥 is an interior
point of 𝑆. Therefore int 𝑆 contains every open subset 𝐺 ⊆ 𝑆, and hence is the
largest open set in 𝑆.
2. Let 𝑆 denote the closure of the set 𝑆. Clearly, 𝑆 ⊆ 𝑆. To show the converse, let
𝑥 be a closure point of 𝑆 and let 𝑁 be a neighborhood of 𝑥. Then 𝑁 contains
some other point 𝑥′ ∕= 𝑋 which is a closure point of 𝑆. 𝑁 is a neighborhood of
𝑥′ which intersects 𝑆. Hence 𝑥 is a closure point of 𝑆.
Consequently 𝑆 = 𝑆 which implies that 𝑆 is closed.
Assume 𝐹 is a closed subset of containing 𝑆. Then
𝑆⊆𝐹 =𝐹
int 𝑆 = 𝑆 ∖ b(𝑆)
𝑆 = 𝑆 ∪ b(𝑆) = 𝑆
𝑆 = 𝑆 ∪ b(𝑆) = 𝑆
𝑆 is closed.
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1.89 Assume 𝑆 is bounded, and let 𝑑 = 𝑑(𝑆). Choose any 𝑥 ∈ 𝑆. For all 𝑦 ∈ 𝑆,
𝜌(𝑥, 𝑦) ≤ 𝑑 < 𝑑 + 1. Therefore, 𝑦 ∈ 𝐵(𝑥, 𝑑 + 1). 𝑆 is contained in the open ball
𝐵(𝑥, 𝑑 + 1).
Conversely, assume 𝑆 is contained in the open ball 𝐵𝑟 (𝑥). Then for any 𝑦, 𝑧 ∈ 𝑆
by the triangle inequality. Therefore 𝑑(𝑆) < 2𝑟 and the set is bounded.
1.90 Let 𝑦 ∈ 𝑆 ∩ 𝐵𝑟 (𝑥0 ). For every 𝑥 ∈ 𝑆, 𝜌(𝑥, 𝑦) < 𝑟 and therefore
𝜌𝑥 = 𝜌(𝑥, 𝑆2 ) > 0
𝜌𝑦 = 𝜌(𝑦, 𝑆1 ) > 0
Let
∪
𝑇1 = 𝐵𝜌𝑥 /2 (𝑥)
𝑥∈𝑆1
∪
𝑇2 = 𝐵𝜌𝑦 /2 (𝑥)
𝑦∈𝑆2
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𝑆
1
1 2
1.95 Assume 𝑆 is connected. Suppose 𝑆 is not an interval. This implies that there
exists numbers 𝑥, 𝑦, 𝑧 such that 𝑥 < 𝑦 < 𝑧 and 𝑥, 𝑧 ∈ 𝑆 while 𝑦 ∈
/ 𝑆. Then
𝑦 = sup{ [𝑥, 𝑧] ∩ 𝑆 }
Clearly 𝑥 ≤ 𝑦 ≤ 𝑧 so that 𝑦 ∈ 𝑆. Now 𝑦 belongs to either 𝐴 or 𝐵. Since 𝐴 is closed in 𝑆,
[𝑥, 𝑧] ∩ 𝐴 is closed and 𝑦 = sup{ [𝑥, 𝑧] ∩ 𝑆 } ∈ 𝐴. This implies the 𝑦 < 𝑧. Consequently,
𝑦 + 𝜖 ∈ 𝐵 for every 𝜖 > 0 such that 𝑦 + 𝜖 ≤ 𝑧. Since 𝐵 is closed, 𝑦 ∈ 𝐵. This implies
that 𝑦 belongs to both 𝐴 and 𝐵 contradicting the assumption that 𝐴 ∩ 𝐵 = ∅. We
conclude that 𝑆 must be connected.
1.96 Assume 𝑥𝑛 → 𝑥 and also 𝑥𝑛 → 𝑦. We have to show that 𝑥 = 𝑦. Suppose not,
that is suppose 𝑥 ∕= 𝑦 (see Figure 1.3). Then 𝜌(𝑥, 𝑦) = 𝑅 > 0. Let 𝑟 = 𝑅/3 > 0. Since
𝑥𝑛 → 𝑥, there exists some 𝑁𝑥 such that 𝑥𝑛 ∈ 𝐵𝑟 (𝑥) for all 𝑛 ≥ 𝑁𝑥 . Since 𝑥𝑛 → 𝑦,
there exists some 𝑁𝑦 such that 𝑥𝑛 ∈ 𝐵𝑟 (𝑦) for all 𝑛 ≥ 𝑁𝑦 . But these statements are
contradictory since 𝐵𝑟 (𝑥) ∩ 𝐵(𝑦, 𝑟) = ∅. We conclude that the successive terms of a
convergent sequence cannot get arbitrarily close to two distinct points, so that the limit
a convergent sequence is unique.
1.97 Let (𝑥𝑛 ) be a sequence which converges to 𝑥. There exists some 𝑁 such that
𝜌(𝑥𝑛 − 𝑥) < 1
for all 𝑛 ≥ 𝑁 . Let
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𝐵(𝑥, 𝑟) 𝑅 𝐵(𝑦, 𝑟)
𝑟 𝑟
𝑥 𝑦
lim 𝑠𝑛 = 0
However, 𝑠𝑛 > 0 for all 𝑛. There is no limit to the number of guests who will get a
share of the cake, although the shares will get vanishingly small for large parties.
1.99 Suppose 𝑥𝑛 → 𝑥. That is, there exists some 𝑁 such that 𝜌(𝑥𝑛 , 𝑥) < 𝜖/2 for all
𝑛 ≥ 𝑁 . Then, for all 𝑚, 𝑛 ≥ 𝑁
𝜌(𝑥𝑚 , 𝑥𝑛 ) ≤ 𝜌(𝑥𝑚 , 𝑥) + 𝜌(𝑥, 𝑥𝑛 )
< 𝜖/2 + 𝜖/2 = 𝜖
1.100 Let (𝑥𝑛 ) be a Cauchy sequence. There exists some 𝑁 such that
𝜌(𝑥𝑛 − 𝑥𝑁 ) < 1
for all 𝑛 ≥ 𝑁 . Let
𝑅 = max{ 𝜌(𝑥1 − 𝑥𝑁 ), 𝜌(𝑥2 − 𝑥𝑁 ), . . . , 𝜌(𝑥𝑁 −1 − 𝑥𝑁 ), 1 }
Every 𝑥𝑛 belongs to 𝐵(𝑥𝑁 , 𝑅 + 1), the ball of radius 𝑅 + 1 centered on 𝑥𝑁 .
1.101 Let (𝑥𝑛 ) be a bounded increasing sequence in ℜ and let 𝑆 = { 𝑥𝑛 } be the set of
elements of (𝑥𝑛 ). Let 𝑏 be the least upper bound of 𝑆. We show that 𝑥𝑛 → 𝑏.
First observe that 𝑥𝑛 ≤ 𝑏 for every 𝑛 (since 𝑏 is an upper bound). Since 𝑏 is the least
upper bound, for every 𝜖 > 0 there exists some element 𝑥𝑁 such that 𝑥𝑁 > 𝑏 − 𝜖. Since
(𝑥𝑛 ) is increasing, we must have
𝑏 − 𝜖 < 𝑥𝑛 ≤ 𝑏 for every 𝑛 ≥ 𝑁
That is, for every 𝜖 > 0 there exists an 𝑁 such that
𝜌(𝑥𝑛 , 𝑥) < 𝜖 for every 𝑛 ≥ 𝑁
𝑥𝑛 → 𝑏.
1.102 If 𝛽 > 1, the sequence 𝛽, 𝛽 2 , 𝛽 3 , . . . is unbounded.
Otherwise, if 𝛽 ≤ 1, 𝛽 𝑛 ≤ 𝛽 𝑛−1 and the sequence is decreasing and bounded by 𝛽 ≤ 1.
Therefore the sequence converges (Exercise 1.101). Let 𝑥 = lim𝑛→∞ . Then
𝛽 𝑛+1 = 𝛽𝛽 𝑛
and therefore
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Expanding
√
𝑥2 − 2 2𝑥 + 2 ≥ 0
√
𝑥2 + 2 ≥ 2 2𝑥
Dividing by 𝑥
2 √
𝑥+ ≥2 2
𝑥
for every 𝑥 > 0. Therefore
( )
1 2 √
𝑥+ ≥ 2
2 𝑥
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1.104 The following sequence approximates the square root of any positive number 𝑎
𝑥1 = 𝑎
1( 𝑎 )
𝑥𝑛+1 = 𝑥𝑛 + 𝑛
2 𝑥
1.105 Let 𝑥 ∈ 𝑆. If 𝑥 ∈ 𝑆, then 𝑥 is the limit of the sequence (𝑥, 𝑥, 𝑥, . . . ). If 𝑥 ∈
/ 𝑆,
then 𝑥 is a boundary point of 𝑆. For every 𝑛, the ball 𝐵(𝑥, 1/𝑛) contains a point
𝑥𝑛 ∈ 𝑆. From the sequence of open balls 𝐵(𝑥, 1/𝑛) for 𝑛 = 1, 2, 3, . . . , we can generate
of a sequence of points 𝑥𝑛 which converges to 𝑥.
Conversely, assume that 𝑥 is the limit of a sequence (𝑥𝑛 ) of points in 𝑆. Either 𝑥 ∈ 𝑆
/ 𝑆. Since 𝑥𝑛 → 𝑥, every neighborhood of 𝑥 contains points
and therefore 𝑥 ∈ 𝑆. Or 𝑥 ∈
𝑛
𝑥 of the sequence. Hence, 𝑥 is a boundary point of 𝑆 and 𝑥 ∈ 𝑆.
1.106 𝑆 is closed if and only if 𝑆 = 𝑆. The result follows from Exercise 1.105.
1.107 Let 𝑆 be a closed subset of a complete metric space 𝑋. Let (𝑥𝑛 ) be a Cauchy
sequence in 𝑆. Since 𝑋 is complete, 𝑥𝑛 → 𝑥 ∈ 𝑋. Since 𝑆 is closed, 𝑥 ∈ 𝑆 (Exercise
1.106).
1.108 Since 𝑑(𝑆 𝑛 ) → 0, 𝑆 cannot contain more than one point. Therefore, it suffices
to show that 𝑆 is nonempty. Choose some 𝑥𝑛 from each 𝑆 𝑛 . Since 𝑑(𝑆 𝑛 ) → 0, (𝑥𝑛 ) is
a Cauchy sequence. Since 𝑋 is complete, there exists some 𝑥 ∈ 𝑋 such that 𝑥𝑛 → 𝑥.
Choose some 𝑚. Since the sets are nested, the subsequence { 𝑥𝑛 : 𝑛 ≥ 𝑚 } ⊆ 𝑆 𝑚 . Since
𝑆 𝑚 is closed, 𝑥 ∈ 𝑆 𝑚 (Exercise 1.106). Since 𝑥 ∈ 𝑆 𝑚 for every 𝑚
∞
∩
𝑥∈ 𝑆𝑚
𝑚=1
1.109 If player 1 picks closed balls whose radius decreases by at least half after each
pair of moves, then { 𝑆 1 , 𝑆 3 , 𝑆 5 , . . . } is a nested sequence of closed sets which has a
nonempty intersection (Exercise 1.108).
1.110 Let (𝑥𝑛 ) be a sequence in 𝑆 ⊆ 𝑇 with 𝑆 closed and 𝑇 compact. Since 𝑇 is
compact, there exists a convergent subsequence 𝑥𝑚 → 𝑥 ∈ 𝑇 . Since 𝑆 is closed,
we must have 𝑥 ∈ 𝑆 (Exercise 1.106). Therefore (𝑥𝑛 ) contains a subsequence which
converges in 𝑆, so that 𝑆 is compact.
1.111 Let (𝑥𝑛 ) be a Cauchy sequence in a metric space. For every 𝜖 > 0, there exists
𝑁 such that
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1.112 We proceed sequentially as follows. Choose any 𝑥1 in 𝑋. If the open ball 𝐵(𝑥1 , 𝑟)
contains 𝑋, we are done. Otherwise, choose some 𝑥2 ∈ / 𝐵(𝑥1 , 𝑟) and consider the set
∪2
𝐵(𝑥𝑖 , 𝑟). If this set contains 𝑋, we are done. Otherwise, choose some 𝑥3 ∈ /
∪𝑖=1
2 ∪3
𝑖=1 𝐵(𝑥𝑖 , 𝑟) and consider 𝑖=1 𝐵(𝑥𝑖 , 𝑟)
The process must terminate with a finite number of open balls. Otherwise, if the process
could be continued indefinitely, we could construct an infinite sequence (𝑥1 , 𝑥2 , 𝑥3 , . . . )
which had no convergent subsequence. The would contradict the compactness of 𝑋.
1.113 Assume 𝑋 is compact. The previous exercise showed that 𝑋 is totally bounded.
Further, since every sequence has a convergent subsequence, every Cauchy sequence
converges (Exercise 1.111). Therefore 𝑋 is complete.
Conversely, assume that 𝑋 is complete and totally bounded and let 𝑆1 = { 𝑥11 , 𝑥21 , 𝑥31 , . . . }
be an infinite sequence of points in 𝑋. Since 𝑋 is totally bounded, it is covered by a
finite collection of open balls of radius 1/2. 𝑆1 has a subsequence 𝑆2 = { 𝑥12 , 𝑥22 , 𝑥32 , . . . }
all of whose points lie in one of the open balls. Similarly, 𝑆2 has a subsequence
𝑆3 = { 𝑥13 , 𝑥23 , 𝑥33 , . . . } all of whose points lie in an open ball of radius 1/3. Contin-
uing in this fashion, we construct a sequence of subsequences, each of which lies in a
ball of smaller and smaller radius. Consequently, successive terms of the “diagonal”
subsequence { 𝑥11 , 𝑥22 , 𝑥33 , . . . } get closer and closer together. That is, 𝑆 is a Cauchy
sequence. Since 𝑋 is complete, 𝑆 converges in 𝑋 and 𝑆1 has a convergent subsequence
𝑆. Hence, 𝑋 is compact.
1.114 1. Every big set 𝑇 ∈ ℬ has a least two distinct points. Hence 𝑑(𝑇 ) >
0 for every 𝑇 ∈ ℬ.
2. Otherwise, there exists 𝑛 such that 𝑑(𝑇 ) ≥ 1/𝑛 for every 𝑇 ∈ ℬ and therefore
𝛿 = inf 𝑇 ∈ℬ 𝑑(𝑇 ) ≥ 1/𝑛 > 0.
3. Choose a point 𝑥𝑛 in each 𝑇𝑛 . Since 𝑋 is compact, the sequence (𝑥𝑛 ) has a
convergent subsequence (𝑥𝑚 ) which converges to some point 𝑥0 ∈ 𝑋.
4. The point 𝑥0 belongs to at least one 𝑆0 in the open cover 𝒞. Since 𝑆0 is open,
there exists some open ball 𝐵𝑟 (𝑥0 ) ⊆ 𝑆0 .
5. Consider the concentric ball 𝐵𝑟/2 (𝑥0 ). Since (𝑥𝑚 ) is a convergent subsequence,
there exists some 𝑀 such that 𝑥𝑚 ∈ 𝐵𝑟/2 (𝑥) for every 𝑚 ≥ 𝑀 .
6. Choose some 𝑛0 ≥ min{ 𝑀, 2/𝑟 }. Then 1/𝑛0 < 𝑟/2 and 𝑑(𝑇𝑛0 ) < 1/𝑛0 < 𝑟/2.
𝑥𝑛0 ∈ 𝑇𝑛0 ∩ 𝐵𝑟/2 (𝑥) and therefore (Exercise 1.90) 𝑇𝑛0 ⊆ 𝐵𝑟 (𝑥) ⊆ 𝑆 0 .
This contradicts the assumption that 𝑇𝑛 is a big set. Therefore, we conclude that
𝛿 > 0.
1.115 1. 𝑋 is totally bounded (Exercise 1.112). Therefore, for every 𝑟 > 0, there
exists a finite number of open balls 𝐵𝑟 (𝑥𝑛 ) such that
𝑛
∪
𝑋= 𝐵𝑟 (𝑥𝑖 )
𝑖=1
𝑥 ∈ 𝐵𝑟 (𝑥𝑖 ) ⊆ 𝑆𝑖
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𝒞 = { 𝑆 ⊆ 𝑋 : 𝑆𝑐 ∈ ℬ }
That is
∪ ∩
𝑆 𝑐 = 𝑋 which implies 𝑆=∅
𝑆∈𝒞 𝑆∈𝒞
Consequently, 𝒞 does not have the finite intersection property. There exists a finite
subcollection { 𝑆1 , 𝑆2 , . . . , 𝑆𝑛 } such that
𝑛
∩
𝑆𝑖 = ∅
𝑖=1
𝑆𝑛 = { 𝑥𝑚 : 𝑚 = 𝑛 + 1, 𝑛 + 2, . . . }
The collection (𝑆𝑛 ) has the finite intersection property since, for any finite set of
integers { 𝑛1 , 𝑛2 , . . . , 𝑛𝑘 }
𝑘
∩
𝑆𝑛𝑗 ⊆ 𝑆𝐾 ∕= ∅
𝑗=1
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∪∞
Choose any 𝑥 ∈ 𝑛=1 𝑆𝑛 . That is, 𝑥 ∈ 𝑆𝑛 for each 𝑛 = 1, 2, . . . . Thus, for every
𝑟 > 0 and 𝑛 = 1, 2, . . . , there exists some 𝑥𝑛 ∈ 𝐵𝑟 (𝑥) ∩ 𝑆𝑛
We construct a subsequence as follows. For 𝑘 = 1, 2, . . . , let 𝑥𝑘 be the first
term in 𝑆𝑘 which belongs to 𝐵1/𝑘 (𝑥). Then, (𝑥𝑘 ) is a subsequence of (𝑥𝑛 ) which
converges to 𝑥. We conclude that every sequence has a convergent subsequence.
1.119 Assume (𝑥𝑛 ) is a bounded sequence in ℜ. Without loss of generality, we can
assume that { 𝑥𝑛 } ⊂ [0, 1]. Divide 𝐼 0 = [0, 1] into two sub-intervals [0, 1/2] and
[1/2, 1]. At least one of the sub-intervals must contain an infinite number of terms of
the sequence. Call this interval 𝐼 1 . Continuing this process of subdivision, we obtain
a nested sequence of intervals
𝐼0 ⊃ 𝐼1 ⊃ 𝐼2 ⊃ . . .
x+y =x+z
−x + (x + y) = −x + (x + z)
(−x + x) + y = (−x + x) + z
0+y =0+z
y=z
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2.
𝛼x = 𝛼y
1 1
(𝛼x) = (𝛼y)
(𝛼 ) 𝛼
( )
1 1
𝛼 x= 𝛼 y
𝛼 𝛼
x=y
3. 𝛼x = 𝛽x implies
(𝛼 − 𝛽)x = 𝛼x − 𝛽x = 0
(𝛼 − 𝛽)x = 0x
(𝛼 − 𝛽)x = (𝛼 + (−𝛽))x
= 𝛼x + (−𝛽)x
= 𝛼x − 𝛽x
5.
6.
𝛼0 = 𝛼(x + (−x))
= 𝛼x + 𝛼(−x)
= 𝛼x − 𝛼x
=0
1.123 The linear hull of the vectors {(1, 0), (0, 2)} is
{ ( ) ( )}
1 0
lin {(1, 0), (0, 2)} = 𝛼1 + 𝛼2
0 2
( )
{ 𝛼1 }
=
𝛼2
= ℜ2
The linear hull of the vectors {(1, 0), (0, 2)} is the whole plane ℜ2 . Figure 1.4 illustrates
how any vector in ℜ2 can be obtained as a linear combination of {(1, 0), (0, 2)}.
1.124 1. From the definition of 𝛼,
∑
𝛼𝑆 = 𝑤(𝑆) − 𝛼𝑇
𝑇 ⊊𝑆
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(−2, 3)
3
-2 -1 0 1
2.
∑ ∑ ∑
𝛼𝑇 𝑤𝑇 (𝑆) = 𝛼𝑇 𝑤𝑇 (𝑆) + 𝛼𝑇 𝑤𝑇 (𝑆)
𝑇 ⊆𝑁 𝑇 ⊆𝑆 𝑇 ∕⊆𝑆
∑ ∑
= 𝛼𝑇 1 + 𝛼𝑇 0
𝑇 ⊆𝑆 𝑇 ∕⊆𝑆
∑
= 𝛼𝑇 1
𝑇 ⊆𝑆
= 𝑤(𝑆)
1.125 1. Choose any x ∈ 𝑆. By homogeneity 0x = 𝜃 ∈ 𝑆.
2. For every x ∈ 𝑆, −x = (−1)x ∈ 𝑆 by homogeneity.
1.126 Examples of subspaces in ℜ𝑛 include:
1. The set containing just the null vector {0} is subspace.
2. Let x be any element in ℜ𝑛 and let 𝑇 be the set of all scalar multiples of x
𝑇 = { 𝛼x : 𝛼 ∈ ℜ }
𝑇 is a line through the origin in ℜ𝑛 and is a subspace.
3. Let 𝑆 be the set of all 𝑛-tuples with zero first coordinate, that is
𝑆 = { (𝑥1 , 𝑥2 , . . . , 𝑥𝑛 ) : 𝑥1 = 0, 𝑥𝑗 ∈ ℜ, 𝑗 ∕= 1 }
For any x, y ∈ 𝑆
x + y = (0, 𝑥2 , 𝑥3 , . . . , 𝑥𝑛 ) + (0, 𝑦2 , 𝑦3 , . . . , 𝑦𝑛 )
= (0, 𝑥2 + 𝑦2 , 𝑥3 + 𝑦3 , . . . , 𝑥𝑛 + 𝑦𝑛 ) ∈ 𝑆
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Similarly
𝛼x = 𝛼(0, 𝑥2 , 𝑥3 , . . . , 𝑥𝑛 )
= (0, 𝛼𝑥2 , 𝛼𝑥3 , . . . , 𝛼𝑥𝑛 ) ∈ 𝑆
x = 𝛼1 𝑥1 + 𝛼2 𝑥2 + . . . 𝛼𝑛 𝑥𝑛
Similarly
y = 𝛽1 𝑥1 + 𝛽2 𝑥2 + . . . 𝛽𝑛 𝑥𝑛
and
and
This shows that lin 𝑆 is closed under addition and scalar multiplication and hence
is a subspace.
lin 𝑆 is the smallest subspace containing 𝑆 Let 𝑇 be any subspace containing 𝑆.
Then 𝑇 contains all linear combinations of elements in 𝑆, so that lin 𝑆 ⊂ 𝑇 .
Hence lin 𝑆 is the smallest subspace containing S.
1.129 The previous exercise showed that lin 𝑆 is a subspace. Therefore, if 𝑆 = lin 𝑆,
𝑆 is a subspace.
Conversely, assume that 𝑆 is a subspace. Then 𝑆 is the smallest subspace containing
𝑆, and therefore 𝑆 = lin 𝑆 (again by the previous exercise).
1.130 Let x, y ∈ 𝑆 = 𝑆1 ∩ 𝑆2 . Hence x, y ∈ 𝑆1 and for any 𝛼, 𝛽 ∈ ℜ, 𝛼x + 𝛽y ∈ 𝑆1 .
Similarly 𝛼x + 𝛽y ∈ 𝑆2 and therefore 𝛼x + 𝛽y ∈ 𝑆. 𝑆 is a subspace.
1.131 Let 𝑆 = 𝑆1 + 𝑆2 . First note that 0 = 0 + 0 ∈ 𝑆. Suppose x, y belong to 𝑆. Then
there exist s1 , t1 ∈ 𝑆1 and s2 , t2 ∈ 𝑆2 such that x = s1 + s2 and y = t1 + t2 . For any
𝛼, 𝛽 ∈ ℜ,
𝛼x + 𝛽y = 𝛼(s1 + s2 ) + 𝛽(t1 + t2 )
= (𝛼s1 + 𝛽t1 ) + (𝛼s2 + 𝛽t2 ) ∈ 𝑆
𝑆1 = { 𝛼(1, 0) : 𝛼 ∈ ℜ }
𝑆2 = { 𝛼(0, 1) : 𝛼 ∈ ℜ }
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𝑆1 and 𝑆2 are respectively the horizontal and vertical axes in ℜ2 . Their union is not a
subspace, since for example
( ) ( ) ( )
1 1 0
= + / 𝑆1 ∪ 𝑆2
∈
1 0 1
However, any vector in ℜ2 can be written as the sum of an element of 𝑆1 and an element
of 𝑆2 . Therefore, their sum is the whole space ℜ2 , that is
𝑆 1 + 𝑆 2 = ℜ2
x1 = 𝛼2 x2 + 𝛼3 x3 + . . . , 𝛼𝑛 x𝑛
1x1 − 𝛼2 x2 − 𝛼3 x3 − . . . 𝛼𝑛 x𝑛 = 0
𝛼1 x1 + 𝛼2 x2 . . . + 𝛼𝑛 x𝑛 = 0
x1 ∈ lin 𝑆 ∖ {x1 }
1.134 Assume {(1, 1, 1), (0, 1, 1), (0, 0, 1)} are linearly dependent. Then there exists
𝛼1 , 𝛼2 , 𝛼3 such that
⎛ ⎞ ⎛ ⎞ ⎛ ⎞ ⎛ ⎞
1 0 0 0
𝛼1 ⎝1⎠ + 𝛼2 ⎝1⎠ + 𝛼3 ⎝0⎠ = ⎝0⎠
1 1 1 0
or equivalently
𝛼1 = 0
𝛼1 + 𝛼2 = 0
𝛼1 + 𝛼2 + 𝛼3 = 0
𝛼1 = 𝛼2 = 𝛼3 = 0
Therefore {(1, 1, 1), (0, 1, 1), (0, 0, 1)} are linearly independent.
1.135 Suppose on the contrary that 𝑈 is linearly dependent. That is, there exists a
set of games { 𝑢𝑇1 , 𝑢𝑇2 , . . . , 𝑢𝑇𝑚 } and nonzero coefficients (𝛼1 , 𝛼2 , . . . , 𝛼𝑚 ) such that
(Exercise 1.133)
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Assume that the coalitions are ordered so that 𝑇1 has the smallest number of players
of any of the coalitions 𝑇1 , 𝑇2 , . . . , 𝑇𝑚 . This implies that no coalition 𝑇2 , 𝑇3 , . . . , 𝑇𝑚 is
a subset of 𝑇1 and
Using (1.39), 𝑢𝑇1 can be expressed as a linear combination of the other games,
𝑚
∑
𝑢𝑇1 = −1/𝛼1 𝛼𝑗 𝑢𝑇𝑗 (1.18)
𝑗=2
𝑢𝑇1 (𝑇1 ) = 0
whereas
𝑢𝑇 (𝑇 ) = 1 for every 𝑇
𝛼x1 = 0
x = 𝛼1 x1 + 𝛼2 x2 + . . . + 𝛼𝑛 x𝑛
x = 𝛽1 x1 + 𝛽2 x2 + . . . + 𝛽𝑛 x𝑛
Subtracting
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𝑆1 = {𝑏1 } ∪ 𝐴 = {b1 , a1 , a2 , . . . , a𝑛 }
𝛽1 b1 + 𝛼1 a1 + 𝛼2 a2 + . . . + 𝛼𝑛 a𝑛 = 0
At least one 𝛼𝑖 ∕= 0. Deleting the corresponding element a𝑖 , we obtain another set 𝑆1′
of 𝑛 elements
which is also spans 𝑋. Adding the second element from 𝐵, we obtain the 𝑛 + 1 element
set
v = (𝑣0 , 𝑣1 , 𝑣2 , . . . , 𝑣2𝑛 −1 )
𝑛
with 𝑣0 = 0. That is, each game defines a vector 𝑣 = (0, 𝑣1 , . . . , 𝑣2𝑛 −1 ) ∈ ℜ2 and
𝑛
conversely each vector 𝑣 ∈ ℜ2 (with 𝑣0 = 0) defines a game. Therefore, the space of
𝑛
all games 𝒢 𝑁 is formally identical to the subspace of ℜ2 in which the first component
𝑛
is identically zero, which in turn is equivalent to the space ℜ2 −1 . Thus, 𝒢 𝑁 is a
2𝑛 − 1-dimensional linear space.
1.142 For illustrative purposes, we present two proofs, depending upon whether the
linear space is assumed to be finite dimensional or not. In the finite dimensional case,
a constructive proof is possible, which forms the basis for practical algorithms for
constructing a basis.
Let 𝑆 be a linearly independent set in a linear space 𝑋.
𝑋 is finite dimensional Let 𝑛 = dim 𝑋. Assume 𝑆 has 𝑚 elements and denote it
𝑆𝑚 .
If lin 𝑆𝑚 = 𝑋, then 𝑆𝑚 is a basis and we are done. Otherwise, there exists some
x𝑚+1 ∈ 𝑋 ∖ lin 𝑆𝑚 . Adding x𝑚+1 to 𝑆𝑚 gives a new set of 𝑚 + 1 elements
𝑆𝑚+1 = 𝑆𝑚 ∪ { x𝑚+1 }
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𝐵 ∪ {x} = {x1 , x2 , . . . , x𝑛 , x }
𝛼1 x1 + 𝛼2 x2 + ⋅ ⋅ ⋅ + 𝛼𝑛 x𝑛 + 𝛼x = 0 (1.20)
𝛼1 x1 + 𝛼2 x2 + ⋅ ⋅ ⋅ + 𝛼𝑛 x𝑛 = 0
𝐵 ∖ {x1 } = {x2 , x3 , . . . , x𝑛 }
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𝑆 is an affine set.
Conversely, suppose that 𝑆 is an affine set containing 0, that is
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𝑉 = 𝑆 −x = {v ∈ 𝑋 : v +x ∈ 𝑆 }
𝑉1 + x1 = 𝑉2 + x2
𝑉1 = 𝑉2 + (x2 − x1 )
= 𝑉2 + x
𝑆 ∥ 𝑇 ⇐⇒ 𝑆 = 𝑇 + x for some x ∈ 𝑋
The relation ∥ is
reflexive 𝑆 ∥ 𝑆 since 𝑆 = 𝑆 + 0
transitive Assume 𝑆 = 𝑇 + x and 𝑇 = 𝑈 + y. Then 𝑆 = 𝑈 + (x + y)
symmetric 𝑆 = 𝑇 + x =⇒ 𝑇 = 𝑆 + (−x)
Therefore ∥ is an equivalence relation.
1.152 See exercises 1.130 and 1.162.
1.153 1. Exercise 1.150
2. Assume x0 ∈ 𝑉 . For every x ∈ 𝐻
x = x0 + v = w ∈ 𝑉
lin {x1 , 𝑉 } = 𝑉 ′ ⊂ 𝑋
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Then
𝐻 ′ = x0 + 𝑉 ′
is an affine set (Exercise 1.150) which strictly contains 𝐻. This contradicts the
definition of 𝐻 as a maximal proper affine set.
5. Let x1 ∈
/ 𝑉 . By the previous part, x ∈ lin {x1 , 𝑉 }. That is, there exists 𝛼 ∈ ℜ
such that
x = 𝛼x1 + v for some v ∈ 𝑉
To see that 𝛼 is unique, suppose that there exists 𝛽 ∈ ℜ such that
x = 𝛽x1 + v′ for some v′ ∈ 𝑉
Subtracting
0 = (𝛼 − 𝛽)x1 + (v − v′ )
which implies that 𝛼 = 𝛽 since x1 ∈
/ 𝑉.
1.154 Assume x, y ∈ 𝑋. That is, x, y ∈ ℜ𝑛 and
∑ ∑
𝑥𝑖 = 𝑦𝑖 = 𝑤(𝑁 )
𝑖∈𝑁 𝑖∈𝑁
𝑛
For any 𝛼 ∈ ℜ, 𝛼x + (1 − 𝛼)y ∈ ℜ and
∑ ∑ ∑
𝛼𝑥𝑖 + (1 − 𝛼)𝑦𝑖 = 𝛼 𝑥𝑖 + (1 − 𝛼) 𝑦𝑖
𝑖∈𝑁 𝑖∈𝑁 𝑖∈𝑁
= 𝛼𝑤(𝑁 ) + (1 − 𝛼)𝑤(𝑁 )
= 𝑤(𝑁 )
Hence 𝑋 is an affine subset of ℜ𝑛 .
1.155 See Exercise 1.129.
1.156 No. A straight line through any two points in ℜ𝑛+ extends outside ℜ𝑛+ . Put
differently, the affine hull of ℜ𝑛+ is the whole space ℜ𝑛 .
1.157 Let
𝑉 = aff 𝑆 − x1
= aff {0, x2 − x1 , x3 − x1 , . . . , x𝑛 − x1 }
𝑉 is a subspace (0 ∈ 𝑉 ) and
aff 𝑆 = 𝑉 + x1
and
dim aff 𝑆 = dim 𝑉
Note that the choice of x1 is arbitrary.
𝑆 is affinely dependent if and only if there exists some x𝑘 ∈ 𝑆 such that x𝑘 ∈
aff (𝑆 ∖ {x𝑘 }). Since the choice of x1 is arbitrary, we assume that x𝑘 =
∕ x1 .
x𝑘 ∈ aff (𝑆 ∖ {x𝑘 }) ⇐⇒ x𝑘 ∈ (𝑉 + x1 ) ∖ {x𝑘 }
⇐⇒ x𝑘 − x1 ∈ 𝑉 ∖ {x𝑘 − x1 }
⇐⇒ x𝑘 − x1 ∈ lin {x2 − x1 , x3 − x1 , . . . , x𝑘−1 − x1 ,
. . . , x𝑘+1 − x1 , . . . , x𝑛 − x1 }
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or
𝑛
∑
𝛼2 x2 + 𝛼3 x3 + ⋅ ⋅ ⋅ + 𝛼𝑛 x𝑛 − 𝛼𝑖 x1 = 0
𝑖=2
∑𝑛
Let 𝛼1 = − 𝑖=2 𝛼𝑖 . Then
𝛼1 x1 + 𝛼2 x2 + . . . + 𝛼𝑛 x𝑛 = 0
and
𝛼1 + 𝛼2 + . . . + 𝛼𝑛 = 0
as required.
1.159 Let
𝑉 = aff 𝑆 − x1 = aff { 0, x2 − x1 , x3 − x1 , . . . , x𝑛 − x1 }
Then
aff 𝑆 = x1 + 𝑉
x = x1 + v, v∈𝑉
with
so that
x = 𝛼1 x1 + 𝛼2 x2 + ⋅ ⋅ ⋅ + 𝛼𝑛 x𝑛
with
𝛼1 + 𝛼2 + ⋅ ⋅ ⋅ + 𝛼𝑛 = 1
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and
Therefore 𝑎 < 𝛼𝑥+(1−𝛼)𝑦 < 𝑏 and 𝛼𝑥+(1−𝛼)𝑦 ∈ (𝑎, 𝑏). (𝑎, 𝑏) is convex. Substituting
≤ for < demonstrates that [𝑎, 𝑏] is convex.
Let 𝑆 be an arbitrary convex set in ℜ. Assume that 𝑆 is not an interval. This implies
that there exist numbers 𝑥, 𝑦, 𝑧 such that 𝑥 < 𝑦 < 𝑧 and 𝑥, 𝑧 ∈ 𝑆 while 𝑦 ∈
/ 𝑆. Define
𝑧−𝑦
𝛼=
𝑧−𝑥
so that
𝑦−𝑥
1−𝛼=
𝑧−𝑥
Note that 0 ≤ 𝛼 ≤ 1 and that
𝑧−𝑦 𝑦−𝑥
𝛼𝑥 + (1 − 𝛼)𝑧 = 𝑥+ 𝑧=𝑦∈
/𝑆
𝑧−𝑥 𝑧−𝑥
which contradicts the assumption that 𝑆 is convex. We conclude that every convex set
in ℜ is an interval. Note that 𝑆 may be a hybrid interval such (𝑎, 𝑏] or [𝑎, 𝑏) as well as
an open (𝑎, 𝑏) or closed [𝑎, 𝑏] interval.
1.161 Let (𝑁, 𝑤) be a TP-coalitional game. If core(𝑁, 𝑤) = ∅ then it is trivially convex.
Otherwise, assume core(𝑁, 𝑤) is nonempty and let x1 and x2 belong to core(𝑁, 𝑤).
That is
∑
𝑥1𝑖 ≥ 𝑤(𝑆) for every 𝑆 ⊆ 𝑁
𝑖∈𝑆
∑
𝑥1𝑖 = 𝑤(𝑁 )
𝑖∈𝑁
Similarly
∑
(1 − 𝛼)𝑥2𝑖 ≥ (1 − 𝛼)𝑤(𝑆) for every 𝑆 ⊆ 𝑁
𝑖∈𝑆
∑
(1 − 𝛼)𝑥2𝑖 = (1 − 𝛼)𝑤(𝑁 )
𝑖∈𝑁
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∩
1.162 Let ℭ be a collection of convex sets and let x, y belong to 𝑆∈ℭ 𝑆. for every
𝑆 ∈ ℭ, x, y ∈ 𝑆 and therefore
∩ 𝛼x + (1 − 𝛼)y ∈ 𝑆 for all 0 ≤ 𝛼 ≤ 1 (since 𝑆 is convex).
Therefore 𝛼x + (1 − 𝛼)y ∈ 𝑆∈ℭ 𝑆.
1.163 Fix some output 𝑦. Assume that x1 , x2 ∈ 𝑉 (𝑦). This implies that both (𝑦, −x1 )
and (𝑦, −x2 ) belong to the production possibility set 𝑌 . If 𝑌 is convex
for every 𝛼 ∈ [0, 1]. This implies that 𝛼x1 + (1 − 𝛼)x2 ∈ 𝑉 (𝑦). Since the choice of 𝑦
was arbitrary, this implies that 𝑉 (𝑦) is convex for every 𝑦.
1.164 Assume 𝑆1 and 𝑆2 are convex sets. Let 𝑆 = 𝑆1 + 𝑆2 . Suppose x, y belong to 𝑆.
Then there exist s1 , t1 ∈ 𝑆1 and s2 , t2 ∈ 𝑆2 such that x = s1 + s2 and y = t1 + t2 . For
any 𝛼 ∈ [0, 1]
since 𝛼s1 + (1 − 𝛼)t1 ∈ 𝑆1 and 𝛼s2 + (1 − 𝛼)t2 ∈ 𝑆2 . The argument readily extends to
any finite number of sets.
1.165 Without loss of generality, assume that 𝑛 = 2. Let 𝑆 = 𝑆1 × 𝑆2 ⊆ 𝑋 = 𝑋1 × 𝑋2 .
Suppose x = (𝑥1 , 𝑥2 ) and y = (𝑦1 , 𝑦2 ) belong to 𝑆. Then
Therefore, 𝛼𝑆 is convex.
1.167 Combine Exercises 1.164 and 1.166.
1.168 The inclusion 𝑆 ⊆ 𝛼𝑆 + (1 − 𝛼)𝑆 is true for any set (whether convex or not),
since for every x ∈ 𝑆
x = 𝛼x + (1 − 𝛼)x ∈ 𝛼𝑆 + (1 − 𝛼)𝑆
The reverse inclusion 𝛼𝑆 +(1−𝛼)𝑆 ⊆ 𝑆 follows directly from the definition of convexity.
1.169 Given any two convex sets 𝑆 and 𝑇 in a linear space, the largest convex set
contained in both is 𝑆 ∩ 𝑇 ; the smallest convex set containing both is conv 𝑆 ∪ 𝑇 .
Therefore, the set of all convex sets is a lattice with
𝑆 ∧𝑇 =𝑆 ∩𝑇
𝑆 ∨ 𝑇 = conv 𝑆 ∪ 𝑇
The lattice is complete since every collection {𝑆𝑖 } has a least upper bound conv ∪ 𝑆𝑖
and a greatest lower bound ∩𝑆𝑖 .
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1.170 If a set contains all convex combinations of its elements, it contains all convex
combinations of any two points, and hence is convex.
Conversely, assume that 𝑆 is convex. Let x be a convex combination of elements in 𝑆,
that is let
x = 𝛼1 x1 + 𝛼2 x2 + . . . + 𝛼𝑛 x𝑛
x = 𝛼1 x1 + 𝛼2 x2 + 𝛼3 x3
x = 𝛼1 x1 + 𝛼2 x2 + 𝛼3 x3
( )
𝛼2 𝛼2
= 𝛼1 x1 + (1 − 𝛼1 ) x2 + x3
1 − 𝛼1 1 − 𝛼1
= 𝛼1 x1 + (1 − 𝛼1 )y
where
( )
𝛼2 𝛼2
y= x2 + x3
1 − 𝛼1 1 − 𝛼1
x = 𝛼1 x1 + 𝛼2 x2 + ⋅ ⋅ ⋅ + 𝛼𝑛 x𝑛
x𝑖 = x1𝑖 + x2𝑖
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and therefore
𝑛
∑ 𝑛
∑
x= 𝛼𝑖 x1𝑖 + 𝛼𝑖 x2𝑖
𝑖=1 𝑖=1
= x1 + x2
∑𝑛 ∑𝑛
where x1 = 𝑖=1 𝛼𝑖 x1𝑖 ∈ 𝑆1 and x2 = 𝑖=1 𝛼𝑖 x2𝑖 ∈ 𝑆2 . Therefore x ∈ conv 𝑆1 +
conv 𝑆2 .
Conversely, assume that x ∈ conv 𝑆1 + conv 𝑆2 . Then x = x1 + x2 , where
𝑛
∑
x1 = 𝛼𝑖 𝑥1𝑖 , x1𝑖 ∈ 𝑆1
𝑖=1
𝑚
∑
x2 = 𝛽𝑗 𝑥2𝑗 , x2𝑖 ∈ 𝑆2
𝑗=1
and
𝑛
∑ 𝑚
∑
x = x1 + x2 = 𝛼𝑖 𝑥1𝑖 + 𝛽𝑗 𝑥2𝑗 ∈ conv (𝑆1 + 𝑆2 )
𝑖=1 𝑗=1
x = 𝛼1 x1 + 𝛼2 x2 + . . . + 𝛼𝑛 x𝑛 (1.21)
𝛽1 x1 + 𝛽2 x2 + . . . + 𝛽𝑛 x𝑛 = 0 (1.22)
and
𝛽1 + 𝛽2 + . . . + 𝛽𝑛 = 0
x = x − 𝑡0
∑𝑛 𝑛
∑
= 𝛼𝑖 x𝑖 − 𝑡 𝛽𝑖 x𝑖
𝑖=1 𝑖=1
𝑛
∑
= (𝛼𝑖 − 𝑡𝛽𝑖 )x𝑖 (1.23)
𝑖=1
for any 𝑡 ∈ ℜ.
{ } 𝛼𝑗
3. Let 𝑡 = min𝑖 𝛼𝛽𝑖𝑖 : 𝛽𝑖 > 0 = 𝛽𝑗
We note that
∙ 𝑡 > 0 since 𝛼𝑖 > 0 for every 𝑖.
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(𝑥1 , c)
𝑥1
(𝑥1 , -c)
where 0 ≤ 𝛽𝑖 ≤ 1 and
𝛽1 + 𝛽2 + 𝛽3 + 𝛽4 = 𝛼1 𝛼2 + (1 − 𝛼1 )𝛼2 + 𝛼1 (1 − 𝛼2 ) + (1 − 𝛼1 )(1 − 𝛼2 )
= 𝛼1 𝛼2 + 𝛼2 − 𝛼1 𝛼2 + 𝛼1 − 𝛼1 𝛼2 + 1 − 𝛼1 − 𝛼2 + 𝛼1 𝛼2
=1
That is
{( ) ( ) ( ) ( )}
𝑐 −𝑐 𝑐 −𝑐
𝑥 ∈ conv , , ,
𝑐 𝑐 −𝑐 −𝑐
2. (a) For any point (𝑥1 , 𝑥2 , . . . , 𝑥𝑛−1 , 𝑐) which lies on face of the cube 𝐶𝑛 , (𝑥1 , 𝑥2 , . . . , 𝑥𝑛−1 ) ∈
𝐶𝑛−1 and therefore
so that
Similarly, any point (𝑥1 , 𝑥2 , . . . , 𝑥𝑛−1 , −𝑐) on the opposite face lies in the
convex hull of the points { (±𝑐, ±𝑐, . . . , ±𝑐, −𝑐) }.
(b) For any other point x = (𝑥1 , 𝑥2 , . . . , 𝑥𝑛 ) ∈ 𝐶𝑛 , let
𝑥𝑛 + 𝑐
𝛼𝑛 =
2𝑐
so that
𝑥𝑛 = 𝛼𝑛 𝑐 + (1 − 𝛼𝑛 )(−𝑐)
Then
⎛ ⎞ ⎛ ⎞ ⎛ ⎞
𝑥1 𝑥1 𝑥1
⎜ 𝑥2 ⎟ ⎜ 𝑥2 ⎟ ⎜ 𝑥2 ⎟
⎜ ⎟ ⎜ ⎟ ⎜ ⎟
⎜ ⎟ ⎜
x = ⎜ . . . ⎟ = 𝛼𝑛 ⎜ . . . ⎟ + (1 − 𝛼𝑛 ) ⎜
⎟ ⎟
⎜ ... ⎟
⎝𝑥𝑛−1 ⎠ ⎝𝑥𝑛−1 ⎠ ⎝𝑥𝑛−1 ⎠
𝑥𝑛 𝑐 −𝑐
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Hence
x ∈ conv { (±𝑐, ±𝑐, . . . , ±𝑐) } ⊂ ℜ𝑛
In other words
𝐶𝑛 ⊆ conv { (±𝑐, ±𝑐, . . . , ±𝑐) } ⊂ ℜ𝑛
3. Let 𝐸 denote the set of points of the form { (±𝑐, ±𝑐, . . . , ±𝑐) } ⊆ ℜ𝑛 . Clearly,
every point in 𝐸 is an extreme point of 𝐶𝑛 . Conversely, we have shown that
𝐶𝑛 ⊆ conv 𝐸. Therefore, no point x ∈ 𝐶 𝑛 ∖ 𝐸 can be an extreme point of 𝐶 𝑛 . 𝐸
is the set of extreme points of 𝐶 𝑛 .
4. Since 𝐶 𝑛 is convex, and 𝐸 ⊂ 𝐶𝑛 , conv 𝐸 ⊆ 𝐶 𝑛 . Consequently, 𝐶 𝑛 = conv 𝐸.
1.178 Let x, y belong to 𝑆 ∖ 𝐹 is convex. For any 𝛼 ∈ [0, 1]
∙ 𝛼x + (1 − 𝛼)y ∈ 𝑆 since 𝑆 convex
∙ 𝛼x + (1 − 𝛼)y ∈
/ 𝐹 since 𝐹 is a face
Thus 𝛼x + (1 − 𝛼)y ∈ 𝑆 ∖ 𝐹 which is convex.
1.179 1. Trivial.
∪
2. Let {𝐹𝑖 } be a collection of faces of 𝑆 and let 𝐹 = 𝐹𝑖 . Choose any x, y ∈ 𝑆.
If the line segment between x and y intersects 𝐹 , then
∪ it intersects some face 𝐹𝑖
which implies that x, y ∈ 𝐹𝑖 . Therefore, x, y ∈ 𝐹 = 𝐹𝑖 .
∩
3. Let {𝐹𝑖 } be a collection of faces of 𝑆 and let 𝐹 = 𝐹𝑖 . Choose any x, y ∈ 𝑆. if
the line segment between x and y intersects 𝐹 , then it intersects
∪ every face 𝐹𝑖
which implies that x, y ∈ 𝐹𝑖 for every 𝑖. Therefore, x, y ∈ 𝐹 = 𝐹𝑖 .
4. Let 𝔉 be the collection of all faces of 𝑆. This is partially ordered by inclusion.
By
∩ the previous result, every nonempty subcollection 𝔊 has a least upper bound
( 𝐹 ∈𝔊 𝐹 ). Hence 𝔉 is a complete lattice (Exercise 1.47).
1.180 Let 𝑆 be a polytope. Then 𝑆 = conv { x1 , x2 , . . . , x𝑛 }. Note that every extreme
point belongs to { x1 , x2 , . . . , x𝑛 }. Now choose the smallest subset whose convex hull
is still 𝑆, that is delete elements which can be written as convex combinations of other
elements. Suppose the minimal subset is { x1 , x2 , . . . , x𝑚 }. We claim that each of
these elements is an extreme point of 𝑆, that is { x1 , x2 , . . . , x𝑚 } = 𝐸.
Assume not, that is assume that x𝑚 is not an extreme point so that there exists x, y ∈ 𝑆
with
x𝑚 = 𝛼x + (1 − 𝛼)y with 0 < 𝛼 < 1 (1.24)
Since x, y ∈ conv {x1 , x2 , . . . , x𝑚 }
𝑚
∑ 𝑚
∑
x= 𝛼𝑖 x𝑖 y= 𝛽x𝑖
𝑖=1 𝑖=1
where
𝛾𝑖 = 𝛼𝛼𝑖 + (1 − 𝛼)𝛽𝑖
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Note that 0 ≤ 𝛾𝑖 ≤ 1, so that either 𝛾𝑚 < 1 or 𝛾𝑚 = 1. We show that both cases lead
to a contradiction.
∙ 𝛾𝑚 < 1. Then
𝑚−1
∑(
1 )
x𝑚 = 𝛼𝛼𝑖 + (1 − 𝛼)𝛽𝑖 x𝑖
1 − 𝛾𝑚 𝑖=1
x1 = 𝛼y + (1 − 𝛼)z (1.25)
Substituting in (1.25)
𝑛
∑ 𝑛
∑
x1 = 𝛼 𝛽𝑖 x𝑖 + (1 − 𝛼) 𝛿𝑖 x𝑖
𝑖=1 𝑖=1
𝑛
∑ ( )
= 𝛼𝛽𝑖 + (1 − 𝛼)𝛿𝑖 x𝑖
𝑖=1
∑𝑛 ( ) ∑ ∑
Since 𝑖=1 𝛼𝛽𝑖 + (1 − 𝛼)𝛿𝑖 = 𝛼 𝑛𝑖=1 𝛽𝑖 + (1 − 𝛼) 𝑖=1 𝛿𝑖 = 1
𝑛
∑ ( )
x1 = 𝛼𝛽𝑖 + (1 − 𝛼)𝛿𝑖 x𝑖
𝑖=1
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1.182 Let 𝑛 be the dimension of a convex set 𝑆 in a linear space 𝑋. Then 𝑛 = dim aff 𝑆
and there exists a set { x1 , x2 , . . . , x𝑛+1 } of affinely independent points in 𝑆. Define
𝑆 ′ = conv { x1 , x2 , . . . , x𝑛+1 }
y𝑖 = w + 𝑠e𝑖
be the outcome in which player 𝑖 receives the entire surplus. (e𝑖 is the 𝑖th unit vector.)
Note that
{
𝑖 𝑤({𝑖}) + 𝑠 𝑗 = 𝑖
𝑦𝑗 =
𝑤({𝑖}) 𝑗 ∕= 𝑖
y𝑖 − y𝑗 = 𝑠(e𝑖 − e𝑗 )
𝑥𝑗 = 𝑤({𝑗}) + 𝛼𝑗 𝑠
Since x is an imputation
∙ 𝛼𝑖 ≥ 0
∑ (∑ ∑ )
∙ 𝑖∈𝑁 𝛼𝑖 = 𝑖∈𝑁 𝑥𝑖 − 𝑖∈𝑁 𝑤({𝑖}) /𝑠 = 1
∑
We claim that x = 𝑖∈𝑁 𝛼𝑖 y𝑖 since for each 𝑗 = 1, 2, . . . , 𝑛
∑ ∑
𝛼𝑖 𝑦𝑗𝑖 = 𝛼𝑖 𝑤({𝑗}) + 𝛼𝑗 𝑠
𝑖∈𝑁 𝑖∈𝑁
= 𝑤({𝑗}) + 𝛼𝑗 𝑠
= 𝑥𝑗
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𝑥2 𝑥2 𝑥2
𝑥1 𝑥1 𝑥1
Figure 1.6: A cone which is not convex, a convex set and a convex cone
so that 𝑆 is a cone. To show that 𝑆 is convex, let x and y be any two elements in 𝑆.
For any 𝛼 ∈ [0, 1], (1.26) implies that
𝛼x + (1 − 𝛼)y ∈ 𝑆
Therefore 𝑆 is convex.
Conversely, assume that 𝑆 is a convex cone. For any 𝛼, 𝛽 ∈ ℜ+ and x, y ∈ 𝑆
𝛼 𝛽
x+ y∈𝑆
𝛼+𝛽 𝛼+𝛽
and therefore
𝛼x + 𝛽y ∈ 𝑆
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By (1), 𝑆 is a cone. To show that it is convex, let x and y belong to 𝑆. By (1), 𝛼x and
(1 − 𝛼)y belong to 𝑆, and therefore 𝛼x + (1 − 𝛼)y belongs to 𝑆 by (2). 𝑆 is convex.
Conversely, assume that 𝑆 is a convex cone. Then
𝛼𝑆 ⊆ 𝑆 for every 𝛼 ≥ 0
𝑆 +𝑆 ⊆𝑆
𝛼y ∈ 𝑌 for every 𝛼 = 1, 2, . . .
𝛼y ∈ 𝑌 for every 𝛼 ≥ 0
1.189 Let 𝒮 ⊂ 𝒢 𝑁 denote the set of all superadditive games. Let 𝑤1 , 𝑤2 ∈ 𝑆 be two
superadditive games. Then, for all distinct coalitions 𝑆, 𝑇 ⊂ 𝑁 with 𝑆 ∩ 𝑇 = ∅
𝑤1 (𝑆 ∪ 𝑇 ) ≥ 𝑤1 (𝑆) + 𝑤1 (𝑇 )
𝑤2 (𝑆 ∪ 𝑇 ) ≥ 𝑤2 (𝑆) + 𝑤2 (𝑇 )
Adding
(𝑤1 + 𝑤2 )(𝑆 ∪ 𝑇 ) = 𝑤1 (𝑆 ∪ 𝑇 ) + 𝑤2 (𝑆 ∪ 𝑇 )
≥ 𝑤1 (𝑆) + 𝑤2 (𝑆) + 𝑤1 (𝑇 ) + 𝑤2 (𝑇 )
= (𝑤1 + 𝑤2 )(𝑆) + (𝑤1 + 𝑤2 )(𝑇 )
x = x1 + x2 + ⋅ ⋅ ⋅ + x𝑛
For any 𝛼 ≥ 0
𝛼x = 𝛼(x1 + x2 + ⋅ ⋅ ⋅ + x𝑛 )
= 𝛼x1 + 𝛼x2 + ⋅ ⋅ ⋅ + 𝛼x𝑛 ∈ 𝑆
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If y ∕= 0, at least one of the 𝛼𝑖 > 0 and hence y1 < 0 since 𝑦𝑖1 < 0 for 𝑖 =
1, 2, . . . , 8.
2. Free disposal requires that y ∈ 𝑌, y′ ≤ y =⇒ y′ ∈ 𝑌 . Consider the production
plan y′ = (−2, −2, −2, −2). Note that y′ ≤ y3 and y′ ≤ y6 . Suppose that
y′ ∈ 𝑌 . Then there exist 𝛼1 , 𝛼2 , . . . , 𝛼8 ≥ 0 such that
8
∑
y= 𝛼𝑖 y𝑖
𝑖=1
4.
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5. Eff(𝑌 ) = cone { y3 , y7 }.
1.192 This is precisely analogous to Exercise 1.128. We observe that
1. cone 𝑆 is a convex cone.
2. if 𝐶 is any convex cone containing 𝑆, then conv 𝑆 ⊆ 𝐶.
Therefore, cone 𝑆 is the smallest convex cone containing S.
1.193 For any set 𝑆, 𝑆 ⊆ cone 𝑆. If 𝑆 is a convex cone, Exercise 1.186 implies that
cone 𝑆 ⊆ 𝑆.
1.194 1. If 𝑛 > 𝑚 = dim cone 𝑆 = dim lin 𝑆, the elements x1 , x2 , . . . , x𝑛 ∈ 𝑆 are
linearly dependent and therefore there exist numbers 𝛽1 , 𝛽2 , . . . , 𝛽𝑛 , not all zero,
such that (Exercise 1.134)
𝛽1 x1 + 𝛽2 x2 + . . . + 𝛽𝑛 x𝑛 = 0 (1.29)
x = x − 𝑡0
∑𝑛 𝑛
∑
= 𝛼𝑖 x𝑖 − 𝑡 𝛽𝑖 x𝑖
𝑖=1 𝑖=1
𝑛
∑
= (𝛼𝑖 − 𝑡𝛽𝑖 )x𝑖 (1.30)
𝑖=1
for any 𝑡 ∈ ℜ.
{ } 𝛼𝑗
3. Let 𝑡 = min𝑖 𝛼𝛽𝑖𝑖 : 𝛽𝑖 > 0 = 𝛽𝑗
We note that
∙ 𝑡 > 0 since 𝛼𝑖 > 0 for every 𝑖.
∙ If 𝛽𝑖 > 0, then 𝛼𝑖 /𝛽𝑖 ≥ 𝛼𝑗 /𝛽𝑗 ≥ 𝑡 and therefore 𝛼𝑖 − 𝑡𝛽𝑖 ≥ 0.
∙ If 𝛽𝑖 ≤ 0 then 𝛼𝑖 − 𝑡𝛽𝑖 > 0 for every 𝑡 > 0.
∙ Therefore 𝛼𝑖 − 𝑡𝛽𝑖 ≥ 0 for every 𝑡 and
∙ 𝛼𝑖 − 𝑡𝛽𝑖 = 0 for 𝑖 = 𝑗.
Therefore, (1.30) represents x as a nonnegative combination of only 𝑛 − 1 points.
4. This process can be repeated until x is represented as a convex combination of
at most 𝑚 points.
1.195 1. The affine hull of 𝑆˜ is parallel to the affine hull of 𝑆. Therefore
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( )
x
2. For every x ∈ conv 𝑆, ∈ conv 𝑆˜ and there exist (Exercise 1.194) 𝑚 + 1
1
( )
x𝑖
points ∈ 𝑆˜ such that
1
( ) ( ) ( ) ( )
x x1 x2 x𝑚+1
∈ conv { , ,... }
1 1 1 1
x ∈ conv { x1 , x2 , . . . , x𝑚+1 }
with x1 , x2 , . . . , x𝑚+1 ∈ 𝑆.
1.196 A subsimplex with precisely one distinguished face is completely labeled. Suppose
a subsimplex has more than one distinguished face. This means that it has vertices
labeled 1, 2, . . . , 𝑛. Since it has 𝑛 + 1 vertices, one of these labels must be repeated
(twice). The distinguished faces lie opposite the repeated vertices. There are precisely
two distinguished faces.
1.197 1. 𝜌(x, y) = ∥x − y∥ ≥ 0.
2. 𝜌(x, y) = ∥x − y∥ = 0 if and only if x − y = 0, that is x = y.
3. Property (3) ensures that ∥−x∥ = ∥x∥ and therefore ∥x − y∥ = ∥y − x∥ so that
𝜌(x, y) = ∥x − y∥ = ∥y − x∥ = 𝜌(y, x)
4. For any z ∈ 𝑋
𝜌(x, y) = ∥x − y∥
= ∥x − z + z − y∥
≤ ∥x − z∥ + ∥z − y∥
= 𝜌(x, z) + 𝜌(z, y)
Therefore
𝑛 𝑛 𝑛
∥x∥ = max(𝑥𝑖 + 𝑦𝑖 ) ≤ max 𝑥𝑖 + max 𝑦𝑖 = ∥x∥ + ∥y∥
𝑖=1 𝑖=1 𝑖=1
1.199 Suppose that producing one unit of good 1 requires two units of good 2 and three
units of good 3. The production plan is (1, −2, −3) and the average net output, −2,
is negative. A norm is required to be nonnegative. Moreover, the∑quantities of inputs
𝑛
and outputs may balance out yielding a zero average. That is, ( 𝑖=1 𝑦𝑖 )/𝑛 = 0 does
not imply that 𝑦𝑖 = 0 for all 𝑖.
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1.200
∥x∥ − ∥y∥ = ∥x − y + y∥ − ∥y∥
≤ ∥x − y∥ + ∥y∥ − ∥y∥
= ∥x − y∥
1.201 Using the previous exercise
∥x𝑛 ∥ − ∥x∥ ≤ ∥x𝑛 − x∥ → 0
1.202 First note that each term x𝑛 + y𝑛 ∈ 𝑋 by linearity. Similarly, x + y ∈ 𝑋. Fix
some 𝜖 > 0. There exists some 𝑁x such that ∥x𝑛 − x∥ < 𝜖 for all 𝑛 ≥ 𝑁x . Similarly,
there exists some 𝑁y such that ∥y𝑛 − y∥ < 𝜖 for all 𝑛 ≥ 𝑁y . For all 𝑛 ≥ max{ 𝑁x , 𝑁y },
∥(x𝑛 + y𝑛 ) − (x + y)∥ = ∥(x𝑛 − x) + (y𝑛 − y)∥
≤ ∥x𝑛 − x∥ + ∥y𝑛 − y∥
<𝜖
Similarly, for every 𝑛 ≥ 𝑁x
∥𝛼x𝑛 − 𝛼x∥ = ∣𝛼∣ ∥x𝑛 − x∥
≤ ∣𝛼∣ 𝜖/2
→ 0 as 𝜖 → 0
1.203 Let x𝑛 be a sequence in 𝑆 + 𝑇 converging to x. For every 𝑛, there exists y𝑛 ∈ 𝑆
and z𝑛 ∈ 𝑇 such that x𝑛 = y𝑛 + z𝑛 . Since 𝑇 is compact, there exists a subsequence z𝑚
converging to z ∈ 𝑇 . Let y = lim 𝑦𝑚 . Then y ∈ 𝑆 since 𝑆 is closed. By the previous
exercise, y𝑚 + z𝑚 → y + z. By assumption, y𝑚 + z𝑚 → x so that x = y + z ∈ 𝑆 + 𝑇 .
𝑆 + 𝑇 is closed.
1.204 Yes. Apply Exercise 1.202.
1.205 The 𝑛th partial sum of the series is
s𝑛 = x + 𝛽x + 𝛽 2 x + ⋅ ⋅ ⋅ + 𝛽 𝑛−1 x
Multiplying this equation by 𝛽 gives
𝛽s𝑛 = 𝛽x + 𝛽 2 x + 𝛽 3 x + ⋅ ⋅ ⋅ + 𝛽 𝑛 x
Subtracting this equation from the previous one and canceling common terms gives
(1 − 𝛽)s𝑛 = x − 𝛽 𝑛 x = (1 − 𝛽 𝑛 )x
Provided that 𝛽 ∕= 1
x − 𝛽𝑛x x 𝛽𝑛x
s𝑛 = = − (1.31)
1−𝛽 1−𝛽 1−𝛽
If 𝛽 < 1, then 𝛽 𝑛 → 0 (Exercise 1.102) and therefore 𝑠𝑛 converges to x/(1 − 𝛽).
1.206
1 1 1 1
1+ + + + + ...
2 4 8 16
is a geometric series 1 + 𝛽 + 𝛽 2 + 𝛽 3 + . . . with 𝛽 = 1/2. The series converges (Exercise
1.205) to
1 1 1 1 1 1
1+ + + + + ⋅⋅⋅ = = 1 =2
2 4 8 16 1−𝛽 1− 2
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1.207 The present value of the 𝑛 payments is the 𝑛th partial sum of the geometric
series 𝑥 + 𝛽𝑥 + 𝛽 2 𝑥 + 𝛽 3 𝑥 + . . . which (using (1.31)) is given by
𝑥 − 𝛽𝑛𝑥
Present value = 𝑠𝑛 =
1−𝛽
1.208 By Exercise 1.93, there exists an open set 𝑇 ⊇ 𝑆1 such that 𝑇 ∩𝑆2 = ∅. For every
x ∈ 𝑆1 , there exists an open ball 𝐵(x) such that 𝐵(x) ⊆ 𝑇 and therefore 𝐵(x)∩𝑆2 = ∅.
The collection { 𝐵(x) } of open balls is an open cover for 𝑆1 . Since 𝑆1 is compact there
exists a finite subcover, that is there exists points x1 , x2 , . . . , x𝑛 in 𝑆1 such that
𝑛
∪
𝑆1 ⊆ 𝐵(x𝑖 )
𝑖=1
𝐵(x𝑖 ) = x𝑖 + 𝑟𝑛 𝐵
for every 𝑛, 𝑚 ≥ 𝑁 . This implies that (x𝑛 ) and (y𝑛 ) are Cauchy sequences in 𝑋 and
𝑌 respectively. Since 𝑋 and 𝑌 are complete, both sequences converge. That is, there
exists x ∈ 𝑋 and y ∈ 𝑌 such that ∥x𝑛 − x∥ → 0 and ∥y𝑛 − y∥ → 0. In other words,
given 𝜖 > 0 there exists 𝑁 such that ∥x𝑛 − x∥ < 𝜖 and ∥y𝑛 − y∥ < 𝜖 for every 𝑛 ≥ 𝑁 .
Let z = (x, y). Then, for every 𝑛 ≥ 𝑁
z𝑛 → z.
1.210 1. By assumption, for every 𝑚 = 1, 2, . . . , there exists a point y𝑚 such that
( 𝑛 )
1 ∑
∥y∥ < ∣𝛼𝑖 ∣
𝑚 𝑖=1
where
y = 𝛼1 x1 + 𝛼2 x2 + ⋅ ⋅ ⋅ + 𝛼𝑛 x𝑛
∑𝑛
Let 𝑠𝑚 = 𝑖=1 ∣𝛼𝑖 ∣. By assumption 𝑠𝑚 > 𝑚 ∥y𝑚 ∥ ≥ 0. Define
1 𝑚
x𝑚 = y
𝑠𝑚
Then
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∑𝑛
2. Since 𝑖=1 ∣𝛽𝑖𝑚 ∣ = 1, ∣𝛽𝑖𝑚 ∣ ≤ 1 for every 𝑖. Consequently, for every coordinate
𝑖, the sequence (𝛽𝑖𝑚 ) is bounded. By the Bolzano-Weierstrass theorem (Exercise
1.119), the sequence (𝛽1𝑚 ) has a convergent subsequence with 𝛽1𝑚 → 𝛽1 . Let x𝑚,1
denote the corresponding subsequence of x𝑚 .
Similarly, 𝛽2𝑚,1 has a subsequence converging to 𝛽2 . Let (x𝑚,2 ) denote the corre-
sponding subsequence of (x𝑚 ). Proceeding coordinate by coordinate, we obtain
a subsequence (x𝑚,𝑛 ) where each term is
x = 𝛽1 x1 + 𝛽2 x2 + ⋅ ⋅ ⋅ + 𝛽2 x𝑛
x𝑚 = 𝛼𝑚 𝑚 𝑚
1 x1 + 𝛼2 x2 + ⋅ ⋅ ⋅ + 𝛼𝑛 x𝑛
Since x𝑚 is a Cauchy sequence, for every 𝜖 > 0 there exists an 𝑁 such that
∥x𝑚 − x𝑟 ∥ < 𝜖 for all 𝑚, 𝑟 ≥ 𝑁 . Using Lemma 1.1, there exists 𝑐 > 0 such that
𝑛
∑𝑛 ∑
𝑐 ∣𝛼𝑖 − 𝛼𝑖 ∣ ≤ (𝛼𝑖 − 𝛼𝑖 )x𝑖 = ∥x𝑚 − x𝑟 ∥ < 𝜖
𝑚 𝑟 𝑚 𝑟
𝑖=1 𝑖=1
x = 𝛼1 x1 + 𝛼2 x2 + ⋅ ⋅ ⋅ + 𝛼𝑛 x𝑛
Then x ∈ 𝑋 and
∑𝑛 ∑ 𝑛
∥x𝑚 − x∥ = (𝛼𝑚
𝑖 − 𝛼𝑖 )x𝑖 ≤ ∣𝛼𝑚
𝑖 − 𝛼𝑖 ∣ ∥x𝑖 ∥
𝑖=1 𝑖=1
Since 𝛼𝑚 𝑚 𝑚
𝑖 → 𝛼𝑖 for every 𝑖, ∥x − x∥ → 0 which implies that x → x.
3. Since (x𝑚 ) was an arbitrary Cauchy sequence, we have shown that every Cauchy
sequence in 𝑋 converges. Hence 𝑋 is complete.
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1.212 Let 𝑆 be an open set according to the ∥⋅∥𝑎 and let x0 be a point in 𝑆. Since 𝑆 is
open, it contains an open ball in the ∥⋅∥𝑎 topology about x0 , namely 𝐵𝑎 (x0 , 𝑟) = { x ∈
𝑋 : ∥x − x0 ∥𝑎 < 𝑟 } ⊆ 𝑆 Let
𝐵𝑏 (x0 , 𝑟) = { x ∈ 𝑋 : ∥x − x0 ∥𝑏 < 𝑟 }
be the open ball about x0 in the ∥⋅∥𝑏 topology. The condition (1.15) implies that
𝐵𝑏 (x0 , 𝑟) ⊆ 𝐵𝑎 (x0 , 𝑟) ⊆ 𝑆 and therefore
x0 ∈ 𝐵𝑏 (x0 , 𝑟) ⊂ 𝑆
𝑆 is open in the ∥⋅∥𝑏 topology. Similarly, any 𝑆 open in the ∥⋅∥𝑏 topology is open in
the ∥⋅∥𝑎 topology.
1.213 Let 𝑋 be a normed linear space of dimension 𝑛. and let { x1 , x2 , . . . , x𝑛 } be
a basis for 𝑋. Let ∥⋅∥𝑎 and ∥⋅∥𝑏 be two norms on 𝑋. Every x ∈ 𝑋 has a unique
representation
x = 𝛼1 x1 + 𝛼2 x2 + ⋅ ⋅ ⋅ + 𝛼𝑛 x𝑛
∥x∥𝑎 = ∥𝛼1 x1 + 𝛼2 x2 + ⋅ ⋅ ⋅ + 𝛼𝑛 x𝑛 ∥𝑎
∑𝑛
≤ ∥𝛼𝑖 x𝑖 ∥𝑎
𝑖=1
𝑛
∑
= ∣𝛼𝑖 ∣ ∥x𝑖 ∥𝑎
𝑖=1
∑𝑛
≤𝑘 ∣𝛼𝑖 ∣
𝑖=1
∥x∥𝑎 ≤ 𝑘 ∥x∥𝑏 /𝑐
𝐴 ∥x∥𝑎 ≤ ∥x∥𝑏
The other inequality in (1.15) is obtained by interchanging the roles of ∥⋅∥𝑎 and ∥⋅∥𝑏 .
1.214 Assume x𝑛 → x = (𝑥1 , 𝑥2 , . . . , 𝑥𝑛 ). Then, for every 𝜖 > 0, there exists some 𝑁
such that ∥x𝑛 − x∥∞ < 𝜖. Therefore, for 𝑖 = 1, 2, . . . , 𝑛
Therefore 𝑥𝑛𝑖 → x𝑖 .
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Conversely, assume that (x𝑛 ) is a sequence in ℜ𝑛 with 𝑥𝑛𝑖 → 𝑥𝑖 for every coordinate 𝑖.
Choose some 𝜖 > 0. For every 𝑖, there exists some integer 𝑁𝑖 such that
and
𝑛
That is, x → x.
A similar proof can be given using the Euclidean norm ∥⋅∥2 , but it is slightly more
complicated. This illustrates an instance where the sup norm is more tractable.
1.215 1. Let 𝑆 ⊆ 𝑋 be closed and bounded and let x𝑚 be a sequence in 𝑆. Every
term x𝑚 has a representation
𝑛
∑
x𝑚 = 𝛼𝑚
𝑖 x𝑖
𝑖=1
Since 𝑆 is bounded, so is x𝑚 . That is, there exists 𝑘 such that ∥x𝑚 ∥ ≤ 𝑘 for all
𝑚. Applying Lemma 1.1, there is a positive constant 𝑐 such that
𝑛
∑
𝑐 ∣𝛼𝑖 ∣ ≤ ∥x𝑚 ∥ ≤ 𝑘
𝑖=1
Since 𝛼𝑚 𝑚 𝑚
𝑖 → 𝛼𝑖 for every 𝑖, ∥x − x∥ → 0 which implies that x → x.
5. Since 𝑆 is closed, x ∈ 𝑆.
6. We have shown that every sequence in 𝑆 has a subsequence which converges in
𝑆. 𝑆 is compact.
1.216 Let x and y belong to 𝐵 = { x : ∥x∥ < 1 }, the unit ball in the normed linear
space 𝑋. Then ∥x∥ , ∥y∥ < 1. By the triangle inequality
Hence 𝛼x + (1 − 𝛼)y ∈ 𝐵.
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1.217 If int 𝑆 is empty, it is trivially convex. Therefore, assume int 𝑆 ∕= ∅ and let
x, y ∈ int 𝑆. We must show that z = 𝛼x + (1 − 𝛼)y ∈ int 𝑆.
Since x, y ∈ int 𝑆, there exists some 𝑟 > 0 such that the open balls 𝐵(x, 𝑟) and 𝐵(y, 𝑟)
are both contained in int 𝑆. Let w be any vector with ∥w∥ < 𝑟. The point
z + w = 𝛼(x + w) + (1 − 𝛼)(y + w) ∈ 𝑆
x1 ∈ 𝑆 + 𝑟𝐵
𝛼x1 ∈ 𝛼(𝑆 + 𝑟𝐵)
𝐵(x̄, 𝑟) = x̄ + 𝑟𝐵
= 𝛼x1 + (1 − 𝛼)x2 + 𝑟𝐵
⊆ 𝛼(𝑆 + 𝑟𝐵) + (1 − 𝛼)x2 + 𝑟𝐵
= 𝛼𝑆 + (1 − 𝛼)x2 + (1 + 𝛼)𝑟𝐵
( )
1+𝛼
= 𝛼𝑆 + (1 − 𝛼) x2 + 𝑟𝐵
1−𝛼
Since x2 ∈ int 𝑆
( )
1+𝛼 1+𝛼
x2 + 𝑟𝐵 = 𝐵 x2 , 𝑟 ⊆𝑆
1−𝛼 1−𝛼
𝐵(x̄, 𝑟) ⊆ 𝛼𝑆 + (1 − 𝛼)𝑆
=𝑆
To show the converse, choose any x ∈ 𝑆 and let x0 ∈ 𝑆𝑖 for every 𝑖 ∈ 𝐼. By Exercise
1.218, 𝛼x + (1 − 𝛼)x0 ∈ 𝑆𝑖 for all 0 < 𝛼 < 1. This implies that 𝛼x + (1 − 𝛼)x0 ∈
∩𝑖∈𝐼 𝑆𝑖 = 𝑆 for all 0 < 𝛼 < 1, and therefore that x0 = lim𝛼→0 𝛼x + (1 − 𝛼)x0 ∈ 𝑆.
1.220 Assume that x ∈ int 𝑆. Then, there exists some 𝑟 such that
𝐵(x, 𝑟) = x + 𝑟𝐵 ⊆ 𝑆
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x1 = x + 𝑟y ∈ 𝑆
x2 = x − 𝑟y ∈ 𝑆
so that
1 1
x= x1 + x2
2 2
x is not an extreme point. We have shown that no interior point is an extreme point;
hence every extreme point must be a boundary point.
1.221 We showed in Exercise 1.220 that ext(𝑆) ⊆ b(𝑆). To show the converse, assume
that x is a boundary point which is not an extreme point. That is, there exist x1 , x2 ∈ 𝑆
such that
𝑆 is strictly convex.
1.223 Let 𝑆 be open and x ∈ conv 𝑆. That is
𝑛
∑
x= 𝛼𝑖 x𝑖
𝑖=1
∑
with x𝑖 ∈ 𝑆, 𝛼𝑖 ∈ [0, 1] and 𝑖 𝛼𝑖 = 1. The open ball about x
𝐵(x, 𝑟) = x + 𝑟𝐵
( 𝑛 )
∑
= 𝛼𝑖 x𝑖 + 𝑟𝐵
𝑖=1
( 𝑛 ) ( 𝑛
)
∑ ∑
= 𝛼𝑖 x𝑖 + 𝛼𝑖 𝑟𝐵
𝑖=1 𝑖=1
𝑛
∑
= (𝛼𝑖 x𝑖 + 𝑟𝐵)
𝑖=1
Since 𝑆 is open, there exists some 𝑟 such that x𝑖 + 𝑟𝐵 ∈ 𝑆 for all 𝑖. For this 𝑟
𝐵(x, 𝑟) ⊆ conv 𝑆
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where x𝑘𝑖 ∈ 𝑆.
For each 𝑖, the sequence (x𝑘𝑖 ) lies in a compact set 𝑆 and hence contains a conver-
gent subsequence. Similarly, the sequence of coefficients (𝛼𝑘𝑖 ) ∈ [0, 1] is bounded
and contains a convergent subsequence (Bolzano-Weierstrass theorem, Exercise
1.119). Proceeding coordinate by coordinate as in Exercise 1.215, we can con-
struct convergent subsequences 𝛼𝑘𝑖 → 𝛼𝑖 and x𝑘𝑖 − x𝑖 .
3. Let
𝑛+1
∑
x= 𝛼𝑖 x𝑖
𝑖=1
Since
𝑛+1
𝑘 ∑
x − x = (𝛼𝑘𝑖 x𝑘𝑖 − 𝛼𝑖 x𝑖 )
𝑖=1
𝑛+1
∑ 𝑘 𝑘
≤ 𝛼𝑖 x𝑖 − 𝛼𝑖 x𝑖
𝑖=1
𝑛+1
∑ 𝑘 𝑘
= 𝛼𝑖 x𝑖 − 𝛼𝑖 x𝑘𝑖 + 𝛼𝑖 x𝑘𝑖 − 𝛼𝑖 x𝑖
𝑖=1
𝑛+1
∑ 𝑘 𝑛+1 ∑
= 𝛼𝑖 − 𝛼𝑖 x𝑘𝑖 + ∣𝛼𝑖 ∣ x𝑘𝑖 − x𝑖
𝑖=1 𝑖=1
→0
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Therefore 𝑆 ⊂ 𝐾.
2. Exercise 1.177.
3. 𝐶 is the convex hull of a finite set and hence is compact (Exercise 1.225)
4. 𝑆 is a closed subset of a compact set and hence is compact (Exercise 1.110).
1.227 A polytope is the convex hull of a finite set. Any finite set is compact.
1.228 The unit simplex Δ𝑛−1 in ℜ𝑛 is the convex hull of the unit vectors e1 , e2 , . . . , e𝑛 ,
that is
Δ𝑛−1 = conv { e1 , e2 , . . . , e𝑛 }
{ ∑ }
= (𝑥1 , 𝑥2 , . . . , 𝑥𝑛 ) ∈ ℜ𝑛 : 𝑥𝑖 ≥ 0 and 𝑥𝑖 = 1
1.229 Let 𝑛 = dim 𝑆. By Exercise 1.182, 𝑆 contains a simplex 𝑆 𝑛 of the same dimen-
sion. That is, there exist 𝑛 vertices v1 , v2 , . . . , v𝑛 such that
𝑆 𝑛 = conv { v1 , v2 , . . . , v𝑛 }
{
= 𝛼1 v1 + 𝛼2 v2 + ⋅ ⋅ ⋅ + 𝛼𝑛 v𝑛 :
𝛼1 , 𝛼2 , . . . , 𝛼𝑛 ≥ 0,
}
𝛼1 + 𝛼2 + . . . + 𝛼𝑛 = 1
ri 𝑆 𝑛 = conv { v1 , v2 , . . . , v𝑛 }
{
= 𝛼1 v1 + 𝛼2 v2 + ⋅ ⋅ ⋅ + 𝛼𝑛 v𝑛 :
𝛼1 , 𝛼2 , . . . , 𝛼𝑛 > 0,
}
𝛼1 + 𝛼2 + . . . + 𝛼𝑛 = 1
which is nonempty.
Note, the proposition is trivially true for a set containing a single point (𝑛 = 0), since
this point is the whole affine space.
1.230 If int 𝑆 ∕= ∅, then aff 𝑆 = 𝑋 and ri 𝑆 = int 𝑆. The converse follows from Exercise
1.229.
1.231 Since
𝑛
∑
𝑚 > inf 𝑝𝑖 𝑥𝑖
x∈𝑋
𝑖=1
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For any 𝛼 ∈ [0, 1], the cost of the weighted average bundle z = 𝛼x + (1 − 𝛼)y (where
each component 𝑧𝑖 = 𝛼𝑥𝑖 + (1 − 𝛼)𝑦𝑖 ) is
𝑛
∑ 𝑛
∑
𝑝𝑖 𝑧 𝑖 = 𝑝𝑖 (𝛼𝑥𝑖 + (1 − 𝛼)𝑦𝑖
𝑖=1 𝑖=1
∑𝑛 𝑛
∑
=𝛼 𝑝𝑖 𝑥𝑖 + (1 − 𝛼) 𝑝𝑖 𝑦 𝑖
𝑖=1 𝑖=1
≤ 𝛼𝑚 + (1 − 𝛼)𝑚
=𝑚
Therefore z ∈ 𝑋(p, 𝑚). The budget set 𝑋(p, 𝑚) is convex.
1.233 1. Assume that ≻ is strongly monotone. Let x, y ∈ 𝑋 with x ≥ y.
Either x ≩ y so that x ≻ y by strong monotonicity
or x = y so that x ≿ y by reflexivity.
In either case, x ≿ y so that ≿ is weakly monotonic.
2. Again, assume that ≿ is strongly monotonic and let y ∈ 𝑋. 𝑋 is open (relative
to itself). Therefore, there exists some 𝑟 such that
𝐵(y, 𝑟) = y + 𝑟𝐵 ⊆ 𝑋
Let x = y + 𝑟e1 be the consumption bundle containing 𝑟 more units of good 1.
Then e1 ∈ 𝐵, x ∈ 𝐵(y, 𝑟) and therefore ∥x − y∥ < 𝑟. Furthermore, x ≩ y and
therefore x ≻ y.
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y ≻ z0 =⇒ y ∕≺ x0 =⇒ y ≿ x0
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y ≻ z0 =⇒ y ∕≺ x0 =⇒ y ≿ x0
Therefore ≻(z0 ) = ≿(x0 ). By continuity, ≻(z0 ) is open and ≿(x0 ) is closed. Hence
≻(z0 ) = ≿(x0 ) is both open and closed (Exercise 1.83).
Alternatively, ≿(x0 ) and ≾(z0 ) are both open sets which partition 𝑋. This contradicts
the assumption that 𝑋 is connected.
1.239 Let 𝑋 ∗ denote the set of best elements. As demonstrated in the preceding proof
∩
𝑋∗ = ≿(y𝑖 )
y∈𝑋
𝐵(1, 1) = { x ∈ ℜ2++ : 𝑥1 + 𝑥2 ≤ 1 }
The consumer would like to spend as much as possible of her income on good 1.
However, the point (1, 0) is not feasible, since (1, 0) ∈
/ 𝑋.
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1.241 Essentially, consumer theory (in economics) is concerned with predicting the way
in which consumer purchases vary with changes in observable parameters such as prices
and incomes. Predictions are deduced by assuming that the consumer will consistently
choose the best affordable alternative in her budget set. The theory would be empty
if there was no such optimal choice.
1.242 1. Let 𝑋 0 = 𝑋 ∩ ℜ𝑛+ . Then 𝑋 0 is compact and 𝑋 1 ⊆ 𝑋 0 . Define the order
x ≿1 y if and only if 𝑑1 (x) ≤ 𝑑1 (y). Then ≿1 is continuous on 𝑋 and
is the set of best elements in 𝑋 with respect to the order ≿1 . By Exercise 1.239,
𝑋 1 is nonempty and compact.
2. Assume 𝑋 𝑘−1 is compact. Define the order x ≿𝑘 y if and only if 𝑑𝑘 (x) ≤ 𝑑𝑘 (y).
Then ≿𝑘 is continuous on 𝑋 𝑘−1 and
is the set of best elements in 𝑋 𝑘−1 with respect to the order ≿𝑘 . By Exercise
1.239, 𝑋 𝑘 is nonempty and compact.
3. Assume x ∈ Nu. Then
x ≿ y for every y ∈ 𝑋
d(x) ≾𝐿 d(y) for every y ∈ 𝑋
For every 𝑘 = 1, 2, . . . , 2𝑛
and therefore
which implies
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Since 𝑑(𝑆𝑘 , x) ∕= 𝑑(𝑆𝑘 , y) and d(x) is listed in descending order, we must have
and
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1.246 1. (a) Clearly ≺(x0 ) ⊆ ≾(x0 ) and ≻(y0 ) ⊆ ≿(y0 ). Consequently ≺(x0 ) ∪
≻(y0 ) ⊆ ≾(x0 ) ∪ ≿(y0 ). We claim that these sets are in fact equal.
Let z ∈ ≾(x0 ) ∪ ≿(y0 ). Suppose that z ∈ ≾(x0 ) but z ∈ / ≺(x0 ). Then
z ≿ x0 . By transitivity, z ≿ x0 ≻ y0 which implies that z ∈ ≻(y0 ).
Similarly z ∈ ≿(y0 ) ∖ ≻(y0 ) implies z ∈ ≺(x0 ). Therefore
≺(x0 ) ∪ ≻(y0 ) = ≾(x0 ) ∪ ≿(y0 )
(b) By continuity, ≺(x0 ) ∪ ≻(y0 ) is open and ≾(x0 ) ∪ ≿(y0 ) = ≺(x0 ) ∪ ≻(y0 ) is
closed. Further x0 ≻ y0 implies that x0 ∈ ≻(y0 ) so that ≺(x0 ) ∪ ≻(y0 ) ∕= ∅.
We have established that ≺(x0 ) ∪ ≻(y0 ) is a nonempty subset of 𝑋 which
is both open and closed. Since 𝑋 is connected, this implies (Exercise 1.83)
that
≺(x0 ) ∪ ≻(y0 ) = 𝑋
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1.248 For every x ∈ 𝑋, there exists some z such that z ≻ x (Nonsatiation). For any 𝑟,
choose some 𝛼 ∈ (0, 𝑟/ ∥x − z∥) and let y = 𝛼z + (1 − 𝛼)x. Then
∥x − y∥ = 𝛼 ∥x − z∥ < 𝑟
y = 𝛼z + (1 − 𝛼)x ≻ x
and therefore
𝑙
∑∑ 𝑙
∑∑
𝑝𝑗 𝑦𝑖𝑗 > 𝑝𝑗 w𝑖𝑗
𝑖∈𝑆 𝑗=1 𝑖∈𝑆 𝑗=1
x∗ ∈ core ⊆ Pareto
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Chapter 2: Functions
2.1 In general, the birthday mapping is not one-to-one since two individuals may have
the same birthday. It is not onto since some days may be no one’s birthday.
2.2 The origin 0 is fixed point for every 𝜃. Furthermore, when 𝜃 = 0, 𝑓 is an identity
function and every point is a fixed point.
2.3 For every 𝑥 ∈ 𝑋, there exists some 𝑦 ∈ 𝑌 such that 𝑓 (𝑥) = 𝑦, whence 𝑥 ∈ 𝑓 −1 (𝑦).
Therefore, every 𝑥 belongs to some contour. To show that distinct contours are disjoint,
assume 𝑥 ∈ 𝑓 −1 (𝑦1 ) ∩ 𝑓 −1 (𝑦2 ). Then 𝑓 (𝑥) = 𝑦1 and also 𝑓 (𝑥) = 𝑦2 . Since 𝑓 is a
function, this implies that 𝑦1 = 𝑦2 .
2.4 Assume 𝑓 is one-to-one and onto. Then, for every 𝑦 ∈ 𝑌 , there exists 𝑥 ∈ 𝑋 such
that 𝑓 (𝑥) = 𝑦. That is, 𝑓 −1 (𝑦) ∕= ∅ for every 𝑦 ∈ 𝑌 . If 𝑓 is one to one, 𝑓 (𝑥) = 𝑦 = 𝑓 (𝑥′ )
implies 𝑥 = 𝑥′ . Therefore, 𝑓 −1 (𝑦) consists of a single element. Therefore, the inverse
function 𝑓 −1 exists.
Conversely, assume that 𝑓 : 𝑋 → 𝑌 has an inverse 𝑓 −1 . As 𝑓 −1 is a function mapping
𝑌 to 𝑋, it must be defined for every 𝑦 ∈ 𝑌 . Therefore 𝑓 is onto. Assume there
exists 𝑥, 𝑥′ ∈ 𝑋 and 𝑦 ∈ 𝑌 such that 𝑓 (𝑥) = 𝑦 = 𝑓 (𝑥′ ). Then 𝑓 −1 (𝑦) = 𝑥 and
also 𝑓 −1 (𝑦) = 𝑥′ . Since 𝑓 −1 is a function, this implies that 𝑥 = 𝑥′ . Therefore 𝑓 is
one-to-one.
2.5 Choose any 𝑥 ∈ 𝑋 and let 𝑦 = 𝑓 (𝑥). Since 𝑓 is one-to-one, 𝑥 = 𝑓 −1 (𝑦) = 𝑓 −1 (𝑓 (𝑥)).
The second identity is proved similarly.
2.6 (2.2) implies for every 𝑥 ∈ ℜ
𝑒𝑥 𝑒−𝑥 = 𝑒0 = 1
and therefore
1
𝑒−𝑥 = (2.28)
𝑒𝑥
For every 𝑥 ≥ 0
𝑥 𝑥2 𝑥3
𝑒𝑥 = 1 + + + + ⋅⋅⋅ > 0
1 2 6
and therefore by (2.28) 𝑒𝑥 > 0 for every 𝑥 ∈ ℜ. For every 𝑥 ≥ 1
𝑥 𝑥2 𝑥3
𝑒𝑥 = 1 + + + + ⋅ ⋅ ⋅ ≥ 1 + 𝑥 → ∞ as 𝑥 → ∞
1 2 6
and therefore 𝑒𝑥 → ∞ as 𝑥 → ∞. By (2.28) 𝑒𝑥 → 0 as 𝑥 → −∞.
2.7
𝑒𝑥 𝑒𝑥/2 𝑒𝑥/2
=
𝑥 2 𝑥2
( 𝑥/2 )
1 𝑒
= 𝑒𝑥/2 → ∞ as 𝑥 → ∞
2 𝑥/2
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since the term in brackets is strictly greater than 1 for any 𝑥 > 0. Similarly
𝑒𝑥 (𝑒𝑥/(𝑛+1) )𝑛 𝑒𝑥/(𝑛+1)
= 𝑥 𝑛
𝑥 (𝑛 + 1)𝑛 ( 𝑛+1 )
( 𝑥/(𝑛+1) )𝑛
1 𝑒
= 𝑒𝑥/(𝑛+1) → ∞
(𝑛 + 1)𝑛 𝑥/(𝑛 + 1)
2.8 Assume that 𝑆 ⊆ ℜ is compact. Then 𝑆 is bounded (Proposition 1.1), and there
exists 𝑀 such that ∣𝑥∣ ≤ 𝑀 for every 𝑥 ∈ 𝑆. For all 𝑛 ≥ 𝑚 ≥ 2𝑀
𝑛
∑ 𝑥𝑘 𝑥𝑚+1 𝑛−𝑚 ∑ ( 𝑥 )𝑘
∣𝑓𝑛 (𝑥) − 𝑓𝑚 (𝑥)∣ = ≤
𝑘! (𝑚 + 1)! 𝑚
𝑘=𝑚+1 𝑘=0
𝑀 𝑚+1 𝑛−𝑚
∑ ( 𝑀 )𝑘
≤
(𝑚 + 1)! 𝑚
𝑘=0
( ( )𝑛−𝑚 )
𝑀 𝑚+1 1 1 1
≤ 1 + + + ⋅⋅⋅ +
(𝑚 + 1)! 2 4 2
( )𝑚+1 ( )𝑚
𝑀 𝑚+1 𝑀 1
≤2 ≤2 ≤
(𝑚 + 1)! 𝑚+1 2
(𝑓 + 𝑔) = 𝑓 (𝑥) + 𝑔(𝑥)
(𝛼𝑓 )(𝑥) = 𝛼𝑓 (𝑥)
With these definitions 𝑓 + 𝑔 and 𝛼𝑓 also map 𝑋 to ℜ. Hence 𝐹 (𝑋) is closed under
addition and scalar multiplication. It is straightforward but tedious to verify that 𝐹 (𝑋)
satisfies the other requirements of a linear space.
2.10 The zero element in 𝐹 (𝑋) is the constant function 𝑓 (𝑥) = 0 for every 𝑥 ∈ 𝑋.
2.11 1. From the definition of ∥𝑓 ∥ it is clear that
∙ ∥𝑓 ∥ ≥ 0.
∙ ∥𝑓 ∥ = 0 of and only 𝑓 is the zero functional.
∙ ∥𝛼𝑓 ∥ = ∣𝛼∣ ∥𝑓 ∥ since sup𝑥∈𝑋 ∣𝛼𝑓 (𝑥)∣ = ∣𝛼∣ sup𝑥∈𝑋 ∣𝑓 (𝑥)∣
It remains to verify the triangle inequality, namely
2. Consequently, for any 𝑓 ∈ 𝐵(𝑋), 𝛼𝑓 (𝑥) ≤ ∣𝛼∣ ∥𝑓 ∥ for every 𝑥 ∈ 𝑋 and therefore
𝛼𝑓 ∈ 𝐵(𝑋). Similarly, for any 𝑓, 𝑔 ∈ 𝐵(𝑋), (𝑓 + 𝑔)(𝑥) ≤ ∥𝑓 ∥ + ∥𝑔∥ for every
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∣𝑓 𝑛 (𝑥) − 𝑓 𝑚 (𝑥)∣ ≤ ∥𝑓 𝑛 − 𝑓 𝑚 ∥ → 0
We need to show
∙ ∥𝑓 𝑛 − 𝑓 ∥ → 0 and
∙ 𝑓 ∈ 𝐵(𝑋)
(𝑓 ) is a Cauchy sequence. For given 𝜖 > 0, choose 𝑁 such that ∥𝑓 𝑛 − 𝑓 𝑚 ∥ < 𝜖/2
𝑛
By suitable choice of 𝑚 (which may depend upon 𝑥), each term on the right can
be made smaller than 𝜖/2 and therefore
By Condition 3
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2.14 1. Assume that production is profitable at p. That is, there exists some y ∈ 𝑌
such that 𝑓 (y, p) > 0. Since the technology exhibits constant returns to scale, 𝑌
is a cone (Example 1.101). Therefore 𝛼y ∈ 𝑌 for every 𝛼 > 0 and
∑ ∑
𝑓 (𝛼y, p) = 𝑝𝑖 (𝛼𝑦𝑖 ) = 𝛼 𝑝𝑖 𝑦𝑖 = 𝛼𝑓 (y, p)
𝑖 𝑖
and therefore
x∗ solve (2.4).
2.16 The assumption that 𝐺(𝑥) ∕= ∅ for every 𝑥 ∈ 𝑋 implies Γ(𝑥0 ) ∕= ∅ for every
𝑥0 ∈ 𝑋. There always exist feasible plans from any starting point. Since 𝑢 is bounded,
there exists 𝑀 such that ∣𝑓 (𝑥𝑡 , 𝑥𝑡+1 )∣ ≤ 𝑀 for every x ∈ Γ(𝑥0 ). Consequently, for
every x ∈ Γ(𝑥0 ), 𝑈 (x) ∈ ℜ and
∞
∑ ∑ ∞ ∑∞
𝑀
∣𝑈 (x)∣ = 𝛽 𝑡 𝑓 (𝑥𝑡 , 𝑥𝑡+1 ) ≤ 𝛽 𝑡 ∣𝑓 (𝑥𝑡 , 𝑥𝑡+1 )∣ ≤ 𝛽𝑡𝑀 =
1−𝛽
𝑡=0 𝑡=0 𝑡=0
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𝑀
𝑣(𝑥0 ) = sup 𝑈 (x) ≤
x∈Γ(𝑥0 ) 1−𝛽
and 𝑣 ∈ 𝐵(𝑋). Next, we note that for every feasible plan x ∈ Γ(𝑥0 )
∞
∑
𝑈 (x) = 𝛽 𝑡 𝑓 (𝑥𝑡 , 𝑥𝑡+1 )
𝑡=0
∞
∑
= 𝑓 (𝑥0 , 𝑥1 ) + 𝛽 𝛽 𝑡 𝑓 (𝑥𝑡+1 , 𝑥𝑡+2 )
𝑡=0
= 𝑓 (𝑥0 , 𝑥1 ) + 𝛽𝑈 (x′ ) (2.29)
𝑈 (x) ≥ 𝑣(𝑥0 ) − 𝜖
𝑣(𝑥0 ) − 𝜖 ≤ 𝑈 (x)
= 𝑓 (𝑥0 , 𝑥1 ) + 𝛽𝑈 (x′ )
≤ 𝑓 (𝑥0 , 𝑥1 ) + 𝛽𝑣(𝑥1 )
≤ sup { 𝑓 (𝑥0 , 𝑦) + 𝛽𝑣(𝑦) }
𝑦∈𝐺(𝑥)
𝑈 (x′ ) ≥ 𝑣(𝑥1 ) − 𝜖
Since this is true for every 𝜖 > 0 and 𝑥1 ∈ 𝐺(𝑥0 ), we conclude that
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That is, x∗ ′ is optimal starting at 𝑥∗1 and therefore 𝑈 (x∗ ′ ) = 𝑣(𝑥∗1 ) (Exercise 2.15).
Consequently
This verifies (2.13) for 𝑡 = 0. A similar argument verifies (2.13) for any period 𝑡.
To show the converse, assume that x∗ = (𝑥0 , 𝑥∗1 , 𝑥∗2 , . . . ) ∈ Γ(𝑥0 ) satisfies (2.13). Suc-
cessively using (2.13)
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Therefore 𝑇 𝑣 ∈ 𝐵(𝑋).
2.19 Let 𝑁 = {1, 2, 3}. Any individual is powerless so that
𝑤({𝑖}) = 0 𝑖 = 1, 2, 3
Any two players can allocate the $1 to between themselves, leaving the other player
out. Therefore
𝑤({𝑖, 𝑗}) = 1 𝑖, 𝑗 ∈ 𝑁, 𝑖 ∕= 𝑗
The best that the three players can achieve is to allocate the $1 amongst themselves,
so that
𝑤(𝑁 ) = 1
2.20 If the consumers preferences are continuous and strictly convex, she has a unique
optimal choice x∗ for every set of prices p and income 𝑚 in 𝑃 (Example 1.116). There-
fore, the demand correspondence is single valued.
2.21 Assume 𝑠∗𝑖 ∈ 𝐵(s∗ ) for every 𝑖 ∈ 𝑁 . Then for every player 𝑖 ∈ 𝑁
s∗ = (𝑠∗1 , 𝑠∗2 , . . . , 𝑠∗𝑛 ) is a Nash equilibrium. Conversely, assume s∗ = (𝑠∗1 , 𝑠∗2 , . . . , 𝑠∗𝑛 ) is
a Nash equilibrium. Then for every player 𝑖 ∈ 𝑁
2.22 For any nonempty compact set 𝑇 ⊆ 𝑆, 𝐵(𝑇 ) is nonempty and compact provided
≿𝑖 is continuous (Proposition 1.5) and 𝐵(𝑇 ) ⊆ 𝑇 . Therefore
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Therefore
Conversely
Consequently
Let
and therefore x̄ ∈ 𝑉 (¯
𝑦 ) so that (¯
𝑦 , x̄) ∈ graph(𝑉 ). That is graph(𝑉 ) is convex.
Conversely, assuming graph(𝑉 ) is convex, if (𝑦 𝑖 , −x𝑖 ) ∈ 𝑌 , 𝑖 = 1, 2, then (𝑦 𝑖 , x𝑖 ) ∈
graph(𝑉 ) and therefore
(¯
𝑦 , x̄) ∈ graph(𝑉 ) =⇒ x̄ ∈ 𝑉 (¯
𝑦 ) =⇒ (¯
𝑦, −x̄) ∈ 𝑌
so that 𝑌 is convex.
2.26 The graph of 𝜑 is
Assume that (𝜽𝑖 , x𝑖 ) ∈ graph(𝐺), 𝑖 = 1, 2. This means that x𝑖 ∈ 𝐺(𝜽) and therefore
𝑔 𝑗 (x, 𝜽) ≤ 𝑐𝑗 for every 𝑗 and 𝑖 = 1, 2. Since 𝑔 𝑗 is convex
Therefore 𝛼x1 +(1−𝛼)x2 ∈ 𝐺(𝛼𝜽 1 +(1−𝛼)𝜽2 ) and (𝛼𝜽 1 +(1−𝛼)𝜽 2 , 𝛼x1 +(1−𝛼)x2 ) ∈
graph(𝐺). 𝐺 is convex.
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2.33 By Exercise 2.31 and Example 2.53, each 𝑔𝑛 is strictly increasing on ℜ+ . That is
and therefore
This suffices to show that 𝑔(𝑥) = lim𝑛→∞ 𝑔𝑛 (𝑥) is increasing (not strictly increasing).
However, 1 + 𝑥 is strictly increasing, and therefore by Exercise 2.31
𝑒𝑥 = 1 + 𝑥 + 𝑔(𝑥)
𝑥2 ≿ 𝑥1 =⇒ 𝑢(𝑥2 ) ≥ 𝑢(𝑥1 )
To show the converse, assume that 𝑥1 , 𝑥2 ∈ 𝑋 with 𝑢(𝑥2 ) ≥ 𝑢(𝑥1 ). Since ≿ is complete,
either 𝑥2 ≿ 𝑥1 or 𝑥1 ≻ 𝑥2 . However, the second possibility cannot occur since 𝑢 is
strictly increasing and therefore
𝑢(𝑥2 ) ≥ 𝑢(𝑥1 ) =⇒ 𝑥2 ≿ 𝑥1
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(d) Suppose x ∼ z1x and x ∼ z2x with z1x ∕= z2x . Then either z1x > z2x or
z1x < z2x . Without loss of generality, assume z2x > z1x . Then monotonicity
and transitivity imply
x ∼ z2x ≻ z1x ∼ x
which is a contradiction. Therefore zx is unique.
Let 𝑧x denote the scale of zx , that is zx = 𝑧x 1. For every x ∈ ℜ𝑛+ , there is a
unique zx ∼ x and the function 𝑢 : ℜ𝑛+ → ℜ given by 𝑢(x) = 𝑧x is well-defined.
Moreover
x2 ≿ x1 ⇐⇒ zx2 ≿ zx1
⇐⇒ 𝑧x2 ≥ 𝑧x1
⇐⇒ 𝑢(x2 ) ≥ 𝑢(x1 )
𝑢 represents the preference order ≿.
2.39 1. For every 𝑥1 ∈ ℜ, (𝑥1 , 2) ≻𝐿 (𝑥1 , 1) in the lexicographic order. If 𝑢 represents
≿𝐿 , 𝑢 is strictly increasing and therefore 𝑢(𝑥1 , 2) > 𝑢(𝑥1 , 1). There exists a
rational number 𝑟(𝑥1 ) such that 𝑢(𝑥1 , 2) > 𝑟(𝑥1 ) > 𝑢(𝑥1 , 1).
2. The preceding construction associates a rational number with every real number
𝑥1 ∈ ℜ. Hence 𝑟 is a function from ℜ to the set of rational numbers 𝑄. For any
𝑥11 , 𝑥21 ∈ ℜ with 𝑥21 > 𝑥11
𝑟(𝑥21 ) > 𝑢(𝑥21 , 1) > 𝑢(𝑥11 , 2) > 𝑟(𝑥11 )
Therefore
𝑥21 > 𝑥11 =⇒ 𝑟(𝑥21 ) > 𝑟(𝑥11 )
𝑟 is strictly increasing.
3. By Exercise 2.29, 𝑟 has an inverse. This implies that 𝑟 is one-to-one and onto,
which is impossible since 𝑄 is countable and ℜ is uncountable (Example 2.16).
This contradiction establishes that ≿𝐿 has no such representation 𝑢.
2.40 Let a1 , a2 ∈ 𝐴 with a1 ≿2 a2 . Since the game is strictly competitive, a2 ≿1 a1 .
Since 𝑢1 represents ≿1 , 𝑢1 (a2 ) ≥ 𝑢1 (a1 ) which implies that −𝑢1 (a2 ) ≤ −𝑢1 (a1 ), that
is 𝑢2 (a1 ) ≥ 𝑢2 (a2 ) where 𝑢2 = −𝑢1 . Similarly
𝑢2 (a1 ) ≥ 𝑢2 (a2 ) =⇒ 𝑢1 (a1 ) ≤ 𝑢1 (a2 ) ⇐⇒ a1 ≾1 a2 =⇒ a1 ≿2 a2
Therefore 𝑢2 = −𝑢1 represents ≿2 and
𝑢1 (a) + 𝑢2 (a) = 0 for every a ∈ 𝐴
2.41 Assume 𝑆 ⫋ 𝑇 . By superadditivity
𝑤(𝑇 ) ≥ 𝑤(𝑆) + 𝑤(𝑇 ∖ 𝑆) ≥ 𝑤(𝑆)
2.42 Assume 𝑣, 𝑤 ∈ 𝐵(𝑋) with 𝑤(𝑦) ≥ 𝑣(𝑦) for every 𝑦 ∈ 𝑋. Then for any 𝑥 ∈ 𝑋
𝑓 (𝑥, 𝑦) + 𝛽𝑤(𝑦) ≥ 𝑓 (𝑥, 𝑦) + 𝛽𝑣(𝑦) for every 𝑦 ∈ 𝑋
and therefore
(𝑇 𝑤)(𝑥) = sup {𝑓 (𝑥, 𝑦) + 𝛽𝑤(𝑦)} ≥ sup {𝑓 (𝑥, 𝑦) + 𝛽𝑣(𝑦)} = (𝑇 𝑣)(𝑥)
𝑦∈𝐺(𝑥) 𝑦∈𝐺(𝑥)
T is increasing.
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is a selection. Similarly
increasing.
∩ ∩
2.47 Let 𝑥1 , 𝑥2 belong to 𝑋 with 𝑥2 ≿ 𝑥1 . Choose 𝑦 1 ∈ 𝑖 𝜑𝑖 (𝑥1 ) and 𝑦 2 ∈ 𝑖 𝜑𝑖 (𝑥2 ).
Then 𝑦 1 ∈ 𝜑𝑖 (𝑥1 ) and 𝑦 2 ∈ 𝜑𝑖 (𝑥2 ) for each 𝑖 = 1, 2, . . . , 𝑛. Since each 𝜑𝑖∩is increasing,
𝑦1 ∧ 𝑦2 ∈ ∩𝜑𝑖 (𝑥1 ) and 𝑦 1 ∨∩𝑦 2 ∈ 𝜑𝑖 (𝑥2 ) for each 𝑖. Therefore 𝑦 1 ∧ 𝑦 2 ∈ 𝑖 𝜑𝑖 (𝑥1 ) and
𝑦 ∨ 𝑦 ∈ 𝑖 𝜑𝑖 (𝑥2 ). 𝜑 = 𝑖 𝜑 is increasing.
1 2
𝑥1 ≿𝑋 𝑥2 =⇒ 𝑓 (𝑥1 ) ≿𝑌 𝑓 (𝑥2 )
𝑥1 ≿𝑋 𝑥2 =⇒ 𝑦1 ≿𝑌 𝑦2
𝜑 is increasing.
2.49 Let 𝑥1 , 𝑥2 ∈ 𝑋. If 𝑋 is a chain, either 𝑥1 ≿ 𝑥2 or 𝑥2 ≿ 𝑥1 . Without loss of
generality , assume 𝑥2 ≿ 𝑥1 . Then 𝑥1 ∨ 𝑥2 = 𝑥2 and 𝑥1 ∧ 𝑥2 = 𝑥1 and (2.17) is satisfied
as an identity.
2.50
Similarly
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implies
for all 𝛼 ≥ 0. By Exercise 1.186, the set of all supermodular functions is a convex cone
in 𝐹 (𝑋).
2.51 Since 𝑓 is supermodular and 𝑔 is nonnegative definite,
( )
𝑓 (𝑥1 ∨ 𝑥2 )𝑔(𝑥1 ∨ 𝑥2 ) ≥ 𝑓 (𝑥1 ) + 𝑓 (𝑥2 ) − 𝑓 (𝑥1 ∧ 𝑥2 ) 𝑔(𝑥1 ∨ 𝑥2 )
( )
= 𝑓 (𝑥2 )𝑔(𝑥1 ∨ 𝑥2 ) + 𝑓 (𝑥1 ) − 𝑓 (𝑥1 ∧ 𝑥2 ) 𝑔(𝑥1 ∨ 𝑥2 )
or
y = (𝑦1 , 0) ∨ (0, 𝑦2 )
0 = (𝑦1 , 0) ∧ (0, 𝑦2 )
If 𝑐 is strictly submodular
Since 𝑐(w, 0) = 0
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𝑤 is superadditive.
2.55 Rewriting (2.18), this implies
Since 𝑆 ⊂ 𝑇
𝑆 ′ ∪ 𝑇 = (𝑆 ∪ {𝑖}) ∪ 𝑇 = 𝑇 ∪ {𝑖}
𝑆 ′ ∩ 𝑇 = (𝑆 ∪ {𝑖}) ∩ 𝑇 = 𝑆
𝑤(𝑆 ∪ {1, 2}) − 𝑤(𝑆 ∪ {1}) ≥ 𝑤((𝑆 ∩ 𝑇 ) ∪ {1, 2}) − 𝑤((𝑆 ∩ 𝑇 ) ∪ {1})
..
.
( )
𝑤(𝑆 ∪ (𝑇 ∖ 𝑆)) − 𝑤(𝑆 ∪ {1, 2, . . . , 𝑚 − 1}) ≥ 𝑤 𝑆 ∩ 𝑇 ) ∪ (𝑇 ∖ 𝑆)
− 𝑤((𝑆 ∩ 𝑇 ) ∪ {1, 2, . . . , 𝑚 − 1})
This simplifies to
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2.56 The cost allocation game is not convex. Let 𝑆 = {𝐴𝑃, 𝐾𝑀 }, 𝑇 = {𝐾𝑀, 𝑇 𝑁 }.
Then 𝑆 ∪ 𝑇 = {𝐴𝑃, 𝐾𝑀, 𝑇 𝑁 } = 𝑁 and 𝑆 ∩ 𝑇 = {𝐾𝑀 } and
If the right hand side of this inequality is nonnegative, then so a fortiori is the left
hand side, that is
If the right hand side is strictly positive, so must be the left hand side
Rearranging
Substituting (2.39)
( ) ( )
𝑓 (𝑥1 , 𝑦1 ) ∨ (𝑥2 , 𝑦2 ) + 𝑓 (𝑥1 , 𝑦1 ) ∧ (𝑥2 , 𝑦2 ) ≥ 𝑓 (𝑥1 , 𝑦1 ) + 𝑓 (𝑥2 , 𝑦2 )
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If the goods are gross substitutes, demand for firm 𝑖 increases and the amount
of the increase is independent of 𝑝𝑖 . Consequently, the effect on profit will be in-
creasing in 𝑝𝑖 . That is the payoff function (net revenue) has increasing differences
in (𝑝𝑖 , p−𝑖 ). Specifically,
∑
𝑢(𝑝𝑖 , p2−𝑖 ) − 𝑢(𝑝𝑖 , p1−𝑖 ) = 𝑑𝑖𝑗 (𝑝𝑖 − 𝑐¯𝑖 )(𝑝2𝑗 − 𝑝1𝑗 )
𝑖∕=𝑗
For any price increase p2−𝑖 ≩ p1−𝑖 , the change in profit 𝑢(𝑝𝑖 , p2−𝑖 ) − 𝑢(𝑝𝑖 , p1−𝑖 ) is
increasing in 𝑝𝑖 .
Hence, the Bertrand oligopoly model is a supermodular game.
2.61 Suppose 𝑓 displays increasing differences so that for all 𝑥2 ≿ 𝑥1 and 𝑦2 ≿ 𝑦1
𝑓 (𝑥2 , 𝑦2 ) − 𝑓 (𝑥1 , 𝑦2 ) ≥ 𝑓 (𝑥2 , 𝑦1 ) − 𝑓 (𝑥1 , 𝑦1 )
Then
𝑓 (𝑥2 , 𝑦1 ) − 𝑓 (𝑥1 , 𝑦1 ) ≥ 0 =⇒ 𝑓 (𝑥2 , 𝑦2 ) − 𝑓 (𝑥1 , 𝑦2 ) ≥ 0
and
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2.63 As in the proof of the theorem, let 𝜽1 , 𝜽 2 belong to Θ with 𝜽 2 ≿ 𝜽1 . Choose any
optimal solutions x1 ∈ 𝜑(𝜽 1 ) and x2 ∈ 𝜑(𝜽2 ). We claim that x2 ≿𝑋 x1 . Assume
otherwise, that is assume x2 ∕≿𝑋 x1 . This implies (Exercise 1.44) that x1 ∧ x2 ∕= x1 .
Since x1 ≿ x1 ∧ x2 , we must have x1 ≻ x1 ∧ x2 . Strictly increasing differences implies
Supermodularity implies
However x1 and x2 are optimal for their respective parameter values, that is
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To show that 𝑓 satisfies the single crossing condition, choose any x2 ≿ x1 and let
𝐺 = {x1 , x2 }. Assume that 𝑓 (x2 , 𝜽1 ) ≥ 𝑓 (x1 , 𝜽 1 ). Then x2 ∈ 𝜑(𝜽1 , 𝐺) which implies
that x2 ∈ 𝜑(𝜽 2 , 𝐺) for any 𝜽 2 ≿ 𝜽1 . (If x1 ∈ 𝜑(𝜽 2 , 𝐺), then also x1 ∨x2 = x2 ∈ 𝜑(𝜽 2 , 𝐺)
since 𝜑 is increasing in (𝜽, 𝐺).) But this implies that 𝑓 (x2 , 𝜽2 ) ≥ 𝑓 (x1 , 𝜽2 ). 𝑓 satisfies
the single crossing condition.
2.66 First, assume that 𝑓 is continuous. Let 𝑇 be an open subset in 𝑌 and 𝑆 = 𝑓 −1 (𝑇 ).
If 𝑆 = ∅, it is open. Otherwise, choose 𝑥0 ∈ 𝑆 and let 𝑦0 = 𝑓 (𝑥0 ) ∈ 𝑇 . Since 𝑇 is
open, there exists a neighborhood 𝑁 (𝑦0 ) ⊆ 𝑇 . Since 𝑓 is continuous, there exists a
corresponding neighborhood 𝑁 (𝑥0 ) with 𝑓 (𝑁 (𝑥0 )) ⊆ 𝑁 (𝑓 (𝑥0 )). Since 𝑁 (𝑓 (𝑥0 )) ⊆ 𝑇 ,
𝑁 (𝑥0 ) ⊆ 𝑆. This establishes that for every 𝑥0 ∈ 𝑆 there exist a neighborhood 𝑁 (𝑥0 )
contained in 𝑆. That is, 𝑆 is open in 𝑋.
Conversely, assume that the inverse image of every open set in 𝑌 is open in 𝑋. Choose
some 𝑥0 ∈ 𝑋 and let 𝑦0 = 𝑓 (𝑥0 ). Let 𝑇 ⊂ 𝑌 be a neighborhood of 𝑦0 . 𝑇 contains an
open ball 𝐵𝑟 (𝑦0 ) about 𝑦0 . By hypothesis, the inverse image 𝑆 = 𝑓 −1 (𝐵𝑟 (𝑦0 )) is open
in 𝑋. Therefore, there exists a neighborhood 𝑁 (𝑥0 ) ⊆ 𝑓 −1 (𝐵𝑟 (𝑦0 )). Since 𝐵𝑟 (𝑦0 ) ⊆ 𝑇 ,
𝑓 (𝑁 (𝑥0 )) ⊆ 𝑇 . Since the choice of 𝑥0 was arbitrary, we conclude that 𝑓 is continuous.
2.67 Assume 𝑓 is continuous. Let 𝑇 be a closed set in 𝑌 and let 𝑆 = 𝑓 −1 (𝑇 ). Then,
𝑇 𝑐 is open. By the previous exercise, 𝑓 −1 (𝑇 𝑐 ) = 𝑆 𝑐 is open and therefore 𝑆 is closed.
Conversely, for every open set 𝑇 ⊆ 𝑌 , 𝑇 𝑐 is closed. By hypothesis, 𝑆 𝑐 = 𝑓 −1 (𝑇 𝑐 ) is
closed and therefore 𝑆 = 𝑓 −1 (𝑇 ) is open. 𝑓 is continuous by the previous exercise.
2.68 Assume 𝑓 is continuous. Let 𝑥𝑛 be a sequence converging to 𝑥 Let 𝑇 be a neigh-
borhood of 𝑓 (𝑥). Since 𝑓 is continuous, there exists a neighborhood 𝑆 ∋ 𝑥 such that
𝑓 (𝑆) ⊆ 𝑇 . Since 𝑥𝑛 converges to 𝑥, there exists some 𝑁 such that 𝑥𝑛 ∈ 𝑆 for all
𝑛 ≥ 𝑁 . Consequently 𝑓 (𝑥𝑛 ) ∈ 𝑇 for every 𝑛 ≥ 𝑁 . This establishes that 𝑓 (𝑥𝑛 ) → 𝑓 (𝑥).
Conversely, assume that for every sequence 𝑥𝑛 → 𝑥, 𝑓 (𝑥𝑛 ) → 𝑓 (𝑥). We show that if 𝑓
were not continuous, it would be possible to construct a sequence which violates this
hypothesis. Suppose then that 𝑓 is not continuous. Then there exists a neighborhood
𝑇 of 𝑓 (𝑥) such that for every neighborhood 𝑆 of 𝑥, there is 𝑥′ ∈ 𝑆 with 𝑓 (𝑥′ ) ∈
/ 𝑇 . In
particular, consider the sequence of open balls 𝐵1/𝑛 (𝑥). For every 𝑛, choose a point
𝑥𝑛 ∈ 𝐵1/𝑛 (𝑥) with 𝑓 (𝑥𝑛 ) ∈/ 𝑇 . Then 𝑥𝑛 → 𝑥 but 𝑓 (𝑥𝑛 ) does not converge to 𝑓 (𝑥).
This contradicts the assumption. We conclude that 𝑓 must be continuous.
2.69 Since 𝑓 is one-to-one and onto, it has an inverse 𝑔 = 𝑓 −1 which maps 𝑌 onto
𝑋. Let 𝑆 be an open set in 𝑋. Since 𝑓 is open, 𝑇 = 𝑔 −1 (𝑆) = 𝑓 (𝑆) is open in 𝑌 .
Therefore 𝑔 = 𝑓 −1 is continuous.
2.70 Assume 𝑓 is continuous. Let (𝑥𝑛 , 𝑦 𝑛 ) be a sequence of points in graph(𝑓 ) con-
verging to (𝑥, 𝑦). Then 𝑦 𝑛 = 𝑓 (𝑥𝑛 ) and 𝑥𝑛 → 𝑥. Since 𝑓 is continuous, 𝑦 = 𝑓 (𝑥) =
lim𝑛→∞ 𝑓 (𝑥𝑛 ) = lim𝑛→∞ 𝑦 𝑛 . Therefore (𝑥, 𝑦) ∈ graph(𝑓 ) which is therefore closed.
2.71 By the previous exercise, 𝑓 continuous implies graph(𝑓 ) closed. Conversely, sup-
pose graph(𝑓 ) is closed and let 𝑥𝑛 be a sequence converging to 𝑥. Then (𝑥𝑛 , 𝑓 (𝑥𝑛 )))
is a sequence in graph(𝑓 ). Since 𝑌 is compact, 𝑓 (𝑥𝑛 ) contains a subsequence which
converges 𝑦. Since graph(𝑓 ) is closed, (𝑥, 𝑦) ∈ graph(𝑓 ) and therefore 𝑦 = 𝑓 (𝑥) and
𝑓 (𝑥𝑛 ) → 𝑓 (𝑥).
2.72 Let 𝑇 be an open set in 𝑍. Since 𝑓 and 𝑔 are continuous, 𝑔 −1 (𝑇 ) is open in 𝑌
and 𝑓 −1 (𝑔 −1 (𝑇 )) is open in 𝑋. But 𝑓 −1 (𝑔 −1 (𝑇 )) = (𝑓 ∘ 𝑔)−1 (𝑇 ). Therefore 𝑓 ∘ 𝑔 is
continuous.
2.73 Exercises 1.201 and 2.68.
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2.74 Let 𝑢 be defined as in Exercise 2.38. Let (x𝑛 ) be a sequence converging to x. Let
𝑧 𝑛 = 𝑢(x𝑛 ) and 𝑧 = 𝑢(x). We need to show that 𝑧 𝑛 → 𝑧.
(𝑧 𝑛 ) has a convergent subsequence. Let 𝑧¯ = max𝑖 𝑥𝑖 and 𝑧 = min𝑖 𝑥𝑖 . Then 𝑧 ∈
[𝑧, 𝑧¯]. Fix some 𝜖 > 0. Since x𝑛 → x, there exists some 𝑁 such that ∥x𝑛 − x∥∞ <
𝜖 for every 𝑛 ≥ 𝑁 . Consequently, for all 𝑛 ≥ 𝑁 , the terms of the sequence (𝑧 𝑛 )
lie in the compact set [𝑧 − 𝜖, 𝑧¯ + 𝜖]. Hence, (𝑧 𝑛 ) has a convergent subsequence
(𝑧 𝑚 ).
Every convergent subsequence (𝑧 𝑚 ) converges to 𝑧. Suppose not. That is, sup-
pose there exists a convergent subsequence which converges to 𝑧 ′ . Without loss
of generality, assume 𝑧 ′ > 𝑧. Let 𝑧ˆ = 12 (𝑧 + 𝑧 ′ ) and let z = 𝑧1, z′ = 𝑧 ′ 1, ẑ = 𝑧ˆ1
be the corresponding commodity bundles (see Exercise 2.38). Since 𝑧 𝑚 → 𝑧 ′ > 𝑧ˆ,
there exists some 𝑀 such that 𝑧 𝑚 > 𝑧ˆ for every 𝑚 ≥ 𝑀 . This implies that
x𝑚 ∼ z𝑚 ≻ ẑ for every 𝑚 ≥ 𝑀
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2.78 Choose any 𝑥0 ∈ 𝑋 and 𝜖 > 0. Since 𝑓 is continuous, there exists 𝛿1 such that
𝜌(𝑥, 𝑥0 ) < 𝛿1 =⇒ ∣𝑓 (𝑥) − 𝑓 (𝑥0 )∣ < 𝜖/2
Similarly, there exists 𝛿2 such that
𝜌(𝑥, 𝑥0 ) < 𝛿2 =⇒ ∣𝑔(𝑥) − 𝑔(𝑥0 )∣ < 𝜖/2
Let 𝛿 = min{𝛿1 , 𝛿2 }. Then, provided 𝜌(𝑥, 𝑥0 ) < 𝛿
∣(𝑓 + 𝑔)(𝑥) − (𝑓 + 𝑔)(𝑥0 )∣ = ∣𝑓 (𝑥) + 𝑔(𝑥) − 𝑓 (𝑥0 ) − 𝑔(𝑥0 )∣
≤ ∣𝑓 (𝑥) − 𝑓 (𝑥0 )∣ + ∣𝑔(𝑥) − 𝑔(𝑥0 )∣
<𝜖
This establishes 𝑓 + 𝑔 is continuous at 𝑥0 . Since 𝑥0 was arbitrary, 𝑓 + 𝑔 is continuous
for every 𝑥0 ∈ 𝑋. The continuity of 𝛼𝑓 is shown similarly.
2.79 Choose any 𝑥0 ∈ 𝑋. Given 0 < 𝜂 ≤ 1, there exists 𝛿 > 0 such that
∣𝑓 (𝑥) − 𝑓 (𝑥0 )∣ < 𝜂 and ∣𝑔(𝑥) − 𝑔(𝑥0 )∣ < 𝜂
whenever 𝜌(𝑥, 𝑥0 ) < 𝛿. Consequently, while 𝜌(𝑥, 𝑥0 ) < 𝛿
∣𝑓 (𝑥)∣ ≤ ∣𝑓 (𝑥) − 𝑓 (𝑥0 )∣ + ∣𝑓 (𝑥0 )∣
< 𝜂 + ∣𝑓 (𝑥0 )∣
≤ 1 + ∣𝑓 (𝑥0 )∣
and
∣(𝑓 𝑔)(𝑥) − (𝑓 𝑔)(𝑥0 )∣ = ∣𝑓 (𝑥)𝑔(𝑥) − 𝑓 (𝑥0 )𝑔(𝑥0 )∣
= ∣𝑓 (𝑥)(𝑔(𝑥) − 𝑔(𝑥0 )) + 𝑔(𝑥0 )(𝑓 (𝑥) − 𝑓 (𝑥0 ))∣
≤ ∣𝑓 (𝑥)∣ ∣𝑔(𝑥) − 𝑔(𝑥0 )∣ + ∣𝑔(𝑥0 )∣ ∣𝑓 (𝑥) − 𝑓 (𝑥0 )∣
< 𝜂(1 + ∣𝑓 (𝑥0 )∣ + ∣𝑔(𝑥0 )∣)
Given 𝜖 > 0, let 𝜂 = min{1, 𝜖/(1 + ∣𝑓 (𝑥0 )∣ + ∣𝑔(𝑥0 )∣)}. Then, we have shown that there
exists 𝛿 > 0 such that
𝜌(𝑥, 𝑥0 ) < 𝛿 =⇒ ∣(𝑓 𝑔)(𝑥) − (𝑓 𝑔)(𝑥0 )∣ < 𝜖
Therefore, 𝑓 𝑔 is continuous at 𝑥0 .
2.80 Apply Exercises 2.78 and 2.72.
2.81 For any 𝑎 ∈ ℜ, the upper and lower contour sets of 𝑓 ∨ 𝑔, namely
{ 𝑥 : max{𝑓 (𝑥), 𝑔(𝑥)} ≥ 𝑎} = {𝑥 : 𝑓 (𝑥) ≥ 𝑎 } ∪ { 𝑥 : 𝑔(𝑥) ≥ 𝑎 }
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2.83 By Proposition 2.3, 𝑓 (𝑋) is connected and hence an interval (Exercise 1.95).
2.84 The range 𝑓 (𝑋) is a compact subset of ℜ (Proposition 2.3). Therefore 𝑓 is bounded
(Proposition 1.1).
˜
2.85 Let 𝐶(𝑋) denote the set of all continuous (not necessarily bounded) functionals
on 𝑋. Then
˜
𝐶(𝑋) = 𝐵(𝑋) ∩ 𝐶(𝑋)
˜
𝐵(𝑋), 𝐶(𝑋) are a linear subspaces of the set of all functionals 𝐹 (𝑋) (Exercises 2.11,
2.78 respectively). Therefore 𝐶(𝑋) = 𝐵(𝑋) ∩ 𝐶(𝑋) ˜ is a subspace of 𝐹 (𝑋) (Exercise
1.130). Clearly 𝐶(𝑋) ⊆ 𝐵(𝑋). Therefore 𝐶(𝑋) is a linear subspace of 𝐵(𝑋).
Let 𝑓 be a bounded function in the closure of 𝐶(𝑋), that is 𝑓 ∈ 𝐶(𝑋). We show that
𝑓 is continuous. For any 𝜖 > 0, there exists 𝑓0 ∈ 𝐶(𝑋) such that ∥𝑓 − 𝑓0 ∥ < 𝜖/3.
Therefore ∣𝑓 (𝑥) − 𝑓0 (𝑥)∣ < 𝜖/3 for every 𝑥 ∈ 𝑋. Choose some 𝑥0 ∈ 𝑋. Since 𝑓0 is
continuous, there exists 𝛿 > 0 such that
{ 𝑥 : 𝑓 (𝑥) ≥ 𝛼 } = {𝑥 : −𝑓 (𝑥) ≤ −𝛼 }
and therefore
𝑥0 ∈ { 𝑥 : 𝑓 (𝑥) ≥ 𝛼 } = { 𝑥 : 𝑓 (𝑥) ≥ 𝛼 }
since 𝑓 is upper semi-continuous. That is, 𝑓 (𝑥0 ) ≥ 𝛼 for every 𝛼 < 𝜇. Hence
𝑓 (𝑥0 ) ≥ 𝜇 = lim𝑛→∞ 𝑓 (𝑥𝑛 ).
2 implies 3 Let (𝑥𝑛 , 𝑦 𝑛 ) be a sequence in hypo 𝑓 which converges to (𝑥, 𝑦). That is,
𝑥𝑛 → 𝑥, 𝑦 𝑛 → 𝑦 and 𝑦 𝑛 ≤ 𝑓 (𝑥𝑛 ). Condition 2 implies that 𝑓 (𝑥) ≥ 𝑦. Hence,
(𝑥, 𝑦) ∈ hypo 𝑓 . Therefore hypo 𝑓 is closed.
3 implies 1 For fixed 𝛼 ∈ ℜ, let 𝑥𝑛 be a sequence in { 𝑥 : 𝑓 (𝑥) ≥ 𝛼 }. Suppose
𝑥𝑛 → 𝑥0 . Then, the sequence (𝑥𝑛 , 𝛼) converges to (𝑥0 , 𝛼) ∈ hypo 𝑓 . Hence
𝑓 (𝑥0 ) ≥ 𝛼 and 𝑥0 ∈ { 𝑥 : 𝑓 (𝑥) ≥ 𝛼 }, which is therefore closed (Exercise 1.106).
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𝑓 (𝑥) ≤ 𝑔(𝑥) + ∥𝑓 − 𝑔∥
𝑇 (𝑓 ) ≤ 𝑇 (𝑔 + ∥𝑓 − 𝑔∥) = 𝑇 (𝑔) + 𝛽 ∥𝑓 − 𝑔∥
or
𝑇 (𝑓 ) − 𝑇 (𝑔) ≤ 𝛽 ∥𝑓 − 𝑔∥
(𝑇 𝑓 − 𝑇 𝑔)(𝑥) ≤ 𝛽 ∥𝑓 − 𝑔∥
and consequently
∥𝑇 𝑓 − 𝑇 𝑔∥ ≤ 𝛽 ∥𝑓 − 𝑔∥
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2.94 We have previously shown that 𝑇 is increasing (Exercise 2.42). By direct calcula-
tion, for any constant 𝑐 ∈ ℜ,
{ ( )}
𝑇 (𝑣 + 𝑐)(𝑥) = sup 𝑓 (𝑥, 𝑦) + 𝛽 𝑣(𝑦) + 𝑐
𝑦∈𝐺(𝑥)
{ }
= sup 𝑓 (𝑥, 𝑦) + 𝛽𝑣(𝑦) + 𝛽𝑐
𝑦∈𝐺(𝑥)
= 𝑇 (𝑣)(𝑥) + 𝛽𝑐
Each 𝑓𝑘 is uniformly continuous (Exercise 2.91), so that there exists 𝛿𝑘 > 0 such that
Let 𝛿 = min{𝛿1 , 𝛿2 , . . . , 𝛿𝑘 }. Given any 𝑓 ∈ 𝐹 , let 𝑘 be such that ∥𝑓 − 𝑓𝑘 ∥ < 𝜖/3. Then
for any 𝑥, 𝑥0 ∈ 𝑋, 𝜌(𝑥, 𝑥0 ) ≤ 𝛿 implies
𝜖 𝜖 𝜖
𝜌(𝑓 (𝑥), 𝑓 (𝑥0 ) ≤ 𝜌(𝑓 (𝑥), 𝑓𝑘 (𝑥)) + 𝜌(𝑓𝑘 (𝑥), 𝑓𝑘 (𝑥0 )) + 𝜌(𝑓𝑘 (𝑥0 ), 𝑓 (𝑥0 )) < + + =𝜖
3 3 3
for every 𝑓 ∈ 𝐹 . Therefore, 𝐹 is equicontinuous.
Conversely, assume that 𝐹 ⊆ 𝐶(𝑋) is closed, bounded and equicontinuous. Let (𝑓𝑛 )
be a bounded equicontinuous sequence of functions in 𝐹 . We show that (𝑓𝑛 ) has a
convergent subsequence.
1. First, we show that for any 𝜖 > 0, there is exists a subsequence (𝑓𝑚 ) such that
∥𝑓𝑚 − 𝑓𝑚′ ∥ < 𝜖 for every 𝑓𝑚 , 𝑓𝑚′ in the subsequence. Since the functions are
equicontinuous, there exists 𝛿 > 0 such that
𝜖
𝜌(𝑓𝑛 (𝑥) − 𝑓𝑛 (𝑥0 ) <
3
for every 𝑥, 𝑥0 in 𝑋 with 𝜌(𝑥, 𝑥0 ) ≤ 𝛿. Since 𝑋 is compact, it is totally bounded
(Exercise 1.113). That is, there exist a finite number of open balls 𝐵𝛿 (𝑥𝑖 ),
𝑖 = 1, 2 . . . , 𝑘 which cover 𝑋. The sequence (𝑓𝑛 (𝑥1 ), 𝑓𝑛 (𝑥2 , . . . , 𝑓𝑛 (𝑥𝑘 )) is a
bounded sequence in ℜ𝑛 . By the Bolzano-Weierstrass theorem (Exercise 1.119),
this sequence has a convergent subsequence (𝑓𝑚 (𝑥1 ), 𝑓𝑚 (𝑥2 ), . . . , 𝑓𝑚 (𝑥𝑘 )) such
that 𝑓𝑚 (𝑥𝑖 ) − 𝑓𝑚′ (𝑥𝑖 ) < 𝜖/3 for 𝑖 and every 𝑓𝑚 , 𝑓𝑚′ in the subsequence. Conse-
quently, for any 𝑥 ∈ 𝑋, there exists 𝑖 such that
𝜌(𝑓𝑚 (𝑥), 𝑓𝑚′ (𝑥) ≤ 𝜌(𝑓𝑚 (𝑥), 𝑓𝑚 (𝑥𝑖 )) + 𝜌(𝑓𝑚 (𝑥𝑖 ), 𝑓𝑚′ (𝑥𝑖 )) + 𝜌(𝑓𝑚′ (𝑥𝑖 ), 𝑓𝑚′ (𝑥))
𝜖 𝜖 𝜖
< + + =𝜖
3 3 3
That is, ∥𝑓𝑚 − 𝑓𝑚′ ∥ < 𝜖 for every 𝑓𝑚 , 𝑓𝑚′ in the subsequence.
2. Choose a ball 𝐵1 of radius 1 in 𝐶(𝑋) which contains infinitely many elements of
(𝑓𝑛 ). Applying step 1, there exists a ball 𝐵2 of radius 1/2 containing infinitely
many elements of (𝑓𝑛 ). Proceeding in this fashion, we obtain a nested sequence
𝐵1 ⊇ 𝐵2 ⊇ . . . of balls in 𝐶(𝑋) such that (a) 𝑑(𝐵𝑖 ) → 0 and (b) each 𝐵𝑖 contains
infinitely many terms of (𝑓𝑛 ). Choosing 𝑓𝑛𝑖 ∈ 𝐵𝑖 gives a convergent subsequence.
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2.96 Let 𝑔 ∈ 𝐹 . Then for every 𝜖 > 0 there exists 𝛿 > 0 and 𝑓 ∈ 𝐹 such that
∥𝑓 − 𝑔∥ < 𝜖/3 and
𝜌(𝑥, 𝑥0 ) ≤ 𝛿 =⇒ 𝜌(𝑓 (𝑥), 𝑓 (𝑥0 ) < 𝜖/3
so that if 𝜌(𝑥, 𝑥0 ) ≤ 𝛿
𝜖 𝜖 𝜖
∥𝑔(𝑥) − 𝑔(𝑥0 )∥ ≤ ∥𝑓 (𝑥) − 𝑔(𝑥)∥ + ∥𝑓 (𝑥) − 𝑓 (𝑥0 )∥ + ∥𝑓 (𝑥0 ) − 𝑔(𝑥0 )∥ < + + =𝜖
3 3 3
2.97 For every 𝑇 ⊆ 𝑌
𝜑− (𝑇 𝑐 ) = { 𝑥 ∈ 𝑋 : 𝜑(𝑥) ∩ 𝑇 𝑐 ∕= ∅ }
𝜑+ (𝑇 ) = { 𝑥 ∈ 𝑋 : 𝜑(𝑥) ⊆ 𝑇 }
For every x ∈ 𝑋 either 𝜑(𝑥) ⊆ 𝑇 or 𝜑(𝑥) ∩ 𝑇 𝑐 ∕= ∅ but not both. Therefore
𝜑+ (𝑇 ) ∪ 𝜑− (𝑇 𝑐 ) = 𝑋
𝜑+ (𝑇 ) ∩ 𝜑− (𝑇 𝑐 ) = ∅
That is
( )𝑐
𝜑+ (𝑇 ) = 𝜑− (𝑇 𝑐 )
2.98 Assume 𝑥 ∈ 𝜑(𝑇 )−1 . Then 𝜑(𝑥) = 𝑇 , 𝜑(𝑥) ⊆ 𝑇 and 𝑥 ∈ 𝜑+ (𝑇 ). Now assume
𝑥 ∈ 𝜑+ (𝑇 ) so that 𝜑(𝑥) ⊆ 𝑇 . Consequently, 𝜑(𝑥) ∩ 𝑇 = 𝜑(𝑥) ∕= ∅ and 𝑥 ∈ 𝜑− (𝑇 ).
2.99 The respective inverses are:
𝜑−1
2 𝜑+ 2 𝜑− 2
{𝑡1 } ∅ ∅ {𝑠1 }
{𝑡2 } ∅ ∅ {𝑠1 , 𝑠2 }
{𝑡1 , 𝑡2 } {𝑠1 } {𝑠1 } {𝑠1 , 𝑠2 }
{𝑡2 , 𝑡3 } {𝑠2 } {𝑠2 } {𝑠1 , 𝑠2 }
{𝑡1 , 𝑡2 , 𝑡3 } ∅ {𝑠1 , 𝑠2 } {𝑠1 , 𝑠2 }
2.100 Let 𝑇 be an open interval meeting 𝜑(1), that is 𝜑(1) ∩ 𝑇 ∕= ∅. Since 𝜑(1) = {1},
we must have 1 ∈ 𝑇 and therefore 𝜑(𝑥) ∩ 𝑇 ∕= ∅ for every 𝑥 ∈ 𝑋. Therefore 𝜑 is lhc at
𝑥 = 1. On the other hand, the open interval 𝑇 = (1/2, 3/2) contains 𝜑(1) but it does
not contain 𝜑(𝑥) for any 𝑥 > 1. Therefore, 𝜑 is not uhc at 𝑥 = 1.
2.101 Choose any open set 𝑇 ⊆ 𝑌 and 𝑥 ∈ 𝑋. Since 𝜑(𝑥) = 𝐾 = 𝜑(𝑥′ ) for every
𝑥, 𝑥′ ∈ 𝑋
∙ 𝜑(𝑥) ⊆ 𝑇 if and only if 𝜑(𝑥′ ) ⊆ 𝑇 for every 𝑥, 𝑥′ ∈ 𝑋
∙ 𝜑(𝑥) ∩ 𝑇 ∕= ∅ if and only if 𝜑(𝑥′ ) ∩ 𝑇 ∕= ∅ for every 𝑥, 𝑥′ ∈ 𝑋.
Consequently, 𝜑 is both uhc and lhc at all 𝑥 ∈ 𝑋.
2.102 First assume that the 𝜑 is uhc. Let 𝑇 be any open subset in 𝑌 and 𝑆 = 𝜑+ (𝑇 ).
If 𝑆 = ∅, it is open. Otherwise, choose 𝑥0 ∈ 𝑆 so that 𝜑(𝑥0 ) ⊆ 𝑇 . Since 𝜑 is uhc,
there exists a neighborhood 𝑆(𝑥0 ) such that 𝜑(𝑥) ⊆ 𝑇 for every 𝑥 ∈ 𝑆(𝑥0 ). That is,
𝑆(𝑥0 ) ⊆ 𝜑+ (𝑇 ) = 𝑆. This establishes that for every 𝑥0 ∈ 𝑆 there exist a neighborhood
𝑆(𝑥0 ) contained in 𝑆. That is, 𝑆 is open in 𝑋.
Conversely, assume that the upper inverse of every open set in 𝑌 is open in 𝑋. Choose
some 𝑥0 ∈ 𝑋 and let 𝑇 be an open set containing 𝜑(𝑥0 ). Let 𝑆 = 𝜑+ (𝑇 ). 𝑆 is an open
set containing 𝑥0 . That is, 𝑆 is a neighborhood of 𝑥0 with 𝜑(𝑥) ⊆ 𝑇 for every 𝑥 ∈ 𝑆.
Since the choice of 𝑥0 was arbitrary, we conclude that 𝜑 is uhc.
The lhc case is analogous.
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𝑛 ≥ 𝑁𝑚 =⇒ 𝑥𝑛 ∈ 𝑆𝑚 =⇒ 𝜑(𝑥𝑛 ) ∩ 𝐵1/𝑚 ∕= ∅
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2. (a) Suppose that 𝑋(p, 𝑚) is not lhc. Then for every neighborhood 𝑆 of (p, 𝑚),
there exists (p′ , 𝑚′ ) ∈ 𝑆 such that 𝑋(p′ , 𝑚′ ) ∩ 𝑇 = ∅. In particular, for
every open ball 𝐵𝑛 (p, 𝑚), there exists a point (p𝑛 , 𝑚𝑛 ) ∈ 𝐵𝑛 (p, 𝑚) such
that 𝑋(p𝑛 , 𝑚𝑛 ) ∩ 𝑇 = ∅. ((p𝑛 , 𝑚𝑛 )) is the required sequence.
(b) By construction, ∥p𝑛 − p∥ < 1/𝑛 → 0 which implies that 𝑝𝑛𝑖 → 𝑝𝑖 for every
𝑖. Therefore (Exercise 1.202)
∑ ∑
𝑝𝑛𝑖 𝑥
˜𝑖 → 𝑝𝑖 𝑥˜𝑖 < 𝑚 and 𝑚𝑛 → 𝑚
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To show that 𝐾 ⊆ 𝜑(𝐾), let 𝑦 ∈ 𝐾. For every 𝑛 there exists an 𝑥𝑛 ∈ 𝜑𝑛 (𝑋) such
that 𝑦 ∈ 𝜑(𝑥𝑛 ). Since 𝑋 is compact, there exists a subsequence 𝑥𝑚 → 𝑥0 . Since
𝑥𝑚 ∈ 𝜑𝑚 (𝑋) for every 𝑚, 𝑥0 ∈ 𝐾. The sequence (𝑥𝑚 , 𝑦) → (𝑥0 , 𝑦). Since 𝜑 is closed
(Exercise 2.107), 𝑦 ∈ 𝜑(𝑥0 ). Therefore 𝑦 ∈ 𝜑(𝐾) which implies that 𝐾 ⊆ 𝜑(𝐾).
2.112 𝜑(𝑥) is compact for every 𝑥 ∈ 𝑋 by Tychonoff’s theorem (Proposition 1.2).
Let 𝑥𝑘 → 𝑥 be a sequence in 𝑋 and let 𝑦 𝑘 = (𝑦1𝑘 , 𝑦2𝑘 , . . . , 𝑦𝑛𝑘 ) with 𝑦𝑖𝑘 ∈ 𝜑(𝑥𝑘 ) be
a corresponding sequence of points in 𝑌 . For each 𝑦𝑖𝑘 , 𝑖 = 1, 2, . . . , 𝑛, there exists a
′
subsequence 𝑦𝑖𝑘 → 𝑦𝑖 with 𝑦𝑖 ∈ 𝜑𝑖 (𝑥) (Exercise 2.104). Therefore 𝑦 = (𝑦1 , 𝑦2 , . . . , 𝑦𝑛 ) ∈
𝜑(𝑥) which implies that 𝜑 is uhc.
2.113 Let 𝑣 ∈ 𝐶(𝑋). For every x ∈ 𝑋, the maximand 𝑓 (𝑥, 𝑦) + 𝛽𝑣(𝑦) is a continuous
function on a compact set 𝐺(𝑥). Therefore the supremum is attained, and max can
replace sup in the definition of the operator 𝑇 (Theorem 2.2). 𝑇 𝑣 is the value function
for the constrained optimization problem
max { 𝑓 (𝑥, 𝑦) + 𝛽𝑣(𝑦) }
𝑦∈𝐺(𝑥)
satisfying the requirements of the continuous maximum theorem (Theorem 2.3), which
ensures that 𝑇 𝑣 is continuous on 𝑋. We have previously shown that 𝑇 𝑣 is bounded
(Exercise 2.18). Therefore 𝑇 𝑣 ∈ 𝐶(𝑋).
2.114 1. 𝑆 has a least upper bound since 𝑋 is a complete lattice. Let 𝑠∗ = sup 𝑆.
Then 𝑆 ∗ = ≿(𝑠∗ ) is a complete sublattice of 𝑋 (Exercise 1.48).
2. For every 𝑠 ∈ 𝑆, 𝑠 ≾ 𝑠∗ and since 𝑓 is increasing and 𝑠 is a fixed point
𝑠 = 𝑓 (𝑠) ≾ 𝑓 (𝑠∗ )
Therefore 𝑓 (𝑠∗ ) ∈ 𝑆 ∗ . (𝑓 (𝑠∗ ) is an upper bound of 𝑆). Again, since 𝑓 is increas-
ing, this implies that 𝑓 (𝑥) ≿ 𝑓 (𝑠∗ ) for every 𝑥 ∈ 𝑆 ∗ . Therefore 𝑓 (𝑆 ∗ ) ⊆ 𝑆 ∗ .
3. Let 𝑔 be the restriction of 𝑓 to the sublattice 𝑆 ∗ . Since 𝑓 (𝑆 ∗ ) ⊆ 𝑆 ∗ , 𝑔 is an
increasing function on a complete lattice. Applying Theorem 2.4, 𝑔 has a smallest
fixed point 𝑥˜.
4. 𝑥 ˜ ∈ 𝐸. Furthermore, 𝑥˜ ∈ 𝑆 ∗ . Therefore 𝑥˜ is
˜ is a fixed point of 𝑓 , that is 𝑥
an upper bound for 𝑆 in 𝐸. Moreover, 𝑥 ˜ is the smallest fixed point of 𝑓 in 𝑆 ∗ .
Therefore, 𝑥
˜ is the least upper bound of 𝑆 in 𝐸.
5. By Exercise 1.47, this implies that 𝐸 is a complete lattice.
In Example 2.91, if 𝑆 = {(2, 1), (1, 2)}, 𝑆 ∗ = {(2, 2), (3, 2), (2, 3), (3, 3)} and 𝑥˜ = (3, 3).
2.115 1. For every 𝑥 ∈ 𝑀 , there exists some 𝑦𝑥 ∈ 𝜑(𝑥) such that 𝑦𝑥 ≾ 𝑥. Moreover,
˜ ≾ 𝑥, there exists some 𝑧𝑥 ∈ 𝜑(˜
since 𝜑 is increasing and 𝑥 𝑥) such that
𝑧𝑥 ≾ 𝑦𝑥 ≾ 𝑥 for every 𝑥 ∈ 𝑀
2. Let 𝑧˜ = inf{𝑧𝑥 }
(a) Since 𝑧𝑥 ≾ 𝑥 for every 𝑥 ∈ 𝑀 , 𝑧˜ = inf{𝑧𝑥 } ≾ inf{𝑥} = 𝑥
˜.
(b) Since 𝜑(˜
𝑥) is a complete sublattice of 𝑋, 𝑧˜ = inf{𝑧𝑥 } ∈ 𝜑(˜
𝑥).
3. Therefore, 𝑥
˜ ∈ 𝑀.
4. Since 𝑧˜ ≾ 𝑥˜ and 𝜑 is increasing, there exists some 𝑦 ∈ 𝜑(˜
𝑧 ) such that
𝑦 ≾ 𝑧˜ ∈ 𝜑(˜
𝑥)
Hence 𝑧˜ ∈ 𝑀 .
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𝑥
˜ = 𝑧˜ ∈ 𝜑(˜
𝑥)
𝑥
˜ is a fixed point of 𝜑.
6. Since 𝐸 ⊆ 𝑀 , 𝑥˜ = inf 𝑀 is the least fixed point of 𝜑.
2.116 1. Let 𝑆 ⊆ 𝐸 and 𝑠∗ = sup 𝑆. For every 𝑥 ∈ 𝑆, 𝑥 ∈ 𝜑(𝑥). Since 𝜑 is
increasing, there exists some 𝑧𝑥 ∈ 𝜑(𝑠∗ ) such that 𝑧𝑥 ≿ 𝑥.
2. Let 𝑧 ∗ = sup 𝑧𝑥 . Then
(a) Since 𝑧𝑥 ≿ 𝑥 for every 𝑥 ∈ 𝑆, 𝑧 ∗ = sup 𝑧𝑥 ≿ sup 𝑥 = 𝑠∗
(b) 𝑧 ∗ ∈ 𝜑(𝑠∗ ) since 𝜑(𝑠∗ ) is a complete sublattice.
3. Define
𝑆 ∗ = { 𝑥 ∈ 𝑋 : 𝑥 ≿ 𝑠 for every 𝑠 ∈ 𝑆 }
𝑆 ∗ = ≿(𝑠∗ )
¯2𝑖 ≿ 𝑎𝑖 ≿ 𝑎
sup 𝐵(a−𝑖 ) = 𝑎 ¯1𝑖
𝑓¯𝑖 is increasing.
2.118 For any player 𝑖, their best response correspondence 𝐵𝑖 (a−𝑖 ) is
1. increasing by the monotone maximum theorem (Theorem 2.1).
2. a complete sublattice of 𝐴𝑖 for every a−𝑖 ∈ 𝐴−𝑖 (Corollary 2.1.1).
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is also
1. increasing (Exercise 2.46)
2. a complete sublattice of 𝐴 for every a ∈ 𝐴
Therefore, the best response correspondence 𝐵(a) satisfies the conditions of Zhou’s
theorem, which implies that the set 𝐸 of fixed points of 𝐵 is a nonempty complete
lattice. 𝐸 is precisely the set of Nash equilibria of the game.
2.119 In proving the theorem, we showed that
𝛽𝑛
𝜌(𝑥𝑛 , 𝑥𝑛+𝑚 ) ≤ 𝜌(𝑥0 , 𝑥1 )
1−𝛽
2.120 First observe that 𝑓 (𝑥) ≥ 1 for every 𝑥 ≥ 1. Therefore 𝑓 : 𝑋 → 𝑋. For any
𝑥, 𝑧 ∈ 𝑋
𝑓 (𝑥) − 𝑓 (𝑦) 𝑥 − 𝑦 + 𝑥2 − 2
𝑦 1 1
= = −
𝑥−𝑦 2(𝑥 − 𝑦) 2 𝑥𝑦
1
Since 𝑥𝑦 ≤ 1 for all 𝑥, 𝑦 ∈ 𝑋
1 𝑓 (𝑥) − 𝑓 (𝑦) 1
− ≤ ≤
2 𝑥−𝑦 2
so that
𝑓 (𝑥) − 𝑓 (𝑦) ∣𝑓 (𝑥) − 𝑓 (𝑦)∣ 1
= ≤
𝑥−𝑦 ∣𝑥 − 𝑦∣ 2
or
1
∣𝑓 (𝑥) − 𝑓 (𝑦)∣ ≤ ∣𝑥 − 𝑦∣
2
𝑓 is a contraction on 𝑋 with modulus 1/2.
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𝑋 is closed and hence complete (Exercise 1.107). Therefore, 𝑓 has a fixed point. That
is, there exists 𝑥0 ∈ 𝑋 such that
1 2
𝑥0 = 𝑓 (𝑥0 ) = (𝑥0 + )
2 𝑥0
Rearranging
2𝑥20 = 𝑥20 + 2 =⇒ 𝑥20 = 2
√
so that 𝑥0 = 2.
Letting 𝑥0 = 2
1 3
𝑥1 = (2 + 1) =
2 2
Using the error bounds in Corollary 2.5.1,
√ 𝛽𝑛
𝜌(𝑥𝑛 , 2) ≤ 𝜌(𝑥0 , 𝑥1 )
1−𝛽
(1/2)𝑛
= 1/2
1/2
1
= 𝑛
2
1
= < 0.001
1024
when 𝑛 = 10. Therefore, we conclude that 10 iterations are ample to reduce the
error below 0.001. Actually, with experience, we can refine this a priori estimate. In
Example 1.64, we calculated the first five terms of the sequence to be
(2, 1.5, 1.416666666666667, 1.41421568627451, 1.41421356237469)
We observe that
𝜌(𝑥3 , 𝑥4 ) = 1.41421568627451 − 1.41421356237469) = 0.0000212389982
so that using the second inequality of Corollary 2.5.1
√ 1/2
𝜌(𝑥4 , 2) ≤ 0.0000212389982 < 0.001
1/2
𝑥4 = 1.41421356237469 is the desired approximation.
2.121 Choose any 𝑥0 ∈ 𝑆. Define the sequence 𝑥𝑛 = 𝑓 (𝑥𝑛 ) = 𝑓 𝑛 (𝑥0 ). Then (𝑥𝑛 ) is a
Cauchy sequence in 𝑆 converging to 𝑥. Since 𝑆 is closed, 𝑥 ∈ 𝑆.
2.122 By the Banach fixed point theorem, 𝑓 𝑁 has a unique fixed point 𝑥. Let 𝛽 be the
Lipschitz constant of 𝑓 𝑁 . We have to show
𝑥 is a fixed point of 𝑓
𝜌(𝑓 (𝑥), 𝑥) = 𝜌(𝑓 (𝑓 𝑁 (𝑥), 𝑓 𝑁 (𝑥)) = 𝜌(𝑓 𝑁 (𝑓 (𝑥), 𝑓 𝑁 (𝑥)) ≤ 𝛽𝜌(𝑓 (𝑥), 𝑥)
Since 𝛽 < 1, this implies that 𝜌(𝑓 (𝑥), 𝑥) = 0 or 𝑓 (𝑥) = 𝑥.
𝑥 is the only fixed point of 𝑓 Suppose 𝑧 = 𝑓 (𝑧) is another fixed point of 𝑓 . Then
𝑧 is a fixed point of 𝑓 𝑁 and
𝜌(𝑥, 𝑧) = 𝜌(𝑓 𝑁 (𝑥), 𝑓 𝑁 (𝑧)) ≤ 𝛽𝜌(𝑥, 𝑧)
which implies that 𝑥 = 𝑧.
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2.123 By the Banach fixed point theorem, for every 𝜃 ∈ Θ, there exists 𝑥𝜃 ∈ 𝑋 such
that 𝑓𝜃 (𝑥𝜃 ) = 𝑥𝜃 . Choose any 𝜃0 ∈ Θ.
as 𝜃 → 𝜃0 . Therefore 𝑥𝜃 → 𝑥𝜃0 .
2.124 1. Let x be a fixed point of 𝑓 . Then x satisfies
x = (𝐼 − 𝐴)x + c = x − 𝐴x + 𝑐
and
𝑓 (x1 ) − 𝑓 (x2 ) ≤ 𝑘 x1 − x2
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This problem satisfies the requirements of the monotone maximum theorem (The-
orem 2.1), since the objective function 𝑓 (𝑥, 𝑦) + 𝛽𝑣(𝑦)
∙ supermodular in 𝑦
∙ displays strictly increasing differences in (𝑥, 𝑦) since for every 𝑥2 ≥ 𝑥1
∙ 𝐺(𝑥) is increasing.
By Corollary 2.1.2, 𝜑(𝑥) is always increasing.
2. Let x∗ = (𝑥0 , 𝑥∗1 , 𝑥∗2 , . . . ) be an optimal plan. Then (Exercise 2.17)
𝑥∗𝑡+1 ∈ 𝜑(𝑥∗𝑡 ), 𝑡 = 0, 1, 2, . . .
By the intermediate value theorem (Exercise 2.83), there exists some point 𝑥 ∈ [0, 1]
with 𝑔(𝑥) = 0 which implies that 𝑓 (𝑥) = 𝑥.
2.128 1. To show that a label min{ 𝑖 : 𝛽𝑖 ≤ 𝛼𝑖 ∕= 0 } exists for every x ∈ 𝑆, assume
to the contrary that, for some x ∈ 𝑆, 𝛽𝑖 > 𝛼𝑖 for every 𝑖 = 0, 1, . . . , 𝑛. This
implies
𝑛
∑ 𝑛
∑
𝛽𝑖 > 𝛼𝑖 = 1
𝑖=0 𝑖=0
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x = 𝛼1 x1 + 𝛼2 x2 + 𝛼4 x4 , 𝛼1 + 𝛼2 + 𝛼4 = 1
and 𝛼𝑖 = 0 for 𝑖 ∈
/ {1, 2, 4}. Therefore
2.132 Suppose such a function exists. Define 𝑓 (x) = −𝑟(x). Then 𝑓 : 𝐵 → 𝐵 conti-
nously, and has no fixed point since for
∙ x ∈ 𝑆, 𝑓 (x) = −𝑟(x) = −x ∕= x
∙ x ∈ 𝐵 ∖ 𝑆, 𝑓 (x) ∈
/ 𝐵 ∖ 𝑆 and therefore𝑓 (x) ∕= x
Therefore 𝑓 has no fixed point contradicting Brouwer’s theorem.
2.133 Suppose to the contrary that 𝑓 has no fixed point. For every x ∈ 𝐵, let 𝑟(z)
denote the point where the line segment from 𝑓 (x) through x intersects the boundary
𝑆 of 𝐵. Since 𝑓 is continuous and 𝑓 (x) ∕= x, 𝑟 is a continuous function from 𝐵 to its
boundary, that is a retraction, contradicting Exercise 2.132. We conclude that 𝑓 must
have a fixed point.
2.134 No-retraction =⇒ Brouwer Note first that the no-retraction theorem (Ex-
ercise 2.132) generalizes immediately to a closed ball about 0 of arbitrary radius.
Assume that 𝑓 is a continuous operator on a compact, convex set 𝑆 in a fi-
nite dimensional normed linear space. There exists a closed ball 𝐵 containing 𝑆
(Proposition 1.1). Define 𝑔 : 𝐵 → 𝑆 by
𝑔(y) = { x ∈ 𝑆 : x is closest to y }
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𝛼∗ and ∑
where ∑ 𝛽 ∗ are the barycentric coordinates of x∗ and 𝑓 (x∗ ) respectively.
Since 𝛽𝑖 = 𝛼∗𝑖 = 1, this implies that
∗
𝛽𝑖∗ = 𝛼∗𝑖 𝑖 = 0, 1, . . . , 𝑛
In other words, 𝑓 (x∗ ) = x∗ .
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𝑔𝑖 (x) = 𝜌(x, 𝐴𝑖 )
𝑓 (x) = 𝛽0 x0 + 𝛽1 x1 + ⋅ ⋅ ⋅ + 𝛽𝑛 x𝑛
where
𝛼𝑖 + 𝑔𝑖 (x)
𝛽𝑖 = ∑ 𝑖 = 0, 1, . . . , 𝑛 (2.45)
1 + 𝑛𝑗=0 𝑔𝑗 (x)
∑
By construction 𝛽𝑖 ≥ 0 and 𝑛𝑖=0 𝛽𝑖 = 1. Therefore 𝑓 (x) ∈ 𝑆. That is, 𝑓 : 𝑆 → 𝑆.
Furthermore 𝑓 is continuous. By Brouwer’s theorem, there exists a fixed point
𝑥∗ with 𝑓 (x∗ ) = x∗ . That is 𝛽𝑖∗ = 𝛼∗𝑖 for 𝑖 = 0, 1, . . . , 𝑛.
Now, since the collection 𝐴0 , 𝐴1 , . . . , 𝐴𝑛 covers 𝑆, there exists some 𝑖 for which
𝜌(x∗ , 𝐴𝑖 ) = 0. Substituting 𝛽𝑖∗ = 𝛼∗𝑖 in (2.45) we have
𝛼∗
𝛼∗𝑖 = ∑𝑛 𝑖
1+ 𝑗=0 𝑔𝑗 (x∗ )
which implies that 𝑔𝑗 (x∗ ) = 0 for every 𝑗. Since the 𝐴𝑖 are closed, x∗ ∈ 𝐴𝑖 for
every 𝑖 and therefore
𝑛
∩
x∗ ∈ 𝐴𝑖 ∕= ∅
𝑖=0
( )
2.137 To simplify the notation, let 𝑧𝑘+ (p) = max 0, z𝑖 (p) . Assume p∗ is a fixed point
of 𝑔. Then for every 𝑘 = 1, 2, . . . , 𝑛
𝑝𝑘 + 𝑧𝑘+ (p∗ )
𝑝∗𝑘 = ∑𝑛
1 + 𝑗=1 𝑧𝑗+ (p∗ )
Cross-multiplying
𝑛
∑
𝑝∗𝑘 + 𝑝∗𝑘 𝑧𝑗+ (p) = 𝑝∗𝑘 + 𝑧𝑘+ (p∗ )
𝑗=1
or
𝑛
∑
𝑝∗𝑘 𝑧𝑗+ (p) = 𝑧𝑘+ (p∗ ) 𝑘 = 1, 2, . . . 𝑛
𝑗=1
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Summing over 𝑘
𝑛
∑ 𝑛
∑ 𝑛
∑
𝑝∗𝑘 𝑧𝑘 (p∗ ) 𝑧𝑖+ (p) = 𝑧𝑘 (p∗ )𝑧𝑘+ (p∗ )
𝑘=1 𝑗=1 𝑘=1
∑𝑛
Since 𝑘=1 𝑝∗𝑘 𝑧𝑘 (p∗ ) = 0 this implies that
𝑛
∑
𝑧𝑘 (p∗ )𝑧𝑘+ (p∗ ) = 0
𝑘=1
( )2
Each term of this sum is nonnegative, since it is either 0 or 𝑧𝑘 (p∗ ) . Consequently,
every term must be zero which implies that 𝑧𝑘 (p∗) ≤ 0 for every 𝑘 = 1, 2, . . . , 𝑙. In
other words, z(p∗ ) ≤ 0.
2.138 Every individual demand function x𝑖 (p, 𝑚) is continuous (Example 2.90) in p
and 𝑚. For given endowment 𝝎 𝑖
𝑙
∑
𝑚𝑖 = 𝑝𝑗 𝝎 𝑖𝑗
𝑗=1
and therefore
𝑛
∑ 𝑛
∑
p𝑇 z(p) = p𝑇 x𝑖 (p, 𝑚) − p𝑇 𝝎 𝑖
𝑖=1 𝑖=1
Since preferences are nonsatiated and strictly convex, they are locally nonsatiated
(Exercise 1.248) which implies (Exercise 1.235) that every consumer must satisfy his
budget constraint
p𝑇 x𝑖 (p, 𝑚) = p𝑇 𝝎𝑖 for every 𝑖 = 1, 2, . . . , 𝑛
Therefore in aggregate
𝑛
∑ 𝑛
∑
p𝑇 z(p) = p𝑇 x𝑖 (p, 𝑚) − p𝑇 𝝎 𝑖 = 0
𝑖=1 𝑖=1
for every p.
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or
∑ ∑
x𝑖 ≤ 𝝎𝑖
𝑖∈𝑁 𝑖∈𝑁
Let x∗ = (x∗1 , x∗2 , . . . , x∗𝑛 ) be the allocation comprising these optimal bundles. The
pair (p∗ , x∗ ) is a competitive equilibrium.
2.141 For each x𝑘 , let 𝑆 𝑘 denote the subsimplex of Λ𝑘 which contains x𝑘 and let
x𝑘0 , x𝑘1 , . . . , x𝑘𝑛 denote the vertices of 𝑆 𝑘 . Let 𝛼𝑘0 , 𝛼𝑘1 , . . . , 𝛼𝑘𝑛 denote the barycentric
coordinates (Exercise 1.159) of x with respect to the vertices of 𝑆 𝑘 and let y𝑖𝑘 = 𝑓 𝑘 (x𝑘𝑖 ),
𝑖 = 0, 1, . . . , 𝑛, denote the images of the vertices. Since 𝑆 is compact, there exists
′ ′ ′
subsequences x𝑘𝑖 , y𝑖𝑘 and 𝛼𝑘 such that
Furthermore, 𝛼∗𝑖 ≥ 0 and 𝛼∗0 +𝛼∗1 +⋅ ⋅ ⋅+𝛼∗𝑛 = 1. Since the diameters of the subsimplices
converge to zero, their vertices must converge to the same point. That is, we must have
By definition of 𝑓 𝑘
Taking limits
For each coordinate 𝑖, (x𝑘𝑖 , y𝑖𝑘 ) ∈ graph(𝜑) for every 𝑘 = 0, 1, . . . . Since 𝜑 is closed,
(x∗𝑖 , y𝑖∗ ) ∈ graph(𝜑). That is, y𝑖∗ ∈ 𝜑(x∗𝑖 ) = 𝜑(x∗ ) for every 𝑖 = 0, 1, . . . , 𝑛. Therefore,
(2.46) implies
x∗ ∈ conv 𝜑(x∗ )
x∗ ∈ 𝜑(x∗ )
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2.142 Analogous to Exercise 2.129, there exists a simplex 𝑇 containing 𝑆 and a retrac-
tion of 𝑇 onto 𝑆, that is a continuous function 𝑔 : 𝑇 → 𝑆 with 𝑔(x) = x for every x ∈ 𝑆.
Then 𝜑 ∘ 𝑔 : 𝑇 ⇉ 𝑆 ⊂ 𝑇 is closed-valued (Exercise 2.106) and uhc (Exercise 2.103).
By the argument in the proof, there exists a point x∗ ∈ 𝑇 such that x∗ ∈ 𝜑 ∘ 𝑔(x∗ ).
However, since 𝜑 ∘ 𝑔(x∗ ) ⊆ 𝑆, we must have x∗ ∈ 𝑆 and therefore 𝑔(x∗ ) = x∗ . This
implies x∗ ∈ 𝜑(x∗ ). That is, x∗ is a fixed point of 𝜑.
2.143 𝐵 = 𝐵1 × 𝐵2 × . . . × 𝐵𝑛 is the Cartesian product of uhc, compact- and convex-
valued correspondences. Therefore 𝐵 is also compact-valued and uhc (Exercise 2.112
and also convex-valued (Exercise 1.165). By Exercise 2.106, 𝐵 is closed.
2.144 Strict quasiconcavity ensures that the best response correspondence is in fact a
function 𝐵 : 𝑆 → 𝑆. Since the hypotheses of Example 2.96 apply, there exists at least
one equilibrium. Suppose that there are two Nash equilibria s and s′ . Since 𝐵 is a
contraction,
𝜌(𝐵(s), 𝐵(s′ ) ≤ 𝛽𝜌(s, s′ )
for some 𝛽 < 1. However
𝐵(s) = s and 𝐵(s′ ) = s′
and (2.46) implies that
𝜌(s, s′ ) ≤ 𝛽𝜌(s, s′ )
which is possible if and only if s = s′ . This implies that the equilibrium must be unique.
2.145 Since 𝐾 is compact, it is totally bounded (Exercise 1.112). There exists a finite
set of points x1 , x2 , . . . , x𝑛 such that
𝑛
∩
𝐾⊆ 𝐵𝜖 (x𝑖 )
𝑖=1
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( )
2.146 1. For every x ∈ 𝑆 𝑘 , 𝑓 (x) ∈ 𝑆 and therefore 𝑔 𝑘 (x) = ℎ𝑘 𝑓 (x) ∈ 𝑆 𝑘 .
2. For any x ∈ 𝑆 𝑘 , let y = 𝑓 (x) ∈ 𝑓 (𝑆) and therefore
𝑘
ℎ (y) − y < 1
𝑘
which implies
𝑘
𝑔 (x) − 𝑓 (x) ≤ 1 for every x ∈ 𝑆 𝑘
𝑘
2.147 By the Triangle inequality
𝑘
x − 𝑓 (x) ≤ 𝑔 𝑘 (x𝑘 ) − 𝑓 (x𝑘 ) + 𝑓 (x𝑘 ) − 𝑓 (x)
Therefore
𝑘
x − 𝑓 (x) → 0 =⇒ x = 𝑓 (x)
x is a fixed point of 𝑓 .
2.148 𝑇 (𝐹 ) is bounded and equicontinuous and so therefore is 𝑇 (𝐹 ) (Exercise 2.96). By
Ascoli’s theorem (Exercise 2.95), 𝑇 (𝐹 ) is compact. Therefore 𝑇 is a compact operator.
Applying Corollary 2.8.1, 𝑇 has a fixed point.
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𝑓 (𝛼1 x1 ) = 𝛼1 𝑓 (𝑥1 )
𝑓 (𝛼2 x2 ) = 𝛼2 𝑓 (𝑥2 )
Conversely, assume
𝑓 (𝛼1 x1 ) = 𝛼1 𝑓 (x1 )
and
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and
3.4 Let x, x1 , x2 ∈ ℜ3 .
and
This mapping is the projection of 3-dimensional space onto the (2-dimensional) plane.
3.5 Applying the definition
( )( )
0 1 𝑥1
𝑓 (𝑥1 , 𝑥2 ) =
1 0 𝑥2
= (𝑥2 , 𝑥1 )
This function interchanges the two coordinates of any point in the plane ℜ2 . Its action
corresponds to reflection about the line 𝑥1 = 𝑥2 ( 45 degree diagonal).
3.6 Assume (𝑁, 𝑤) and (𝑁, 𝑤′ ) are two games in 𝒢 𝑁 . For any coalition 𝑆 ⊆ 𝑁
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The following table details the computation of the Shapley value for player 𝐴𝑃 .
𝑆 𝛾𝑆 𝑤(𝑆) 𝑤(𝑆 ∖ {𝑖}) 𝛾𝑆 (𝑤(𝑆) − 𝑤(𝑆 ∖ {𝑖}))
𝐴𝑃 1/3 0 0 0
𝐴𝑃, 𝑇 𝑁 1/6 210 0 35
𝐴𝑃, 𝐾𝑀 1/6 770 0 128 1/3
𝐴𝑃, 𝑇 𝑁, 𝐾𝑀 1/3 1530 1170 120
𝜑𝑓 (𝑤) 283 1/3
Thus 𝜑𝐴𝑃 𝑤 = 283 1/3. Similarly, we can calculate that 𝜑𝑇 𝑁 𝑤 = 483 1/3 and 𝜑𝐾𝑀 𝑤 =
763 1/3.
3.8
( )
∑ ∑ ∑
𝜑𝑖 𝑤 = 𝛾𝑆 (𝑤(𝑆) − 𝑤(𝑆 ∖ {𝑖}))
𝑖∈𝑁 𝑖∈𝑁 𝑆∋𝑖
( )
∑ ∑
= 𝛾𝑆 (𝑤(𝑆) − 𝑤(𝑆 ∖ {𝑖}))
𝑆∋𝑖 𝑖∈𝑁
∑∑ ∑∑
= 𝛾𝑆 𝑤(𝑆) − 𝛾𝑆 𝑤(𝑆 ∖ {𝑖})
𝑆⊆𝑁 𝑖∈𝑆 𝑆⊆𝑁 𝑖∈𝑆
( )
∑ ∑ ∑
= 𝑠 × 𝛾𝑆 𝑤(𝑆) − 𝛾𝑆 𝑤(𝑆 ∖ {𝑖})
𝑆⊆𝑁 𝑆⊆𝑁 𝑖∈𝑆
∑ ∑
= 𝑠 × 𝛾𝑆 𝑤(𝑆) − 𝑠 × 𝛾𝑆 𝑤(𝑆)
𝑆⊆𝑁 𝑆⊂𝑁
= 𝑛 × 𝛾𝑁 𝑤(𝑁 )
= 𝑤(𝑁 )
3.9 If 𝑖, 𝑗 ∈ 𝑆
𝑤(𝑆 ∖ {𝑖}) = 𝑤(𝑆 ∖ {𝑖, 𝑗} ∪ {𝑗}) = 𝑤(𝑆 ∖ {𝑖, 𝑗} ∪ {𝑖}) = 𝑤(𝑆 ∖ {𝑖})
∑
𝜑𝑖 (𝑤) = 𝛾𝑆 (𝑤(𝑆) − 𝑤(𝑆 ∖ {𝑖}))
𝑆∋𝑖
∑ ∑
= 𝛾𝑆 (𝑤(𝑆) − 𝑤(𝑆 ∖ {𝑖})) + 𝛾𝑆 (𝑤(𝑆) − 𝑤(𝑆 ∖ {𝑖}))
𝑆∋𝑖,𝑗 𝑆∋𝑖,𝑆∕∋𝑗
∑ ∑
= 𝛾𝑆 (𝑤(𝑆) − 𝑤(𝑆 ∖ {𝑗})) + 𝛾𝑆 (𝑤(𝑆 ∪ {𝑖}) − 𝑤(𝑆))
𝑆∋𝑖,𝑗 𝑆∕∋𝑖,𝑗
∑ ∑
= 𝛾𝑆 (𝑤(𝑆) − 𝑤(𝑆 ∖ {𝑗})) + 𝛾𝑆 ′ (𝑤(𝑆 ′ ∪ {𝑗}) − 𝑤(𝑆 ′ ))
𝑆∋𝑖,𝑗 𝑆 ′ ∕∋𝑖,𝑗
∑ ∑
= 𝛾𝑆 (𝑤(𝑆) − 𝑤(𝑆 ∖ {𝑗})) + 𝛾𝑆 (𝑤(𝑆) − 𝑤(𝑆 ∖ {𝑗}))
𝑆∋𝑖,𝑗 𝑆∕∋𝑖,𝑆∋𝑗
= 𝜑𝑗 (𝑤)
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3.11 Every 𝑖 ∈
/ 𝑇 is a null player, so that
𝜑𝑖 (𝑢𝑇 ) = 0 for every 𝑖 ∈
/𝑇
Feasibility requires that
∑ ∑
𝜑𝑖 (𝑢𝑇 ) = 𝜑𝑖 (𝑢𝑇 ) = 1
𝑖∈𝑇 𝑖∈𝑁
Further, any two players in 𝑇 are substitutes, so that symmetry requires that
𝜑𝑖 (𝑢𝑇 ) = 𝜑𝑗 (𝑢𝑇 ) for every 𝑖, 𝑗 ∈ 𝑇
Together, these conditions require that
1
𝜑𝑖 (𝑢𝑇 ) = for every 𝑖 ∈ 𝑇
𝑡
The Shapley value of the a T-unanimity game is
{
1
𝑖∈𝑇
𝜑𝑖 (𝑢𝑇 ) = 𝑡
0 𝑖∈/𝑇
where 𝑡 = ∣𝑇 ∣.
3.12 Any coalitional game can be represented as a linear combination of unanimity
games 𝑢𝑇 (Example 1.75)
∑
𝑤= 𝛼𝑇 𝑢𝑇
𝑇
∑ 1 ∑ 1
= 𝛼𝑇 − 𝛼𝑇
𝑡 𝑡
𝑇 ⊆𝑁 𝑇 ⊆𝑁
𝑖∈𝑇
/
= 𝑃 (𝑁, 𝑤) − 𝑃 (𝑁 ∖ {𝑖}, 𝑤)
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0𝑋 = x − x
and by additivity
𝑓 (0𝑋 ) = 𝑓 (x − x)
= 𝑓 (x) − 𝑓 (x)
= 0𝑌
𝑔 ∘ 𝑓 (x1 + x2 ) = 𝑔 ∘ 𝑓 (x1 + x2 )
( )
= 𝑔 𝑓 (x1 ) + 𝑓 (x2 )
( ) ( )
= 𝑔 𝑓 (x1 ) + 𝑔 𝑓 (x2 )
= 𝑔 ∘ 𝑓 (x1 ) + 𝑔 ∘ 𝑓 (x2 )
and
𝑔 ∘ 𝑓 (𝛼x) = 𝑔 (𝑓 (𝛼x))
= 𝑔 (𝛼𝑓 (x))
= 𝛼𝑔 (𝑓 (x))
= 𝛼𝑔 ∘ 𝑓 (x)
Therefore 𝑔 ∘ 𝑓 is linear.
3.15 Let 𝑆 be a subspace of 𝑋 and let y1 , y2 belong to 𝑓 (𝑆). Choose any x1 ∈ 𝑓 −1 (y1 )
and x2 ∈ 𝑓 −1 (y2 ). Then for 𝛼1 , 𝛼2 ∈ ℜ
𝛼1 x1 + 𝛼2 x2 ∈ 𝑆
𝑓 (𝑆) is a subspace.
Let 𝑇 be a subspace of 𝑌 and let x1 , x2 belong to 𝑓 −1 (𝑇 ). Let y1 = 𝑓 (x1 ) and
y2 = 𝑓 (x2 ). Then y1 , y2 ∈ 𝑇 . For every 𝛼1 , 𝛼2 ∈ ℜ
𝛼1 y1 + 𝛼2 y2 = 𝛼1 𝑓 (x1 ) + 𝛼2 𝑓 (x2 ) ∈ 𝑇
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Therefore
𝛼1 x1 + 𝛼2 x2 ∈ 𝑓 −1 (𝑇 )
x1 = 𝑓 −1 (y1 )
x2 = 𝑓 −1 (y2 )
so that
y1 = 𝑓 (x1 )
y2 = 𝑓 (x2 )
Since 𝑓 is linear
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ℎ(x) = 𝑔 (𝑓 (x)) = 0
Then
z = ℎ(x1 ) = 𝑔 ∘ 𝑓 (x1 )
z = 𝑔(y) = 𝑔 ∘ 𝑓 (x2 )
We need to show that this still holds if 𝑓 is not one-to-one. In this case, for arbitrary
y ∈ 𝑓 (𝑋), 𝑓 −1 (y) may contain more than one element. Suppose x1 and x2 are distinct
elements in 𝑓 −1 (y). Then
which implies that ℎ(x1 ) = ℎ(x2 ) for all x1 , x2 ∈ 𝑓 −1 (y). Thus 𝑔 = ℎ∘ 𝑓 −1 : 𝑓 (𝑋) → 𝑍
is well defined even if 𝑓 is many-to-one.
To show that 𝑔 is linear, choose y1 , y2 in 𝑓 (𝑋) and let
x1 ∈ 𝑓 −1 (y1 )
x2 ∈ 𝑓 −1 (y2 )
x1 + x2 ∈ 𝑓 −1 (y1 + y2 )
and
𝑔(y1 + y2 ) = ℎ(x1 + x2 )
Therefore
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Since 𝑓 (x𝑖 ) ∈ 𝑓 (𝐵), we have shown that y can be written as a linear combination of
elements of 𝑓 (𝐵), that is
y ∈ lin 𝐵
Since the choice of y was arbitrary, 𝑓 (𝐵) spans 𝑓 (𝑋), that is
lin 𝐵 = 𝑓 (𝑋)
3.24 Let 𝑛 = dim 𝑋 and 𝑘 = dim kernel 𝑓 . Let x1 , . . . , x𝑘 be a basis for the kernel of
𝑓 . This can be extended (Exercise 1.142) to a basis 𝐵 for 𝑋. Exercise 3.23 showed
lin 𝐵 = 𝑓 (𝑋)
To show that dim 𝑓 (𝑋) = 𝑛 − 𝑘, we have to show that {𝑓 (𝑥𝑘+1 ), 𝑓 (𝑥𝑘+2 ), . . . , 𝑓 (𝑥𝑛 )} is
linearly independent. Assume not. That is, assume there exist 𝛼𝑘+1 , 𝛼𝑘+2 , ..., 𝛼𝑛 ∈ 𝑅
such that
𝑛
∑
𝛼𝑖 𝑓 (x𝑖 ) = 0
𝑖=𝑘+1
or
𝑛
∑
x= 𝛼𝑖 𝑥𝑖 ∈ kernel 𝑓
𝑖=𝑘+1
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which contradicts the assumption that 𝐵 is a basis for 𝑋. Therefore {𝑓 (x𝑘+1 ), . . . , 𝑓 (x𝑛 )}
is a basis for 𝑓 (𝑋) and therefore dim 𝑓 (𝑥) = 𝑛 − 𝑘. We conclude that
dim kernel 𝑓 + dim 𝑓 (𝑋) = 𝑛 = dim 𝑋
3.25 Equation (3.2) implies that nullity 𝑓 = 0, and therefore 𝑓 is one-to-one (Exercise
3.18).
3.26 Choose some x = (𝑥1 , 𝑥2 , . . . , 𝑥𝑛 ) ∈ 𝑋. x has a unique representation in terms of
the standard basis (Example 1.79)
𝑛
∑
x= 𝑥𝑗 e𝑗
𝑗=1
so that
y = 𝑓 (x)
𝑛
( 𝑚
)
∑ ∑
= 𝑥𝑗 𝑎𝑖𝑗 e𝑖
𝑗=1 𝑖=1
⎛ ⎞
𝑚
∑ ∑𝑛
= ⎝ 𝑎𝑖𝑗 𝑥𝑗 ⎠ e𝑖
𝑖=1 𝑗=1
⎛ ∑𝑛 ⎞
𝑎1𝑗 𝑥𝑗
∑𝑗=1
𝑛
⎜ 𝑗=1 𝑎2𝑗 𝑥𝑗 ⎟
⎜ ⎟
=⎜ .. ⎟
⎝ ⎠
∑𝑛 .
𝑎
𝑗=1 𝑚𝑗 𝑗 𝑥
= 𝐴x
where
⎛ ⎞
𝑎11 𝑎12 . . . 𝑎1𝑛
⎜ 𝑎21 𝑎22 . . . 𝑎2𝑛 ⎟
𝐴=⎜ ⎟
⎝ . . . . . . . . . . . . . . . . . . . . .⎠
𝑎𝑚1 𝑎𝑚2 . . . 𝑎𝑚𝑛
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3.27
( )
1 0 0
0 1 0
3.28 We must specify bases for each space. The most convenient basis for 𝐺𝑁 is the
T-unanimity games. We adopt the standard basis for ℜ𝑛 . With respect to these bases,
the Shapley value 𝜑 is represented by the 2𝑛−1 ×𝑛 matrix where each row is the Shapley
value of the corresponding T-unanimity game.
For three player games (𝑛 = 3), the matrix is
⎛ ⎞
1 0 0
⎜0 1 0⎟
⎜ ⎟
⎜0 0 1⎟
⎜1 1 ⎟
⎜ 0⎟
⎜ 21 2 ⎟
⎜ 1⎟
⎜ 2 01 2⎟
⎝0 1⎠
2 2
1 1 1
3 3 3
Then 𝑓 is Lipschitz at 0 (with Lipschitz constant 𝑀 ) and hence continuous (by the
previous exercise).
Conversely, assume 𝑓 is continuous but not bounded. Then, for every positive integer
𝑛, there exists some x𝑛 ∈ 𝑋 such that ∥𝑓 (x𝑛 )∥ > 𝑛 ∥x𝑛 ∥ which implies that
( )
x𝑛
𝑓 >1
𝑛 ∥x𝑛 ∥
Define
x𝑛
y𝑛 =
𝑛 ∥x𝑛 ∥
Then y𝑛 → 0 but 𝑓 (y𝑛 ) ∕→ 0. This implies that 𝑓 is not continuous at the origin,
contradicting our hypothesis.
3.31 Let {x1 , x2 , . . . , x𝑛 } be a basis for 𝑋. For every x ∈ 𝑋, there exists numbers
𝛼1 , 𝛼2 , . . . , 𝛼𝑛 such that
𝑛
∑
x= 𝛼𝑖 x𝑖
𝑖=1
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and
𝑛
∑
𝑓 (x) = 𝛼𝑖 𝑓 (x𝑖 )
𝑖=1
∑ 𝑛
∥𝑓 (x)∥ = 𝛼𝑖 𝑓 (x𝑖 )
𝑖=1
𝑛
∑
≤ ∣𝛼𝑖 ∣ ∥𝑓 (x𝑖 )∥
𝑖=1
( 𝑛 )∑
𝑛
≤ max ∥𝑓 (x𝑖 )∥ ∣𝛼𝑖 ∣
𝑖=1
𝑖=1
∥𝑓 (x)∥ ≤ 𝑀 ∥x∥
∥𝑓 (x)∥
∥𝑓 ∥ = sup = sup ∥𝑓 (x/𝑎)∥ = sup ∥𝑓 (y)∥
x∕=0 𝑎 x∕=0 ∥y∥=1
∥𝑓 ∥ = sup ∥𝑓 (x)∥ ≥ 0
∥x∥=1
so that 𝛼𝑓 ∈ 𝐵𝐿(𝑋, 𝑌 ).
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and
Thus, 𝑓 is bounded.
To complete the proof, we must show 𝑓 𝑛 → 𝑓 , that is ∥𝑓 𝑛 − 𝑓 ∥ → 0. Since (𝑓 𝑛 )
is a Cauchy sequence, for every 𝜖 > 0, there exists 𝑁 such that ∥𝑓 𝑛 − 𝑓 𝑚 ∥ ≤ 𝜖
for every 𝑛, 𝑚 ≥ 𝑁 and consequently
Letting 𝑚 go to infinity,
∥𝑓 𝑛 − 𝑓 ∥ = sup {𝑓 𝑛 − 𝑓 )(x)} ≤ 𝜖
∥x∥=1
for every 𝑛 ≥ 𝑁 .
3.34 1. Since 𝑋 is finite-dimensional, 𝑆 is compact (Proposition 1.4). Since 𝑓 is
continuous, 𝑓 (𝑆) is a compact set in 𝑌 (Exercise 2.3). Since 0𝑋 ∈/ 𝑆, 0𝑌 =
𝑓 (0𝑋 ) ∈
/ 𝑓 (𝑆).
( )𝑐
2. Consequently, 𝑓 (𝑆) is an open set containing 0𝑌 . It contains an open ball
( )𝑐
𝑇 ⊆ 𝑓 (𝑆) around 0𝑌 .
3. Let y ∈ 𝑇 and choose any x ∈ 𝑓 −1 (y) and consider y/ ∥x∥. Since 𝑓 is linear,
( )
y 𝑓 (x) x
= =𝑓 ∈ 𝑓 (𝑆)
∥x∥ ∥x∥ ∥x∥
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Suppose that y ∈
/ 𝑓 (𝐵). Then ∥x∥ ≥ 1 and therefore
y
y ∈ 𝑇 =⇒ ∈𝑇
∥x∥
by linearity. As we have just shown, there exists an open ball T about 0𝑌 such
that 𝑇 ⊆ 𝑓 (𝐵). Let 𝑇 (x) = y + 𝑟𝑇 . 𝑇 (x) is an open ball about y. Since
𝑇 ⊆ 𝑓 (𝐵), 𝑇 (x) = y + 𝑟𝑇 ⊆ 𝑓 (𝐵𝑟 (x)) ⊆ 𝑓 (𝑆). This implies that 𝑓 (𝑆) is open.
Since 𝑆 was an arbitrary open set, 𝑓 is an open map.
5. Exercise 2.69.
3.35 𝑓 is linear
𝑛
∑ 𝑛
∑ 𝑛
∑
𝑓 (𝛼 + 𝛽) = (𝛼𝑖 + 𝛽𝑖 )x𝑖 = 𝛼𝑖 x𝑖 + 𝛽𝑖 x𝑖 = 𝑓 (𝛼) + 𝑓 (𝛽)
𝑖=1 𝑖=1 𝑖=1
𝑚 ∥x∥ ≤ ∥𝑓 (x)∥
By the linearity of 𝑓 ,
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3.37 For any function, continuity implies closed graph (Exercise 2.70). To show the con-
verse, assume that 𝐺 = graph(𝑓 ) is closed. 𝑋 ×𝑌 with norm ∥(x, y)∥ = max{∥x∥ , ∥y∥}
is a Banach space (Exercise 1.209). Since 𝐺 is closed, 𝐺 is complete. Also, 𝐺 is a sub-
space of 𝑋 × 𝑌 . Consequently, 𝐺 is a Banach space in its own right.
Consider the projection ℎ : 𝐺 → 𝑋 defined by ℎ(x, 𝑓 (x)) = x. Clearly ℎ is linear,
one-to-one and onto with
Similarly
𝑓 (3 × 2) = 𝑓 (6) = 15 ∕= 3 × 𝑓 (2)
𝑔(x) = 𝑓 (x) − y
1 1 1 1
𝑔( x1 + x2 ) = 𝑓 (x1 ) + 𝑓 (x2 ) − 𝑦
2 2 2 2
1 1
= (𝑓 (x1 ) − 𝑦) + (𝑓 (x2 ) − 𝑦)
2 2
1 1
= 𝑔(x1 ) + 𝑔(x2 )
2 2
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Since 𝑔 is homogeneous
𝑓 (x) = 𝑔(x) + y
with 𝑔 linear
3.40 Let 𝑆 be an affine subset of 𝑋 and let y1 , y2 belong to 𝑓 (𝑆). Choose any x1 ∈
𝑓 −1 (y1 ) and x2 ∈ 𝑓 −1 (y2 ). Then for any 𝛼 ∈ ℜ
𝛼x1 + (1 − 𝛼)x2 ∈ 𝑆
Since 𝑓 is affine
Therefore
𝛼x1 + (1 − 𝛼)x2 ∈ 𝑓 −1 (𝑇 )
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where 𝜒{𝑠} is the indicator function of the set {𝑠}. Since 𝐸 is linear
∑
𝐸(𝑋) = 𝑋(𝑠)𝐸(𝜒{𝑠} )
𝑠∈𝑆
∑
= 𝑝𝑆 𝑋(𝑠)
𝑠∈𝑆
since 𝐸(𝜒{𝑠} = 𝑃 ({𝑠}) = 𝑝𝑠 ≥ 0. For the random variable 𝑋 = 1, 𝑋(𝑠) = 1 for every 𝑠 ∈
𝑆 and
∑
𝐸(1) = 𝑝𝑆 = 1
𝑠∈𝑆
Therefore
Similarly
3.45 Assume that x∗ = x∗1 + x∗2 + ⋅ ⋅ ⋅ + x∗𝑛 maximizes 𝑓 over 𝑆. Suppose to the contrary
that there exists y𝑗 ∈ 𝑆𝑗 such that 𝑓 (y𝑗 ) > 𝑓 (x∗𝑗 ). Then y = x∗1 + x∗2 + ⋅ ⋅ ⋅ + y𝑗 + ⋅ ⋅ ⋅ +
x∗𝑛 ∈ 𝑆 and
∑ ∑
𝑓 (y) = 𝑓 (x∗𝑖 ) + 𝑓 (y𝑖 ) > 𝑓 (x∗𝑖 ) = 𝑓 (x∗ )
𝑖∕=𝑗 𝑖
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(1/𝑛) ∈
/ 𝑙1 .
Every convergent sequence is bounded (Exercise 1.97). Therefore 𝑐0 ⊂ 𝑙∞ .
2. Clearly, every sequence (𝑝𝑡 ) ∈ 𝑙1 defines a linear functional 𝑓 ∈ 𝑐′0 given by
∞
∑
𝑓 (x) = 𝑝𝑡 𝑥𝑡
𝑛=1
Therefore 𝑓 ∈ 𝑐∗0 .
To show the converse, let e𝑡 denote the unit sequences
e1 = (1, 0, 0, . . . )
e2 = (0, 1, 0, . . . )
e3 = (0, 0, 1, . . . )
{e1 , e2 , e3 , . . . , } form a basis for 𝑐0 . Then every sequence (𝑥𝑡 ) ∈ 𝑐0 has a unique
representation
∞
∑
(𝑥𝑡 ) = 𝑥𝑡 e𝑡
𝑛=1
Let
𝑝𝑡 = 𝑓 (e𝑡 )
so that
∞
∑
𝑓 (x) = 𝑝𝑡 𝑥𝑡
𝑛=1
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We need to show that the sequence (𝑝𝑡 ) ∈ 𝑙1 . For any 𝑁 , consider the sequence
x𝑡 = (𝑥1 , 𝑥2 , . . . , 𝑥𝑡 , 0, 0, . . . ) where
⎧
⎨0 𝑝𝑡 = 0 or 𝑛 ≥ 𝑁
𝑥𝑡 = ∣𝑝𝑡 ∣
⎩ otherwise
𝑝𝑡
Then (x𝑡 ) ∈ 𝑐0 , ∥x𝑡 ∥∞ = 1 and
𝑡
∑ 𝑡
∑
𝑓 (x𝑡 ) = 𝑝𝑡 𝑥𝑡 = ∣𝑝𝑡 ∣
𝑛=1 𝑛=1
Consequently
∞
∑ 𝑡
∑
∣𝑝𝑡 ∣ = sup ∣𝑝𝑡 ∣ ≤ ∥𝑓 ∥ < ∞
𝑛=1 𝑁 𝑛=1
for every x = (𝑥𝑡 ) ∈ 𝑙1 Again, given any linear functional 𝑓 ∈ 𝑙1∗ , let 𝑝𝑡 = 𝑓 (e𝑡 )
where e𝑡 is the 𝑛 unit sequence. Then 𝑓 has the representation
∞
∑
𝑓 (x) = 𝑝𝑡 𝑥𝑡
𝑛=1
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3.47 By linearity
𝑔(𝑥) = 𝜑(𝑥, 0)
𝛼 = 𝜑(0, 1)
Then
𝜑(𝑥, 𝑡) = 𝑔(𝑥) + 𝛼𝑡
3.48 Suppose
𝑚
∩
kernel 𝑔𝑗 ⊆ kernel 𝑓
𝑗=1
Then
kernel 𝐺 = { x ∈ 𝑋 : 𝑔𝑗 (x) = 0, 𝑗 = 1, 2, . . . 𝑚 }
∩𝑚
= kernel 𝑔𝑗
𝑗=1
⊆ kernel 𝑓
Let 𝛼𝑗 = 𝐻(e𝑗 ) where e𝑗 is the 𝑗-th unit vector in ℜ𝑚 . Since every linear mapping is
determined by its action on a basis, we must have
That is
𝑓 ∈ lin 𝑔1 , 𝑔2 , . . . , 𝑔𝑚
Conversely, suppose
𝑓 ∈ lin 𝑔1 , 𝑔2 , . . . , 𝑔𝑚
That is
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3.49 Let 𝐻 be a hyperplane in 𝑋. Then there exists a unique subspace 𝑉 such that
𝐻 = x0 + 𝑉 for some x0 ∈ 𝐻 (Exercise 1.153). There are two cases to consider.
Case 1: x0 ∈
/ 𝑉 . For every x ∈ 𝑋, there exists unique 𝛼x ∈ ℜ such
x = 𝛼x x0 + 𝑣 for some 𝑣 ∈ 𝑉
𝐻 = { x ∈ 𝑋 : 𝑓 (x) = 1 }
x = 𝛼x x1 + 𝑣 for some 𝑣 ∈ 𝑉
𝐻 = { x ∈ 𝑋 : 𝑓 (x) = 0 }
{ x : 𝑓 (x) = 𝑐} = {x : 𝑓 (x − x1 ) = 0 } = x1 + 𝑉
which is a hyperplane.
3.50 By the previous exercise, there exists a linear functional 𝑔 such that
𝐻 = { 𝑥 ∈ 𝑋 : 𝑓 (𝑥) = 𝑐 }
𝐻 = { x : 𝑓 (𝑥) = 1} = {x : 𝑔(𝑥) = 1 }
Then
𝐻 ⊆ { x : 𝑓 (𝑥) − 𝑔(𝑥) = 0 }
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𝐻 = { 𝑥 ∈ 𝑋 : 𝑓 (𝑥) = 0 }
x = 𝛼x0 + v
𝑓 (𝑥) = 0 ⇐⇒ 𝑔(𝑥) = 0
𝑓 (x) = 𝛼𝑓 (x0 )
𝑔(x) = 𝛼𝑔(x0 )
3.53 𝑓 continuous implies that the set { 𝑥 ∈ 𝑋 : 𝑓 (𝑥) = 𝑐 } = 𝑓 −1 (𝑐) is closed for every
𝑐 ∈ ℜ (Exercise 2.67). Conversely, let 𝑐 = 0 and assume that 𝐻 = { 𝑥 ∈ 𝑋 : 𝑓 (𝑥) = 0 }
is closed. There exists x0 ∕= 0 such that 𝑋 = lin {𝑥0 , 𝐻} (Exercise 1.153). Let x𝑛 → x
be a convergent sequence in 𝑋. Then there exist 𝛼𝑛 , 𝛼 ∈ ℜ and v𝑛 , 𝑣 ∈ 𝐻 such that
x𝑛 = 𝛼𝑛 x0 + v𝑛 , x = 𝛼x0 + v and
𝑓 is continuous.
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3.54
𝑚 ∑
∑ 𝑛
𝑓 (x + x′ , y) = 𝑎𝑖𝑗 (𝑥𝑖 + 𝑥′𝑖 )𝑦𝑗
𝑖=1 𝑗=1
𝑚 ∑
∑ 𝑛 𝑚 ∑
∑ 𝑛
= 𝑎𝑖𝑗 𝑥𝑖 𝑦𝑗 + 𝑎𝑖𝑗 𝑥′𝑖 𝑦𝑗
𝑖=1 𝑗=1 𝑖=1 𝑗=1
= 𝑓 (x, y) + 𝑓 (x′ , y)
and
𝑎𝑖𝑗 = 𝑓 (x𝑖 , y𝑗 ) 𝑖 = 1, 2, . . . , 𝑚, 𝑗 = 1, 2, . . . , 𝑛
and therefore
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and therefore
and
Similarly
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and
𝑓 (x1 + x2 , y) = 𝜑x1 +x2 (y) = 𝜑x1 (y) + 𝜑x2 (y) = 𝑓 (x1 , y) + 𝑓 (x2 , y)
and
𝑓 is bilinear
3. Let 𝑓 ∈ 𝐵𝑖𝐿(𝑋 × 𝑌, 𝑍). For every x ∈ 𝑋, the partial function 𝑓x : 𝑌 → 𝑍 is
linear. Therefore 𝑓x ∈ 𝐵𝐿(𝑌, 𝑍) and 𝜑 ∈ 𝐵𝐿(𝑋, 𝐵𝐿(𝑌, 𝑍)).
3.59 Bilinearity and symmetry imply
Nonnegativity implies
−2𝛼𝑓 (x, y) ≥ 0
𝑓 (x, y) = 0
Case 2 Either 𝑓 (x, x) > 0 or 𝑓 (y, y) > 0. Without loss of generality, assume 𝑓 (y, y) >
0 and set 𝛼 = 𝑓 (x, y)/𝑓 (y, y) in (3.38). That is
( ) ( )2
𝑓 (x, y) 𝑓 (x, y)
𝑓 (x, x) − 2 𝑓 (x, y) + 𝑓 (y, y) ≥ 0
𝑓 (y, y) 𝑓 (y, y)
or
𝑓 (x, y)2
𝑓 (x, x) − ≥0
𝑓 (y, y)
which implies
( )2
𝑓 (x, y) ≤ 𝑓 (x, x)𝑓 (y, y) for every x, y ∈ 𝑋
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3.62 By definition, the inner product is a bilinear functional. To show that it is contin-
uous, let 𝑋 be an inner product space with inner product denote by x𝑇 y. Let x𝑛 → x
and y𝑛 → y be sequences in 𝑋.
𝑛 𝑇 𝑛
(x ) y − x𝑇 y = (x𝑛 )𝑇 y𝑛 − (x𝑛 )𝑇 y + (x𝑛 )𝑇 y − x𝑇 y
≤ (x𝑛 )𝑇 y𝑛 − (x𝑛 )𝑇 y + (x𝑛 )𝑇 y − x𝑇 y
≤ (x𝑛 )𝑇 (y𝑛 − y) + (x𝑛 − x)𝑇 y
Since the sequence x𝑛 converges, it is bounded, that is there exists 𝑀 such that ∥x𝑛 ∥ ≤
𝑀 for every 𝑛. Therefore
𝑛 𝑇 𝑛
(x ) y − x𝑇 y ≤ ∥x𝑛 ∥ ∥y𝑛 − y∥ + ∥x𝑛 − x∥ ∥y∥ ≤ 𝑀 ∥y𝑛 − y∥ + ∥x𝑛 − x∥ ∥y∥ → 0
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or
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so that
2 2 2 2
∥𝑥 + 𝑦∥ + ∥𝑥 − 𝑦∥ = 5 ∕= 2 ∥𝑥∥ + 2 ∥𝑥∥
Since 𝑥 and 𝑦 do not satisfy the parallelogram law (Exercise 3.66), 𝐶(𝑋) cannot be an
inner product space.
3.68 Let {x1 , x2 , . . . , x𝑛 } be a set of pairwise orthogonal vectors. Assume
0 = 𝛼x1 + 𝛼2 x2 + ⋅ ⋅ ⋅ + 𝛼𝑛 x𝑛
which implies
−1 ≤ cos 𝜃 ≤ 1
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If x ⊥ y, x𝑇 y = y𝑇 x = 0 and
2 2 2
∥x + y∥ = ∥x∥ + ∥y∥
3.72 1. Choose some x̂ ∈ 𝑆 and let 𝑆ˆ be the set of all x ∈ 𝑆 which are closer to y
than x̂, that is
𝑆ˆ = { x ∈ 𝑆 : ∥x − y∥ ≤ ∥x̂ − y∥ }
A fortiori
∥x1 − y∥ = ∥x0 − y∥ = 𝛿
since 12 (x0 + x1 ) ∈ 𝑆 and therefore 12 (x0 + x1 ) − y ≥ 𝛿 so that
2
∥x0 − x1 ∥ ≤ 2𝛿 2 + 2𝛿 2 − 4𝛿 2 = 0
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Dividing through by 𝛼
2
2(x0 − y)𝑇 (x − x0 ) + 𝛼 ∥x − x0 ∥ ≥ 0
which inequality must hold for every 0 < 𝛼 < 1. Letting 𝛼 → 0, we must have
(x0 − y)𝑇 (x − x0 ) ≥ 0
as required.
3.73 1. Using the parallelogram law (Exercise 3.66),
2 2
∥x𝑚 − x𝑛 ∥ = ∥(x𝑚 − y) + (y − x𝑛 )∥
2 2 2
= 2 ∥x𝑚 − y∥ + 2 ∥y − x𝑛 ∥ − 2 ∥x𝑚 + x𝑛 ∥
for every 𝑚, 𝑛. Since 𝑆 is convex, (x𝑚 +x𝑛 )/2 ∈ 𝑆 and therefore ∥x𝑚 + x𝑛 ∥ ≥ 2𝑑.
Therefore
2 2 2
∥x𝑚 − x𝑛 ∥ = 2 ∥x𝑚 − y∥ + 2 ∥y − x𝑛 ∥ − 4𝑑2
Therefore
𝑔(y) = { x ∈ 𝑆 : x is closest to y }
The function 𝑔 is well-defined since for every y ∈ 𝑇 there exists a unique point x ∈ 𝑆
which is closest to y (Exercise 3.72). Clearly, for every x ∈ 𝑆, x is the closest point to
x. Therefore 𝑔(x) = x for every x ∈ 𝑆.
To show that 𝑔 is continuous, choose any y1 and y2 in 𝑇
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so that
2 2 2
∥y1 − y2 ∥ − ∥x1 − x2 ∥ = ∥(y1 − y2 ) − (x1 − x2 )∥
+ 2(x1 − y1 )𝑇 (x2 − x1 ) + 2(x2 − y2 )𝑇 (x1 − 𝑥2 )
∥y1 − y2 ∥2 − ∥x1 − x2 ∥2 ≥ 0
or
𝑔 is Lipschitz continuous.
3.75 Let 𝑆 = kernel 𝑓 . Then 𝑆 is a closed subspace of 𝑋. If 𝑆 = 𝑋, then 𝑓 is the zero
functional and y = 0 is the required element. Otherwise chose any y ∈ / 𝑆 and let x0
be the closest point in 𝑆 (Exercise 3.72). Define z = x0 − y. Then z ∕= 0 and
z𝑇 x ≥ 0 for every x ∈ 𝑆
z𝑇 x = 0 for every x ∈ 𝑆
that is z is orthogonal to 𝑆.
Let 𝑆ˆ be the subset of 𝑋 defined by
𝑆ˆ = { 𝑓 (x)z − 𝑓 (z)x : x ∈ 𝑋 }
For every x ∈ 𝑆ˆ
( )
𝑓 (x) = 𝑓 𝑓 (x)z − 𝑓 (z)x = 𝑓 (x)𝑓 (z) − 𝑓 (z)𝑓 (x) = 0
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since z ∈ 𝑆 ⊥ . Therefore
( )
𝑓 (z) 𝑇 z𝑓 (z)
𝑓 (x) = 2x z = x𝑇 2 = x𝑇 y
∥z∥ ∥z∥
where
z𝑓 (z)
y= 2
∥z∥
and
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In particular,
𝑓 (x𝐹 ) =< x𝐹 , x𝑓 >= 𝐹 (𝑓 )
That is, for every 𝐹 ∈ 𝑋 ∗∗ , there exists an element x𝐹 ∈ 𝑋 such that
𝐹 (𝑓 ) = 𝑓 (x𝐹 )
𝑋 is reflexive.
3.78 1. Adapt Exercise 3.64.
2. By Exercise 3.75, there exists unique x∗ ∈ 𝑋 such that
𝑓y (x) = x𝑇 x∗
3. Substituting
𝑓 (x)𝑇 y = 𝑓y (x) = x𝑇 x∗ = 𝑥𝑇 𝑓 ∗ (y)
4. For every y1 , y2 ∈ 𝑌
( ) ( )
x𝑇 𝑓 ∗ (y1 + y2 ) = 𝑓 (x)𝑇 y1 + y2 = 𝑓 (x)𝑇 y1 + 𝑓 (x)𝑇 y1 = x𝑇 𝑓 ∗ (y1 ) + x𝑇 𝑓 ∗ (y1 )
and for every y ∈ 𝑌
x𝑇 𝑓 ∗ (𝛼y) = 𝑓 (x)𝑇 𝛼y = 𝛼𝑓 (x)𝑇 y = 𝛼x𝑇 𝑓 ∗ (y) = x𝑇 𝛼𝑓 ∗ (y)
3.79 The zero element 0𝑋 is a fixed point of every linear operator (Exercise 3.13).
3.80 𝐴𝐴−1 = 𝐼 so that
det(𝐴) det(𝐴−1 ) = det(𝐼) = 1
3.81 Expanding along the 𝑖th row using (3.8)
𝑛
∑
det(𝐶) = (−1)𝑖+𝑗 (𝛼𝑎𝑖𝑗 + 𝛽𝑏𝑖𝑗 ) det(𝐶𝑖𝑗 )
𝑗=1
∑𝑛 𝑛
∑
=𝛼 (−1)𝑖+𝑗 𝑎𝑖𝑗 det(𝐶𝑖𝑗 ) + 𝛽 (−1)𝑖+𝑗 𝑏𝑖𝑗 det(𝐶𝑖𝑗 )
𝑗=1 𝑗=1
But the matrices differ only in the 𝑖th row and therefore
𝐴𝑖𝑗 = 𝐵𝑖𝑗 = 𝐶𝑖𝑗 , 𝑗 = 1, 2, . . . 𝑛
so that
𝑛
∑ 𝑛
∑
det(𝐶) = 𝛼 (−1)𝑖+𝑗 𝑎𝑖𝑗 det(𝐴𝑖𝑗 ) + 𝛽 (−1)𝑖+𝑗 𝑏𝑖𝑗 det(𝐵𝑖𝑗 )
𝑗=1 𝑗=1
= 𝛼 det(𝐴) + 𝛽 det(𝐵)
3.82 Suppose that x1 and x2 are eigenvectors corresponding to the eigenvalue 𝜆. By
linearity
𝑓 (x1 + x2 ) = 𝑓 (x1 ) + 𝑓 (x2 ) = 𝜆x1 + 𝜆x2 = 𝜆(x1 + x2 )
and
𝑓 (𝛼x1 ) = 𝛼𝑓 (x1 ) = 𝛼𝜆x
Therefore x1 + x2 and 𝛼x1 are also eigenvectors.
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3.83 Suppose 𝑓 is singular. Then there exists x ∕= 0 such that 𝑓 (x) = 0. Therefore x
is an eigenvector with eigenvalue 0. Conversely, if 0 is an eigenvalue
𝑓 (x) = 0x = 0
and therefore
3.86 By bilinearity
(𝜆1 − 𝜆2 )x𝑇1 x2 = 0
Hence
( )𝑇
𝑔(x, y) = 𝜆x − 𝑓 (x) y
is well-defined.
2. For any x ∈ 𝑋
( )𝑇
𝑔(x, x) = 𝜆x − 𝑓 (x) x
= 𝜆x𝑇 x − 𝑓 (x)𝑇 x
= 𝜆 ∥x∥2 − 𝑓 (x)𝑇 x
( )𝑇 ( )
2 2 x x
= 𝜆 ∥x∥ − ∥x∥ 𝑓 2 2
∥x∥ ∥x∥
2( 𝑇
)
= ∥x∥ 𝜆 − 𝑓 (z) z ≥ 0
since z = x/ ∥x∥ ∈ 𝑆.
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3. Since 𝑓 is symmetric
( )𝑇
𝑔(y, x) = 𝜆y − 𝑓 (y) x
= 𝜆y𝑇 x − 𝑓 (y)𝑇 x
= 𝜆x𝑇 y − 𝑓 (x)𝑇 𝑦
( )𝑇
= 𝜆x − 𝑓 (x) y = 𝑔(x, y)
That is
( )𝑇
𝑔(x0 , y) = 𝜆x0 − 𝑓 (x0 ) y = 0 for every 𝑦 ∈ 𝑋
and therefore
𝜆x0 − 𝑓 (x0 ) = 0
or
𝑓 (x0 ) = 𝜆x0
x = 𝛼1 x1 + 𝛼2 x2 + ⋅ ⋅ ⋅ + 𝛼𝑛 x𝑛
If x ∈ 𝑆
x𝑇 x1 = 𝛼1 x𝑇1 x1 = 0
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3.90 By linearity
∑
𝑓 (x) = 𝑥𝑗 𝑓 (x𝑗 )
𝑗
by Exercise 3.69.
3.91 Let 𝑓 be the symmetric linear operator defining 𝑄
𝑄(x) = x𝑇 𝑓 (x)
By the spectral theorem (Proposition 3.6), there exists an orthonormal basis x1 , x2 , . . . , x𝑛
comprising the eigenvectors of 𝑓 . Let 𝜆1 , 𝜆2 , . . . , 𝜆𝑛 be the corresponding eigenvalues,
that is
𝑓 (x𝑖 ) = 𝜆𝑖 x𝑖 𝑖 = 1, 2 . . . , 𝑛
Then for x = 𝑥1 x1 + 𝑥2 x2 + ⋅ ⋅ ⋅ + 𝑥𝑛 x𝑛
𝑄(x) = x𝑇 𝑓 (x)
= (𝑥1 x1 + 𝑥2 x2 + ⋅ ⋅ ⋅ + 𝑥𝑛 x𝑛 )𝑇 𝑓 (𝑥1 x1 + 𝑥2 x2 + ⋅ ⋅ ⋅ + 𝑥𝑛 x𝑛 )
= (𝑥1 x1 + 𝑥2 x2 + ⋅ ⋅ ⋅ + 𝑥𝑛 x𝑛 )𝑇 (𝑥1 𝑓 (x1 ) + 𝑥2 𝑓 (x2 ) + ⋅ ⋅ ⋅ + 𝑥𝑛 𝑓 (x𝑛 ))
= (𝑥1 x1 + 𝑥2 x2 + ⋅ ⋅ ⋅ + 𝑥𝑛 x𝑛 )𝑇 (𝑥1 𝜆1 x1 + 𝑥2 𝜆2 x2 + ⋅ ⋅ ⋅ + 𝑥𝑛 𝜆𝑛 x𝑛 )
= 𝑥1 𝜆1 𝑥1 + 𝑥2 𝜆2 𝑥2 + ⋅ ⋅ ⋅ + 𝑥𝑛 𝜆𝑛 𝑥𝑛
= 𝜆1 𝑥21 + 𝜆2 𝑥22 + ⋅ ⋅ ⋅ + 𝜆𝑛 𝑥2𝑛
3.92 1. Assuming that 𝑎11 ∕= 0, the quadratic form can be rewritten as follows
𝑄(𝑥1 , 𝑥2 ) = 𝑎11 𝑥21 + 2𝑎12 𝑥1 𝑥2 + 𝑎22 𝑥22
𝑎212 2 𝑎212 2
= 𝑎11 𝑥21 + 2𝑎12 𝑥1 𝑥2 + 𝑥 − 𝑥 + 𝑎22 𝑥22
𝑎11 2 𝑎11 2
( ( )2 ) ( )
2 𝑎 12 𝑎 12 𝑎212
= 𝑎11 𝑥1 + 2 𝑥1 𝑥2 + 𝑥2 + 𝑎22 − 𝑥22
𝑎11 𝑎11 𝑎11
( )2 ( )
𝑎12 𝑎11 𝑎22 − 𝑎212
= 𝑎11 𝑥1 + 𝑥2 + 𝑥22
𝑎11 𝑎11
2. We observe that 𝑞 must be positive for every 𝑥1 and 𝑥2 provided 𝑎11 > 0 and
𝑎11 𝑎22 − 𝑎212 > 0. Similarly 𝑞 must be negative for every 𝑥1 and 𝑥2 if 𝑎11 > 0 and
𝑎11 𝑎22 − 𝑎212 > 0. Otherwise, we can choose values for 𝑥1 and 𝑥2 which make 𝑞
both positive and negative.
Note that the condition 𝑎11 𝑎22 > 𝑎212 > 0 implies that 𝑎11 and 𝑎12 must have the
same sign.
3. If 𝑎11 = 𝑎22 = 0, then 𝑞 is indefinite. Otherwise, if 𝑎11 = 0 but 𝑎22 ∕= 0, then the
𝑞 can we can “complete the square” using 𝑎22 and deduce
{ } { }
nonnegative 𝑎11 , 𝑎22 ≥ 0
𝑞 is definite if and only if and 𝑎11 𝑎22 ≥ 𝑎212
nonpositive 𝑎11 , 𝑎22 ≤ 0
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Subtracting
𝐴x𝑝 = c and 𝐴x = 0
Adding
𝐴x𝑝 + 𝐴x = 𝐴(x𝑝 + x) = c
𝑆 = x0 + 𝑉
𝑉 ⊥ = { a ∈ 𝑋 : ax = 0 for every x ∈ 𝑉 }
𝑉 = (𝑉 ⊥ )⊥ = {x : a𝑖 x = 0, 𝑖 = 1, 2, . . . 𝑚}
Let 𝐴 be the 𝑚×𝑛 matrix whose rows are a1 , a2 , . . . , a𝑚 . Then 𝑉 is the set of solutions
to the homogeneous linear system 𝐴x = 0, that is
𝑉 = { 𝑥 : 𝐴x = 0 }
Therefore
𝑆 = x0 + 𝑉
= x0 + { x : 𝐴x = 0 }
= { x : 𝐴(x − x0 ) = 0 }
= { x : 𝐴x = c }
where c = 𝐴x0 .
3.102 Consider corresponding homogeneous system
𝑥1 + 3𝑥2 = 0
𝑥1 − 𝑥2 = 0
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𝑥1 + 6𝑥2 = 0
3𝑥1 − 3𝑥2 = 0
4𝑥1 = 0
for which the only solution is 𝑥1 = 0. Substituting in the first equation implies 𝑥2 = 0.
The kernel of 𝑓 = 𝐴x is {0}. Therefore dim 𝑓 (ℜ2 ) = 2, and the system 𝐴x = 𝑐 has a
unique solution for every 𝑐1 , 𝑐2 .
3.103 We can write the system 𝐴x = c in the form
⎛ ⎞ ⎛ ⎞ ⎛ ⎞ ⎛ ⎞
𝑎11 𝑎1𝑗 𝑎1𝑛 𝑐1
⎜ .. ⎟ ⎜ .. ⎟ ⎜ .. ⎟ ⎜ .. ⎟
𝑥1 ⎝ . ⎠ + ⋅ ⋅ ⋅ + 𝑥𝑗 ⎝ . ⎠ + ⋅ ⋅ ⋅ + 𝑥𝑛 ⎝ . ⎠ = ⎝ . ⎠
𝑎𝑛1 𝑎𝑛𝑗 𝑎𝑛𝑛 𝑐𝑛
are linearly dependent (Exercise 1.133). Therefore det(𝐶) = 0. Let 𝐵𝑗 denote the
matrix obtained from 𝐴 by replacing the 𝑗th column with c. Then 𝐴, 𝐵𝑗 and 𝐶 differ
only in the 𝑗th column, with the 𝑗th column of 𝐶 being a linear combination of the
𝑗th columns of 𝐴 and 𝐵𝑗 .
⎛ ⎞ ⎛ ⎞ ⎛ ⎞
𝑐1𝑗 𝑎1𝑗 𝑐1𝑗
⎜ .. ⎟ ⎜ .. ⎟ ⎜ .. ⎟
⎝ . ⎠ = 𝑥𝑗⎝ . ⎠ − ⎝ . ⎠
𝑐𝑛𝑗 𝑎𝑛𝑗 𝑐𝑛𝑗
By Exercise 3.81
and therefore
det(𝐵𝑗 )
𝑥𝑗 =
det(𝐴)
as required.
3.104 Let
( )−1 ( )
𝑎 𝑏 𝐴 𝐵
=
𝑐 𝑑 𝐶 𝐷
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𝑅x = 𝑅y
or
𝑅(x − y) = 0
There exists a duplicable portfolio if and only if this homogeneous system has a non-
trivial solution, that is if rank 𝑅 < 𝐴.
3.106 State 𝑠¯ is insurable if there is a solution to the linear system
𝑅x = e𝑠¯ (3.42)
where e𝑠¯ is the 𝑠¯-th unit vector (the 𝑠¯ Arrow-Debreu security). (3.42) has a solution
for every state 𝑠 if and only if 𝑓 (ℜ𝐴 ) = ℜ𝑆 , that is rank 𝑅 = 𝑆.
3.107 Figure 3.1.
3.108 Let 𝑆 be an affine subset of ℜ𝑛 . Then there exists (Exercise 3.101) a system of
linear equations 𝐴x = c such that
𝑆 = { x : 𝐴x = c }
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𝐴x ≤ c
𝐴y ≤ c
and therefore
𝐴x ≤ 0
𝐴𝛼x ≤ 0
𝑦1 𝐴1 + 𝑦2 𝐴2 + ⋅ ⋅ ⋅ + 𝑦𝑘 𝐴𝑘 = 0
𝐴𝑡y = 0
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from
𝐴x = c
to give
(c) Note that x > 0 and therefore 𝑡ˆ > 0 which implies that 𝑥 ˆ𝑗 > 0 for every
𝑦𝑗 ≤ 0. For every 𝑦𝑗 > 0, 𝑥𝑗 /𝑦𝑗 ≥ 𝑡ˆ, which implies that 𝑥𝑗 ≥ 𝑡ˆ𝑦𝑗 , so that
𝑥ˆ𝑗 ≥ 𝑥𝑗 − 𝑡ˆ𝑦𝑗 ≥ 0
ˆℎ = 𝑥ℎ − 𝑡ˆ𝑦ℎ = 0
𝑥
so that
𝑘
∑
c= 𝑥ˆ𝑗 𝐴𝐽
𝑗 =1
𝑗∕=ℎ
𝑥
ˆ is a feasible solution with one less positive component.
3. Starting with any nonbasic feasible solution, this elimination technique can be
repeated until the remaining vectors are linearly independent and a basic feasible
solution is obtained.
3.112 1. Exercise 1.173.
2. For each 𝑖, there exists 𝑙𝑖 elements x𝑖𝑗 and coefficients 𝑎𝑖𝑗 > 0 such that
𝑙𝑖
∑
x𝑖 = 𝑎𝑖𝑗 x𝑖𝑗
𝑖=1
∑ 𝑙𝑖
and 𝑗=1 𝑎𝑖𝑗 = 1. Hence
𝑛
∑ 𝑛 ∑
∑ 𝑙𝑖
x= x𝑖 = 𝑎𝑖𝑗 x𝑖𝑗
𝑖=1 𝑖=1 𝑗=1
3. Direct computation.
4. Regarding the 𝑎𝑖𝑗 as “variables” and the points 𝑧𝑖𝑗 as coefficents,
𝑙𝑖
𝑛 ∑
∑
z= 𝑎𝑖𝑗 z𝑖𝑗
𝑖=1 𝑗=1
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a basic feasible solution. That is, there exists coefficients 𝑏𝑖𝑗 ≥ 0 and 𝑏𝑖𝑗 > 0 for
at most (𝑚 + 𝑛) components such that
𝑙𝑖
𝑛 ∑
∑
z= 𝑏𝑖𝑗 z𝑖𝑗 (3.43)
𝑖=1 𝑗=1
and
𝑙𝑖
∑
𝑏𝑖𝑗 = 1 for every 𝑖
𝑗=1
5. (3.43) implies that at least one 𝑏𝑖𝑗 > 0 for every 𝑖. This accounts for at least
𝑛 of the positive 𝑏𝑖𝑗 . Since there are at most (𝑚 + 𝑛) coefficients 𝑏𝑖𝑗 which are
strictly positive, there are at most 𝑚 indices 𝑖 which have more than one positive
coefficient 𝑏𝑖𝑗 . For the remaining 𝑚 − 𝑛 indices, x𝑖 = x𝑖𝑗 for some 𝑗; that is
x𝑖 ∈ 𝑆𝑖 .
3.113 1. Since 𝐴 is productive, there exists x ≥ 0 such that 𝐴x > 0. Consider any
z for which 𝐴z ≥ 0. For every 𝛼 > 0
Suppose to the contrary that z ∕≥ 0. That is, there exists some component 𝑧𝑖 < 0.
Let
𝑧𝑖
𝛼 = max{− }
𝑥𝑖
Without loss of generality, 𝑧1 attains this maximum, that is assume 𝛼 = 𝑧1 /𝑥1 .
Then
𝑥1 + 𝛼𝑧1 = 0
and
𝑥𝑖 + 𝛼𝑧𝑖 ≥ 0
for every 𝑖.
Now consider the matrix 𝐵 = 𝐼 − 𝐴. By the assumptions of the Leontief model
(Example 3.35), the matrix 𝐴 has 1 along the diagonal and negative off-diagonal
elements. That is
𝑎𝑖𝑖 = 1 𝑖 = 1, 2, . . . , 𝑛
𝑎𝑖𝑗 ≤ 0 𝑖, 𝑗 = 1, 2, . . . , 𝑛, 𝑗 ∕= 𝑗
Therefore
𝐵 =𝐼 −𝐴≥0
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where 𝐴−1
𝑖 is the 𝑖 column of 𝐴−1 . Since x𝑖 ≥ 0 for every 𝑖, we conclude that 𝐴−1 ≥ 0.
Conversely, assume that 𝐴−1 ≥ 0. Let 1 = (1, 1, . . . , 1) denote a net output of 1 for
each commodity. Then
x = 𝐴−1 1 ≥ 0
and
𝐴x = 1 > 0
𝐴 is productive.
3.115 Takayama 1985, p.383, Theorem 4.C.4.
3.116 Let a0 = (𝑎01 , 𝑎02 , . . . , 𝑎0𝑛 ) be the vector of labour requirements and 𝑤 the wage
rate. The unit profit of industry 𝑖 is
∑
𝜋𝑖 = 𝑝𝑖 + 𝑎𝑖𝑗 𝑝𝑗 − 𝑤𝑎0
𝑗∕=𝑖
Recall that 𝑎𝑖𝑗 ≤ 0 for 𝑗 ∕= 𝑖. The vector of unit profits for all industries is
Π = 𝐴p − 𝑤𝑎0
Profits will be zero in all industries if there exists a price system p such that
Π = 𝐴p − 𝑤𝑎0 = 0
or
𝐴p = 𝑤𝑎0 (3.46)
By the previous results, (3.46) has a unique nonnegative solution p = 𝐴−1 𝑤𝑎0 if the
technology 𝐴 is productive. Furthermore, 𝐴−1 is nonnegative. Since 𝑎0 > 0, so is
p > 0.
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3.117 Let 𝑢𝐵 denote the steady state unemployment rate for blacks. Then 𝑢𝐵 satisfies
the equation
𝑢𝐵 = 0.0038(1 − 𝑢𝐵 ) + 0.8975𝑢𝐵
which implies that 𝑢𝐵 = 0.036. That is, the data implies an unemployment rate of 3.6
percent for blacks. Similarly, the unemployment rate for white males 𝑢𝑊 satisfies the
equation
𝑢𝑊 = 0.0022(1 − 𝑢𝑊 ) + 0.8614𝑢𝑊
If the current state vector is x0 = (.4, .6), the state vector after a single mailing will be
x1 = 𝑇 x0
( )( )
.6 .25 .4
=
.4 .75 .6
( )
0.39
=
.61
Following a single mailing, the number of subscribers will drop to 30 percent of the
mailing list, comprising 24 percent from renewals and 15 percent new subscriptions.
3.119 Let 𝑓 (𝑥) = 𝑥2 . For every 𝑥1 , 𝑥2 ∈ ℜ and 0 ≤ 𝛼 ≤ 1
3.120 𝑓 (𝑥) = 𝑥 is linear and therefore convex. In the previous exercise we showed that
𝑥2 is convex. Therefore 𝑓 (𝑥) = 𝑥𝑛 is convex for 𝑛 = 1, 2. Assume that 𝑓 is convex for
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𝑛 − 1. Then
𝑓 (𝛼𝑥1 + (1 − 𝛼)𝑥2 ) = (𝛼𝑥1 + (1 − 𝛼)𝑥2 )𝑛
= (𝛼𝑥1 + (1 − 𝛼)𝑥2 )(𝛼𝑥1 + (1 − 𝛼)𝑥2 )𝑛−1
≤ (𝛼𝑥1 + (1 − 𝛼)𝑥2 )(𝛼𝑥𝑛−1
1 + (1 − 𝛼)𝑥𝑛−1
2 ) (since 𝑥𝑛−1 is convex)
= 𝛼2 𝑥𝑛1 + 𝛼(1 − 𝛼)𝑥𝑛−1
1 𝑥2 + 𝛼(1 − 𝛼)𝑥1 𝑥𝑛−1
2 + (1 − 𝛼)2 𝑥𝑛2
= 𝛼𝑥𝑛1 + (1 − 𝛼)𝑥𝑛2 − 𝛼𝑥𝑛1 − (1 − 𝛼)𝑥𝑛2
+ 𝛼2 𝑥𝑛1 + 𝛼(1 − 𝛼)𝑥𝑛−1
1 𝑥2 + 𝛼(1 − 𝛼)𝑥1 𝑥𝑛−1
2 + (1 − 𝛼)2 𝑥𝑛2
( )
= 𝛼𝑥𝑛1 + (1 − 𝛼)𝑥𝑛2 − 𝛼(1 − 𝛼) 𝑥𝑛1 − 𝑥1 𝑥𝑛−1
2 − 𝑥𝑛−1
1 𝑥2 + 𝑥𝑛
2
( )
𝑛 𝑛 𝑛−1 𝑛−1
= 𝛼𝑥1 + (1 − 𝛼)𝑥2 − 𝛼(1 − 𝛼) 𝑥1 (𝑥1 − 𝑥2 ) − 𝑥2 (𝑥1 − 𝑥2 )
( )
= 𝛼𝑥𝑛1 + (1 − 𝛼)𝑥𝑛2 − 𝛼(1 − 𝛼) (𝑥1 − 𝑥2 )(𝑥𝑛−1
1 − 𝑥𝑛−1
2 )
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3.122 Assume 𝑓 is convex which implies epi 𝑓 is convex. The points (x𝑖 , 𝑓 (x𝑖 )) ∈ epi 𝑓 .
Since epi 𝑓 is convex
that is
Jensen’s inequality can also be proved by induction from the definition of a convex
function (see for example Sydsaeter + Hammond 1995; p.624).
3.123 For each 𝑖, let 𝑦𝑖 = log 𝑥𝑖 so that
𝑥𝑖 = 𝑒𝑦𝑖
𝑥𝛼
𝑖 = 𝑒
𝑖 𝛼𝑖 𝑦𝑖
as required.
3.124 Assume 𝑓 is concave. That is for every x1 , x2 ∈ 𝑆 and 0 ≤ 𝛼 ≤ 1
is convex. But
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3.126 Suppose that x1 minimizes the cost of producing 𝑦 at input prices w1 while x2
minimizes cost at w2 . For some 𝛼 ∈ [0, 1], let w̄ be the weighted average price, that is
w̄ = 𝛼w1 + (1 − 𝛼)w2
and suppose that x̄ minimizes cost at w̄. Then
𝑐(w̄, 𝑦) = w̄x̄
= (𝛼w1 + (1 − 𝛼)w2 )x̄
= 𝛼w1 x̄ + (1 − 𝛼)w2 x̄
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That is
Rearranging
as required.
3.130 A functional is affine if and only if inequalities (3.24) and (3.26) are satisfied as
equalities.
3.131 Since 𝑓 and 𝑔 are convex on 𝑆
𝛼𝑓 is convex.
Moreover, if 𝑓 is strictly convex,
𝛼𝑓 is strictly convex.
3.132
That is
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3.133 If 𝑓 is convex
𝑓 (𝛼x1 + (1 − 𝛼)x2 ) ≤ 𝛼𝑓 (x1 ) + (1 − 𝛼)𝑓 (x2 )
Since 𝑔 is increasing
( ) ( )
𝑔 𝑓 (𝛼x1 + (1 − 𝛼)x2 ) ≤ 𝑔 𝛼𝑓 (x1 ) + (1 − 𝛼)𝑓 (x2 )
( ) ( )
≤ 𝛼𝑔 𝑓 (x1 ) + (1 − 𝛼)𝑔 𝑓 (x2 )
since 𝑔 is also convex. The concave case is proved similarly.
3.134 Let 𝐹 = log 𝑓 . If 𝐹 is convex, 𝑓 (x) = 𝑒𝐹 (x) is an increasing convex function of a
convex function and is therefore convex (Exercise 3.133).
3.135 If 𝑓 is positive and concave, then log 𝑓 is concave (Exercise 3.51). Therefore
1
log = log 1 − log 𝑓 = − log 𝑓
𝑓
is convex. By the previous exercise (Exercise 3.134), this implies that 1/𝑓 is convex.
If 𝑓 is negative and convex, then −𝑓 is positive and concave, 1/ − 𝑓 is convex, and
therefore 1/𝑓 is concave.
3.136 Consider the identity
( ) ( ) ( ) ( )
𝑔 𝑓 (𝑥1 ∨ 𝑥2 ) + 𝑔 𝑓 (𝑥1 ∧ 𝑥2 ) − 𝑔 𝑓 (𝑥1 ) − 𝑔 𝑓 (𝑥2 )
( ) ( ) ( ) ( ) ) )
= 𝑔 𝑓 (𝑥1 ∨ 𝑥2 ) + 𝑔 𝑓 (𝑥1 ∧ 𝑥2 ) − 𝑔 𝑓 (𝑥1 ) − 𝑔 𝑓 (𝑥1 ∨ 𝑥2 ) + 𝑓 (𝑥1 ∧ 𝑥2 ) − 𝑓 (𝑥1 )
( ) ( )
+ 𝑔 𝑓 (𝑥1 ∨ 𝑥2 ) + 𝑓 (𝑥1 ∧ 𝑥2 ) − 𝑓 (𝑥1 ) − 𝑔 𝑓 (𝑥2 ) (3.50)
Define
( ) ( ) ( ) ( )
𝜑(𝑥1 , 𝑥2 ) = 𝑔 𝑓 (𝑥1 ∨ 𝑥2 ) + 𝑔 𝑓 (𝑥1 ∧ 𝑥2 ) − 𝑔 𝑓 (𝑥1 ) − 𝑔 𝑓 (𝑥2 )
Now consider 𝜑2 .
{ } { }
≥ supermodular
𝑓 (𝑥1 ∨ 𝑥2 ) + 𝑓 (𝑥1 ∧ 𝑥2 ) − 𝑓 (𝑥1 ) is 𝑓 (𝑥2 ) if 𝑓 is
≤ submodular
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Since 𝑓 is convex
z = 𝛼x + (1 − 𝛼)x0 (3.55)
Rewriting (3.55)
(1 − 𝛼)x0 = z − 𝛼x
(1 + 𝛼)x0 = z + 𝛼(2x0 − x)
1 𝛼
x0 = z+ (2x0 − x)
1+𝛼 1+𝛼
3. Note that
(2x0 − x) = x0 − (x − x0 ) ∈ 𝐵(x0 )
so that
𝑓 (2x0 − x) ≤ 𝑀
and therefore
1 𝛼 1 𝛼
𝑓 (x0 ) ≤ 𝑓 (z) + 𝑓 (2x0 − x) ≤ 𝑓 (z) + 𝑀
1+𝛼 1+𝛼 1+𝛼 1+𝛼
which implies
or
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Therefore 𝑓 is bounded on 𝑇 .
3.139 The previous exercise showed that 𝑓 is locally bounded from above for every
x ∈ 𝑆. To show that it is also locally bounded from below, choose some x0 ∈ 𝑆. There
exists some 𝐵(x0 and 𝑀 such that
𝑓 (x1 ) ≥ 2𝑓 (x) − 𝑀
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Let
( )
ℎ(𝑡) = 𝑓 𝑡x1 + (1 − 𝑡)x2
Let
𝑓 (𝛼x1 + (1 − 𝛼)x2 ) ≥ 𝛼𝑓 (x1 ) + (1 − 𝛼)𝑓 (x2 ) ≥ 𝛼𝑓 (x1 ) + (1 − 𝛼)𝑓 (x1 ) = 𝑓 (x1 ) = min{𝑓 (x1 ), 𝑓 (x2 )}
𝑓 is quasiconcave.
3.145 Let 𝑓 : ℜ → ℜ. Choose any 𝑥1 , 𝑥2 in ℜ with 𝑥1 < 𝑥2 . If 𝑓 is increasing, then
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Now
𝑣(¯
𝑝, 𝑚) = sup{ 𝑢(x) : x ∈ 𝑋(p̄, 𝑚) }
≤ sup{ 𝑢(x) : x ∈ 𝑋(p1 , 𝑚) ∪ 𝑋(p2 , 𝑚) }
≤𝑐
Therefore p̄ ∈ ≾𝑣 (𝑐) for every 0 ≤ 𝛼 ≤ 1. Thus, ≾𝑣 (𝑐) is convex and so 𝑣 is quasiconvex
(Exercise 3.146).
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Since 𝑔 is increasing
( ) ( ) ( ) ( )
𝑔 𝑓 (𝛼x1 + (1 − 𝛼)x2 ) ≥ 𝑔( min{𝑓 (x1 ), 𝑓 (x2 )}) ≥ min{𝑔 𝑓 (x1 ) , 𝑔 𝑓 (x2 ) }
𝑔 ∘ 𝑓 is quasiconcave.
3.149 When 𝜌 ≥ 1, the function
≿ℎ (𝑎) = { 𝑥 ∈ 𝑆 : ℎ(x) ≥ 𝑎 }
𝑓ˆ(𝑥) + 𝑏
= {𝑥 ∈ 𝑆 : ≥ 𝑎}
𝑔ˆ(𝑥) + 𝑐
= { 𝑥 ∈ ℜ𝑛 : 𝑓ˆ(x) + 𝑏 ≥ 𝑎ˆ
+ 𝑔(x) + 𝑎𝑐 }
= { 𝑥 ∈ ℜ𝑛+ : 𝑓ˆ(x) − 𝑎ˆ
𝑔 (x) ≥ 𝑏 − 𝑎𝑐 }
which is a halfspace in 𝑋 and therefore convex. Similarly, the lower contour set
≾ℎ (𝑎) = { 𝑥 ∈ 𝑆 : ℎ(x) ≥ 𝑎 }
is also a halfspace and hence convex. Therefore ℎ is both quasiconcave and quasiconvex.
3.152 For 𝑎 ≤ 0
≿(𝑎) = { 𝑥 ∈ 𝑆 : ℎ(x) ≥ 0 } = 𝑆
≿ℎ (𝑎) = { 𝑥 ∈ 𝑆 : ℎ(x) ≥ 𝑎 }
𝑓 (x)
= {𝑥 ∈ 𝑆 : ≥ 𝑎}
𝑔(x)
= { 𝑥 ∈ 𝑆 : 𝑓 (x) ≥ 𝑎𝑔(x) }
= { 𝑥 ∈ 𝑆 : 𝑓 (x) − 𝑎𝑔(x) ≥ 0 }
is convex since 𝑓 − 𝑎𝑔 = 𝑓 + 𝑎(−𝑔) is concave (Exercises 3.124 and 3.131). Since ≿ℎ (𝑎)
is convex for every 𝑎, ℎ is quasiconcave.
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3.153
𝑓 (x)
ℎ(x) =
𝑔ˆ(x)
where 𝑔ˆ = 1/𝑔 is positive and convex by Exercise 3.135. By the previous exercise, ℎ is
quasiconcave.
3.154 Let 𝐹 = log 𝑓 . If 𝐹 is concave, 𝑓 (x) = 𝑒𝐹 (x) is an increasing function of
(quasi)concave function, and hence is quasiconcave (Exercise 3.148).
3.155 Let
𝑛
∑
𝐹 (x) = log 𝑓 (x) = 𝛼𝑖 log 𝑓𝑖 (x)
𝑖=1
𝑓 (x1 , 𝜽 1 ) = 𝑣(𝜽 1 )
𝑓 (x2 , 𝜽 2 ) = 𝑣(𝜽 2 )
¯ = 𝑣(𝜽)
𝑓 (x̄, 𝜽) ¯
Since 𝑓 is convex in 𝜽
¯ = 𝑓 (x̄, 𝜽)
𝑣(𝜽) ¯
= 𝑓 (x̄, 𝛼𝜽 1 + (1 − 𝛼)𝜽 2 )
≤ 𝛼𝑓 (x̄, 𝜽 1 ) + (1 − 𝛼)𝑓 (x∗ , 𝜽2 )
≤ 𝛼𝑓 (x1 , 𝜽1 ) + (1 − 𝛼)𝑓 (x2 , 𝜽 2 )
= 𝛼𝑣(𝜽 1 ) + (1 − 𝛼)𝑣(𝜽 2 )
𝑣 is convex.
3.157 Assume to the contrary that x1 and x2 are distinct optimal solutions, that is
x1 , x2 ∈ 𝜑(𝜽), x1 =
∕ x2 , for some 𝜽 ∈ Θ∗ , so that
Let x̄ = 𝛼x1 + (1 − 𝛼)x2 for 𝛼 ∈ (0, 1). Since 𝐺(𝜽) is convex, x̄ is feasible. Since 𝑓 is
strictly quasiconcave
where
∞
∑
𝑈 (x) = 𝛽 𝑡 𝑓 (𝑥𝑡 , 𝑥𝑡+1 )
𝑡=0
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and
Since an optimal policy exists (Exercise 2.125), the maximum is attained and
and therefore
Similarly
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The function
In particular, we have
𝑓 (x∗ , y∗ ) ≤ 𝑣 ≤ 𝑓 (x∗ , y∗ )
Then
and therefore
That is
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𝑓 (𝑡𝑥) = 𝑡𝑎 𝑓 (𝑥)
Letting 𝑥 = 1
𝑓 (𝑡) = 𝑡𝑎 𝑓 (1)
3.165 Suppose that x∗ minimizes the cost of producing output 𝑦 at prices w. That is
It follows that
for every 𝑡 > 0, verifying that x∗ minimizes the cost of producing 𝑦 at prices 𝑡w.
Therefore
𝑓 (𝑦x∗ ) = 𝑦𝑓 (x∗ ) = 𝑦
Suppose that
w𝑇 x′ < w𝑇 (𝑦x∗ )
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Since 𝑓 is homogeneous
( )
x′ 1
𝑓 = 𝑓 (x′ ) = 1
𝑦 𝑦
Therefore, x′ is a lower cost method of producing one unit of output, contradicting the
definition of x∗ . We conclude that
𝑐(w, 𝑦) = 𝑦𝑐(w, 1)
𝑐(w, 𝑦) is homogeneous of degree one in 𝑦.
3.167 If the consumer’s demand is invariant to proportionate changes in all prices and
income, so also will the derived utility. More formally, suppose that x∗ maximizes
utility at prices p and income 𝑚, that is
x∗ ≿ x for every x ∈ 𝑋(p, 𝑚)
Then
𝑣(p, 𝑚) = 𝑢(x∗ )
Since 𝑋(𝑡p, 𝑡𝑚) = 𝑋(p, 𝑚)
x∗ ≿ x for every x ∈ 𝑋(𝑡p, 𝑡𝑚)
and
𝑣(𝑡p, 𝑡𝑚) = 𝑢(x∗ ) = 𝑣(p, 𝑚)
3.168 Assume 𝑓 is homogeneous of degree one, so that
𝑓 (𝑡x) = 𝑡𝑓 (x) for every 𝑡 > 0
Let (x, 𝑦) ∈ epi 𝑓 , so that
𝑓 (x) ≤ 𝑦
For any 𝑡 > 0
𝑓 (𝑡x) = 𝑡𝑓 (x) ≤ 𝑡𝑦
which implies that (𝑡x, 𝑡𝑦) ∈ epi 𝑓 . Therefore epi 𝑓 is a cone.
Conversely assume epi 𝑓 is a cone. Let x ∈ 𝑆 and define 𝑦 = 𝑓 (x). Then (x, 𝑦) ∈ epi 𝑓
and therefore (𝑡x, 𝑡𝑦) ∈ epi 𝑓 so
𝑓 (𝑡x) ≤ 𝑡𝑦
Now suppose to the contrary that
𝑓 (𝑡x) = 𝑧 < 𝑡𝑦 = 𝑡𝑓 (x) (3.58)
Then (𝑡x, 𝑧) ∈ epi 𝑓 . Since epi 𝑓 is a cone, we must have (x, 𝑧/𝑡) ∈ epi 𝑓 so that
𝑧
𝑓 (x) ≤
𝑡
and
𝑡𝑓 (x) ≤ 𝑧 = 𝑓 (𝑡x)
contradicting (3.58). We conclude that
𝑓 (𝑡x) = 𝑡𝑓 (x) for every 𝑡 > 0
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3.172 Continuity is a necessary and sufficient condition for the existence of a utility
function representing ≿ (Remark 2.9).
Suppose 𝑢 represents the homothetic preference relation ≿. For any x1 , x2 ∈ 𝑆
is increasing.
3.174 Assume x1 , x2 ∈ 𝑆 with
ℎ(x1 ) = ℎ(x2 )
Since ℎ is homogeneous
𝑔(𝛼) = 𝑓 (𝛼x0 )
and therefore
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3.176 Let 𝑓 be the production function. If 𝑓 is homothetic, there exists (Exercise 3.175)
a linearly homogeneous function ℎ and strictly increasing function 𝑔 such that 𝑓 = 𝑔 ∘ℎ.
by Exercise 3.166.
3.177 Let 𝑓 : 𝑆 → ℜ be positive, strictly increasing, homothetic and quasiconcave. By
Exercise 3.175, there exists a linearly homogeneous function ℎ : 𝑆 → ℜ and strictly
increasing function 𝑔 ∈ 𝐹 (𝑅) such that 𝑓 = 𝑔 ∘ ℎ. ℎ = 𝑔 −1 ∘ 𝑓 is positive, quasiconcave
(Exercise 3.148) and homogeneous of degree one. By Proposition 3.12, ℎ is concave
and therefore 𝑓 = 𝑔 ∘ ℎ is concavifiable.
3.178 Since 𝐻𝑓 (𝑐) is a supporting hyperplane to 𝑆 at x0 , then
𝑓 (x0 ) = 𝑐
and either
or
Since y ∈ int 𝐴, y𝛼 ∈ 𝐴 for 𝛼 sufficiently small. That is, there exists some 𝛼 such that
y𝛼 is feasible and y𝛼 ≻ y∗ , contradicting the optimality of y∗ .
3.180 For notational simplicity, let 𝑓 be the linear functional which separates 𝐴 and 𝐵
in Example 3.77. 𝑓 (y) measure the cost of the plan y = (ℎ, 𝑞), that is 𝑓 (y) = 𝑤ℎ + 𝑝𝑞.
Assume to the contrary there exists a preferred lifestyle in 𝑋, that is there exists some
y = (ℎ, 𝑞) ∈ 𝑋 such that y ≻ y∗ = (ℎ∗ , 𝑞 ∗ ). Since y ∈ 𝐵, 𝑓 (y) ≥ 𝑓 (y∗ ) by (3.29). On
the other hand, y ∈ 𝑋 which implies that 𝑓 (y) ≤ 𝑓 (y∗ ). Consequently, 𝑓 (y) = 𝑓 (y∗ ).
By continuity, there exists some 𝛼 < 1 such that 𝛼y ≻ y∗ which implies that 𝛼y ∈ 𝐵.
By linearity
contrary to (3.29). This contradiction establishes that y∗ is the best choice in budget
set 𝑋.
3.181 By Proposition 3.7, epi 𝑓 is a convex set in 𝑋 × ℜ with (x0 , 𝑓 (x0 )) a point on
its boundary. By Corollary 3.2.2 of the Separating Hyperplane Theorem, there exists
linear a functional 𝜑 ∈ (𝑋 × ℜ)′ such that
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𝜑(x, 𝑦) = −𝑔(x) + 𝛼𝑦
The assumption that x0 ∈ int 𝑆 ensures that 𝛼 > 0 and we can normalize so that
𝛼 = 1. Substituting in (3.59)
for every x ∈ 𝑆.
3.182 By Exercise 3.72, there exists a unique point x0 ∈ 𝑆 such that
and therefore
Furthermore
2
𝑓 (x0 ) − 𝑓 (y) = 𝑓 (x0 − y) = (x0 − y)𝑇 (x0 − y) = ∥x0 − y∥ > 0
A fortiori
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3.185 1. 𝑓 (𝑆) ⊆ ℜ.
2. 𝑓 (𝑆) is convex and hence an interval (Exercise 1.160.
3. 𝑓 (𝑆) is open in ℜ (Proposition 3.2).
3.186 𝑆 is nonempty and convex and 0 ∈ / 𝑆. (Otherwise, there exists x ∈ 𝐴 and y ∈ 𝐵
such that 0 = y + (−x) which implies that x = y contradicting the assumption that
𝐴 ∩ 𝐵 = ∅.) Thus there exists a continuous linear functional 𝑓 ∈ 𝑋 ∗ such that
so that
By Exercise 3.185, 𝑓 (int 𝐴) is an open interval in (−∞, 𝑐], hence 𝑓 (int 𝐴) ⊆ (−∞, 𝑐),
so that 𝑓 (x) < 𝑐 for every x ∈ int 𝐴. Similarly, 𝑓 (int 𝐵) > 𝑐 and
3.187 Since int 𝐴 ∩ 𝐵 = ∅, int 𝐴 and 𝐵 can be separated. That is, there exists a
continuous linear functional 𝑓 ∈ 𝑋 ∗ and a number 𝑐 such that
since
Conversely, suppose that 𝐴 and 𝐵 can be separated. That is, there exists 𝑓 ∈ 𝑋 ∗ such
that
Then 𝑓 (int 𝐴) is an open interval in [𝑐, ∞), which is disjoint from the interval 𝑓 (𝐵) ⊆
(−∞, 𝑐]. This implies that int 𝐴 ∩ 𝐵 = ∅.
3.188 Since x0 ∈ b(𝑆), {x0 } ∩ int 𝑆 = ∅ and int 𝑆 ∕= ∅. By Corollary 3.2.1, {x0 } and
𝑆 can be separated, that is there exist 𝑓 ∈ 𝑋 ∗ such that
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𝑓 (𝜆x) ≥ 𝑐
or
3.190 First note that 0 ∈ 𝑍 and therefore 𝑓 (0) = 0 ≤ 𝑐 so that 𝑐 ≥ 0. Suppose that
there exists some z ∈ 𝑍 for which 𝑓 (z) = 𝜖 ∕= 0. By linearity, this implies
2𝑐 2𝑐
𝑓( z) = 𝑓 (z) = 2𝑐 > 𝑐
𝜖 𝜖
which contradicts the requirement
By Exercise 3.190
and therefore
Since int 𝐴 ∕= ∅, there exists some x ∈ int 𝐴 with 𝑓 (x) < 𝑐. Hence 𝐴 ⊈ 𝑓 −1 (𝑐) = 𝐻𝑓 (𝑐).
3.193 Follows directly from the basic separation theorem, since 𝐴 = int 𝐴 and 𝐵 =
int 𝐵.
3.194 Let 𝑆 = 𝐵 − 𝐴. Then
1. 𝑆 is a nonempty, closed, convex set (Exercise 1.203).
2. 0 ∈
/ 𝑆.
There exists a continuous linear functional 𝑓 ∈ 𝑋 ∗ such that
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or
𝑓 (x) + 𝑐 ≤ 𝑓 (y)
and
Conversely, assume that 𝐴 and 𝐵 can be strongly separated. That is, there exists
a continuous linear functional 𝑓 ∈ 𝑋 ∗ and number 𝜖 > 0 such that
𝑓 (x) ≤ 𝑐 − 𝜖 < 𝑐 + 𝜖 ≤ 𝑓 (y) for every x ∈ 𝐴, y ∈ 𝐵
Let 𝑈 = { 𝑥 ∈ 𝑋 : ∣𝑓 (𝑥)∣ < 𝜖 }. 𝑈 is a convex neighborhood of 0 such that
(𝐴 + 𝑈 ) ∩ 𝐵 = ∅.
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∥x + (−u) − y∥ = ∥x − y − u∥ ≥ ∥x − y∥ − ∥u∥
so that
𝐴 + 𝐵𝜖 ∩ 𝐵 = ∅
3.198 Take 𝐴 = {y} and 𝐵 = 𝑀 in Proposition 3.14. There exists 𝑓 ∈ 𝑋 ∗ such that
By Corollary 3.2.3, 𝑐 = 0.
3.199 1. Consider the set
𝜑(e0 ) > 0
𝜑(z) = 0 for every z ∈ 𝑍
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and
𝑚
∑
𝜆𝑗 𝑐𝑗 > 0
𝑗=1
and
𝑚
∑ 𝑚
∑
𝜆𝑗 𝑔𝑗 = 0 =⇒ 𝜆𝑗 𝑐𝑗 = 0
𝑗=1 𝑗=1
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ˆ = { x ∈ 𝐾 : ∥x∥ = 1 } is
3.202 The set 𝐾 1
There exists 𝑦 such that 𝑦 > 𝑔(0) and therefore (0, 𝑦) ∈ int 𝐴 and 𝜑(0, 𝑦) > 0.
Therefore
1
𝜑(0, 1) = 𝜑(0, 1) > 0
𝑦
4. Let 𝑓 ∈ 𝑋 ∗ be defined by
1
𝑓 (x) = − 𝜑(x, 0)
𝑐
where 𝑐 = 𝜑(0, 1). Since
𝜑(x, 0) = 𝜑(x, 𝑦) − 𝜑(0, 𝑦)
= 𝜑(x, 𝑦) − 𝑐𝑦
1 1
𝑓 (x) = − (𝜑(x, 𝑦) − 𝑐𝑦) = − 𝜑(x, 𝑦) + 𝑦
𝑐 𝑐
for every 𝑦 ∈ ℜ
5. For every x ∈ 𝑍
1
𝑓 (x) = − 𝜑(x, 𝑓0 (x)) + 𝑓0 (x)
𝑐
= 𝑓0 (x)
since 𝜑(x, 𝑓0 (x)) = 0 for every x ∈ 𝑍. Thus 𝑓 is an extension of 𝑓0 .
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𝑓 (x∗ ) = 𝑐
That is 𝑓 is maximized at x∗ .
Version 1 By the previous exercise, 𝑓 achieves its maximum at an extreme point.
That is, there exists an extreme point x0 ∈ 𝑆 such that
𝑓 (x0 ) = 𝑐
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On the other hand, by Exercise 3.16, 𝑓 attains its maximum at an extreme point of 𝑆.
That is, there exists x1 ∈ 𝑆ˆ such that
𝑓 (x1 ) ≥ 𝑓 (x) for every x ∈ 𝑆
In particular
𝑓 (x1 ) ≥ 𝑓 (x0 )
since x0 ∈ 𝑆ˆ ⊂ 𝑆. This contradicts (3.64) since x1 ∈ 𝑆.
ˆ
3.210 1. (a) 𝑃 is compact and convex, since it is the product of compact, convex
sets (Proposition 1.2, Exercise 1.165).
∑𝑛 ∑𝑛
(b) Since x ∈ 𝑖=1 conv 𝑆𝑖 , there exist x𝑖 ∈ conv 𝑆𝑖 such that x = 𝑖=1 x𝑖 .
(x1 , x2 , . . . , x𝑛 ) ∈ 𝑃 (x) so that 𝑃 (x) ∕= ∅.
(c) By the Krein-Millman theorem (or Exercise 3.207), 𝑃 (x) has an extreme
point z = (z1 , z2 , . . . , z𝑛 ) such that
∙ z𝑖 ∈ conv 𝑆𝑖 for every 𝑖
∑𝑛
∙ 𝑖=1 z𝑖 = x.
since z ∈ 𝑃 (x).
2. (a) Exercise 1.176
(b) Since 𝑙 > 𝑚 = dim 𝑋, the vectors y1 , y2 , . . . , y𝑙 are linearly dependent
(Exercise 1.143). Consequently, there exists numbers 𝛼′1 , 𝛼′2 , . . . , 𝛼′𝑙 , not all
zero, such that
𝛼′1 y1 + 𝛼′2 y2 + ⋅ ⋅ ⋅ + 𝛼′𝑙 y𝑙 = 0
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3
conv 𝑆2 (0, 2.5)
2
(.5, 2)
1 P(x)
0 1 2 3 4
conv 𝑆1
𝑆˜𝑖 = { x𝑖𝑗 : 𝑗 = 1, 2, . . . , 𝑙𝑖 }
Then
𝑛
∑
x= x𝑖 , x𝑖 ∈ conv 𝑆˜𝑖
𝑖=1
∑ ∑˜
That is, x ∈ conv 𝑆˜𝑖 = conv 𝑆𝑖 . Moreover, the sets 𝑆𝑖 are compact (in fact
finite). By the previous exercise, there exists 𝑛 points z𝑖 ∈ 𝑆˜𝑖 such that
𝑛
∑
x= z𝑖 , z𝑖 ∈ conv 𝑆˜𝑖
𝑖=1
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Clearly 𝑃 ⊆ 𝑆. To show that 𝑆 ⊆ 𝑃 , assume not. That is, assume that there
exists y ∈ 𝑆 ∖𝑃 and let x ∈ ri 𝑃 . (ri 𝑃 is nonempty by exercise 1.229). Since 𝑃 is
closed (Exercise 1.227), there exists a some 𝛼 such that x̄ = 𝛼x+(1−𝛼)y belongs
to the relative boundary of 𝑃 , and there exists some 𝑖 such that x̄ ∈ 𝐹𝑖 ⊆ 𝐻𝑖 .
Let 𝐻𝑖+ = { x ∈ 𝑋 : 𝑔𝑖 (x) ≤ 𝑐𝑖 } denote the closed half-space bounded by 𝐻𝑖 and
containing 𝑃 . 𝐻𝑖 is a face of 𝐻𝑖+ containing x̄ = 𝛼x+(1−𝛼)y, which implies that
x, y ∈ 𝐻𝑖 . This in turn implies that x ∈ 𝐹𝑖 , which contradicts the assumption
that x ∈ ri 𝑃 . We conclude that 𝑆 = 𝑃 .
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𝑓 (y) > 𝑐
𝑓 (x) < 𝑐 for every x ∈ 𝑆
Since 𝑆 is a cone, 0 ∈ 𝑆 and 𝑓 (0) = 0 < 𝑐. Since 𝛼𝑆 = 𝑆 for every 𝛼 > 0 then
y∈ / 𝑆 ∗∗
/ 𝑆 =⇒ y ∈
𝐾 = cone {𝑔1 , 𝑔2 , . . . , 𝑔𝑚 }
∑ 𝑚
= { 𝑔 ∈ 𝑋∗ : 𝑔 = 𝜆𝑗 𝑔𝑗 , 𝜆𝑗 ≥ 0 }
𝑗=1
Since 𝜆𝑗 can be made arbitrarily large, this last inequality implies that
𝜑(𝑔𝑗 ) ≤ 0 𝑗 = 1, 2, . . . , 𝑚
Since
𝜑(𝑔𝑗 ) = 𝑔𝑗 (x) ≤ 0
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x ∈ 𝑆. By hypothesis
𝑓 (x) = 𝜑(𝑓 ) ≤ 0
contradicting the conclusion that 𝜑(𝑓 ) > 0. This contradiction establishes that 𝑓 ∈ 𝐾,
that is
𝑚
∑
𝑓 (𝑥) = 𝜆𝑗 𝑔𝑗 (𝑥), 𝜆𝑗 ≥ 0
𝑗=1
3.224 Let a1 , a2 , . . . , a𝑚 denote the rows of 𝐴 and define the linear functional 𝑓, 𝑔1 , 𝑔2 , . . . , 𝑔𝑚
by
𝑓 (x) = cx
𝑔𝑗 (x) = a𝑗 x 𝑗 = 1, 2, . . . , 𝑚
𝑆 = { x ∈ 𝑋 : 𝑔𝑗 (x) ≤ 0, 𝑗 = 1, 2, . . . , 𝑚 }
𝑚
∑
𝑓 (x) = 𝑦𝑗 𝑔𝑗 (x)
𝑗=1
or
𝑚
∑
c= 𝑦𝑗 a𝑗 = 𝐴𝑇 y
𝑗=1
Then
𝐴x ≤ 0 =⇒ a𝑗 x ≤ 0 for every 𝑗 =⇒ cx ≤ 0
3.225 Let 𝑁 = ℜ𝑛+ denote the positive orthant of ℜ𝑛 . 𝑁 is a convex set (indeed cone)
with a nonempty interior. By Corollary 3.2.1, there exists a hyperplane 𝐻p (𝑐) such
that
p𝑇 x ≤ 𝑐 ≤ py for every x ∈ 𝑆, y ∈ 𝑁
Since 0 ∈ 𝑁
p0 = 0 ≥ 𝑐
p𝑇 x ≤ 𝑐 ≤ 0 for every 𝑥 ∈ 𝑆
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p𝑇 x ≤ 0 for every x ∈ 𝑆
or
From the previous exercise, there exists a hyperplane with nonnegative normal p ≩ 0
such that
p𝑇 x ≤ 0 for every x ∈ 𝑆 −
p𝑇 x ≥ 0 for every x ∈ 𝑆
and therefore
0 ∈ 𝑆 = ≿(x∗ ) − x∗ ∕= ∅
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Assume to the contrary that 𝑆 ∩ int ℜ𝑙− ∕= ∅. That is, there exists some z ∈ 𝑆
with z < 0. This implies that there exists some allocation (x1 , x2 , . . . , x𝑛 ) such
that
∑
z= x𝑖 − x∗ < 0
𝑖
and x𝑖 ≿ x∗𝑖for every 𝑖 ∈ 𝑁 . Distribute z equally to all the consumers. That is,
consider the allocation
y𝑖 = x𝑖 + z/𝑛
𝑆 ∩ int ℜ𝑙− ∕= ∅
p∗ z ≥ 0 for every z ∈ 𝑆
That is
y𝑗 = (1 − 𝜖)x𝑗
𝜖
y𝑖 = x∗𝑖 + x𝑗 , 𝑖 ∕= 𝑗
𝑛−1
By continuity, there exists some 𝜖 > 0 such that y𝑗 = (1 − 𝜖)x𝑗 ≻𝑗 x∗𝑗 . By
monotonicity, y𝑖 ≻𝑖 x∗𝑖 for every 𝑖 ∕= 𝑗. We have constructed ∑ an allocation y
which is strictly preferred to x∗ by all the agents, so that y = 𝑖 y𝑖 ∈ ≿(x∗ ).
(3.65) implies that
py ≥ px∗
That is
⎛ ⎞ ⎛ ⎞ ⎛ ⎞
∑( 𝜖
) ∑ ∑
p ⎝(1 − 𝜖)x𝑗 + x∗𝑖 + x𝑗 ⎠ = p ⎝x𝑗 + x∗𝑖 ⎠ ≥ p ⎝x∗𝑗 + x∗𝑖 ⎠
𝑛−1
𝑖∕=𝑗 𝑖∕=𝑗 𝑖∕=𝑗
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so that
∑ ∑
𝑡𝑖 = p∗ (x∗𝑖 − w𝑖 ) = 0
𝑖 𝑖
∗
Furthermore, for 𝑚𝑖 = 𝑝 w𝑖 + 𝑡𝑖 , (3.68) implies
𝑋(p∗ , 𝑚𝑖 ) = { x𝑖 : p∗ x𝑖 ≤ p∗ w𝑖 + 𝑡𝑖 } = { x𝑖 : p∗ x𝑖 ≤ p∗ x∗𝑖 } = 𝑋(p∗ , p∗ x∗𝑖 )
for each consumer 𝑖. Using (3.67) we conclude that
x∗𝑖 ≿𝑖 x𝑖 for every x𝑖 ∈ 𝑋(p∗ , 𝑚𝑖 )
for every agent 𝑖. (p∗ , x∗ ) is a competitive equilibrium where each consumer’s after-tax
wealth is
𝑚𝑖 = pw𝑖 + 𝑡𝑖
3.230 Apply Exercise 3.202 with 𝐾 = ℜ𝑛+ .
3.231
𝐾 ∗ = { p : p𝑇 x ≤ 0 for every x ∈ 𝐾 }
No such hyperplane exists if and only if 𝐾 ∗ ∩ ℜ𝑛++ = ∅. Assume this is the case. By
Exercise 3.225, there exists x ≩ 0 such that
xp = p𝑇 x ≤ 0 for every p ∈ 𝐾 ∗
In other words, x ∈ 𝐾 ∗∗ . By the duality theorem 𝐾 ∗∗ = 𝐾 which implies that x ∈ 𝐾
as well as ℜ𝑛+ , contrary to the hypothesis that 𝐾 ∩ ℜ𝑛+ = {0}. This contradiction
establishes that 𝐾 ∗ ∩ ℜ𝑛++ ∕= ∅.
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3.232 Given a set of financial assets with prices p and payoff matrix 𝑅, let
𝑍 = { (−px, 𝑅𝑥) : x ∈ ℜ𝑛 }
𝑍 is the set of all possible (cost, payoff) pairs. It is a subspace of ℜ𝑆+1 . Let 𝑁 be the
nonnegative orthant in ℜ𝑆+1 . The no arbitrage condition
𝑅x ≥ 0 =⇒ p𝑇 x ≥ 0
implies that 𝑍 ∩ 𝑁 = {0}. By Exercise 3.230, there exists a hyperplane with positive
normal 𝜆 = 𝜆0 , 𝜆1 , . . . , 𝜆𝑆 such that
𝜆z = 0 for every z ∈ 𝑍
𝜆z > 0 for every z ∈ ℜ𝑆+1
+ ∖ {0}
That is
−𝜆0 px + 𝜆𝑅x = 0 for every x ∈ ℜ𝑛
or
p𝑇 x = 𝜆/𝜆0 𝑅x for every x ∈ ℜ𝑛
𝜆/𝜆0 is required state price vector.
Conversely, if a state price vector exists
𝑆
∑
𝑝𝑎 = 𝑅𝑎𝑠 𝜋𝑠
𝑎=1
then clearly
𝑅x ≥ 0 =⇒ p𝑇 x ≥ 0
No arbitrage portfolios exist.
3.233 Apply the Farkas lemma to the system
−𝐴x ≤ 0
−c𝑇 x > 0
3.234 The inequality system 𝐴𝑇 y ≥ c has a nonnegative solution if and only if the
corresponding system of equations
𝐴𝑇 y − z = c
has a nonnegative solution y ∈ ℜ𝑚 𝑛
+ , z ∈ ℜ+ . This is equivalent to the system
( )
′ y
𝐵 =c (3.69)
z
where 𝐵 ′ = (𝐴𝑇 , −𝐼𝑛 ) and 𝐼𝑛 is the 𝑛 × 𝑛 identity matrix. By the Farkas lemma,
system (3.69) has no solution if and only if the system
𝐵x ≤ 0 and c𝑇 x > 0
( )
𝐴
has a solution x ∈ ℜ𝑛 . Since 𝐵 = , 𝐵x ≤ 0 implies
−𝐼
𝐴x ≤ 0 and − 𝐼x ≤ 0
and the latter inequality implies x ∈ ℜ𝑛+ . Thus we have established that the system
𝐴𝑇 y ≥ c has no nonnegative solution if and only if
𝐴x ≤ 0 and c𝑇 x > 0 for some x ∈ ℜ𝑛+
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3.235 Assume system I has a solution, that is there exists x̂ ∈ ℜ𝑛+ such that
𝐴x = 0, cx = 1, x ≥ 0 (3.70)
which is equivalent to
x′ 𝐴𝑇 = 0, xc = 1, x ≥ 0 (3.71)
Suppose y ∈ ℜ𝑚 satisfies
𝐴y ≥ c
Multiplying by x ≥ 0 gives
x′ 𝐴𝑇 y ≥ xc
0≥1
𝐵x = b (3.72)
( ) ( )
−𝐴 0
where 𝐵 = is (𝑚 + 1) × 𝑛 and b = ∈ ℜ𝑚+1 . If (3.72) has no solution,
c 1
there exists (by the Farkas alternative) some z ∈ ℜ𝑚+1 such that
𝐵 ′ z ≤ 0 and bz > 0
𝐴𝑇 y ≥ c
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3.236 For every linear functional 𝑔𝑗 , there exists a vector a ∈ ℜ𝑛 such that
𝑔𝑗 (x) = a𝑗 ẋ
(Proposition 3.11). Let 𝐴𝑇 be the matrix whose rows are a𝑗 , that is
⎛ 1⎞
a
⎜ a2 ⎟
𝐴=⎜ ⎟
⎝. . .⎠
a𝑚
Then, the system of inequalities (3.31) is
𝐴𝑇 x ≥ c
where c = (𝑐1 , 𝑐2 , . . . , 𝑐𝑚 ). By the preceding exercise, this system is consistent if and
only there is no solution to the system
𝐴𝜆 = 0 c𝜆 > 0 𝜆≥0
Now
𝑚
∑
𝐴𝜆 = 0 ⇐⇒ 𝜆𝑗 𝑔𝑖 = 0 𝑖 = 1, 2, . . . , 𝑚
𝑗=1
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𝑆 = { x : 𝑔𝑗 (x) = a𝑖 x = 0, 𝑗 = 1, 2, . . . , 𝑚 }
𝐴𝑥 = 0
has no solution satisfying the constraint c𝑇 x > 0. By Exercise 3.20, there exists scalars
𝑦1 , 𝑦2 , . . . , 𝑦𝑚 such that
𝑚
∑
𝑓 (x)= 𝑦𝑗 𝑔𝑗 (x)
𝑗=1
or
𝑚
∑
c= 𝑦𝑗 𝑎𝑗 = 𝐴𝑇 y
𝑗=1
𝐴𝑇 y = c
c𝑇 x = 𝑦𝐴𝑥 = 0
for all 𝑥 such that 𝐴𝑥 = 0 and therefore there is no solution satisfying the constraint
c𝑇 x = 1.
3.239 Let
𝑆 = { z : z = 𝐴x, x ∈ ℜ }
𝑆 ∩ ℜ𝑚
++ = ∅
yz = 0 for every z ∈ 𝑆
That is
𝐴𝑇 y = 0
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3.240 We have already shown (Exercise 3.239) that the alternatives I and II are mutu-
ally incompatible. If Gordan’s system II
𝐴𝑇 y = 0
has a semipositive solution y ≩ 0, then we can normalize y such that 1y = 1 and the
system
𝐴𝑇 y = 0
1y = 1
𝐵′y = c
( )
′ 𝐴𝑇
where 𝐵 = and c = (0, 1) = (0, 0, . . . , 0, 1), 0 ∈ ℜ𝑚 , is the (𝑚 + 1)st unit
1
vector has no solution y ≥ 0. By the Farkas lemma, there exists z ∈ ℜ𝑛+1 such that
𝐵z ≥ 0
cz < 0
Decompose z into z = (x, 𝑥) with x ∈ ℜ𝑛 . The second inequality implies that 𝑥 < 0
since
𝐵z = (𝐴, 1)(x, 𝑥) = 𝐴x + 1𝑥 ≥ 0
or
𝐴x ≥ −1𝑥 > 0
𝐴 = (a1 , a2 , . . . , a𝑚 )
be the matrix whose columns are a𝑗 . To say that 𝑆 contains no positive vector means
that the system
𝐴x > 0
𝐴𝑇 y = 0
that is
a𝑗 y = ya𝑗 = 0, 𝑗 = 1, 2, . . . , 𝑚
so that y ∈ 𝑆 ⊥ .
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yz = 0 for every z ∈ 𝑆
That is
y𝐴x = 0 for every x ∈ ℜ𝑛
Letting x = 𝐴𝑇 y, we have y𝐴𝐴𝑇 y = 0 which implies that
𝐴𝑇 y = 0
System II has a solution y.
Conversely, assume that x̂ is a solution to I. Suppose to the contrary there also exists
a solution ŷ to II. Then, since 𝐴x̂ ≩ 0 and ŷ > 0, we must have ŷ𝐴x̂ = x̂𝐴𝑇 ŷ > 0.
On the other hand, 𝐴𝑇 ŷ = 0 which implies x̂𝐴𝑇 ŷ = 0, a contradiction. Hence, we
conclude that II cannot have a solution if I has a solution.
3.244 The inequality system 𝐴𝑇 y ≤ 0 has a nonnegative solution if and only if the
corresponding system of equations
𝐴𝑇 y + z = 0
has a nonnegative solution y ∈ ℜ𝑚 𝑛
+ , z ∈ ℜ+ . This is equivalent to the system
( )
′ y
𝐵 =0 (3.75)
z
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𝐴y ≤ 0, y ≩ 0
−𝐴y ≥ 0
1y ≥ 1
( )
𝑚 ′ −𝐴
has no solution y ∈ ℜ+ . Defining 𝐵 = , the latter can be written as
1′
𝐵 ′ y ≥ −e𝑚+1 (3.76)
𝐵z ≤ 0, −e𝑚+1 z > 0
𝐴𝑇 x ≥ 1𝑧 > 0
x𝐴𝑇 y = y′ 𝐴𝑇 x ≤ 0
𝐴𝑇 x ≤ 0
𝐵1x > 0
𝐶1x = 0
Either
Case 1 𝐶 1 x ≩ 0 has no solution and the result is proved or
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x̄ = 𝛼x + x′
where
−b𝑗 x
𝛼 > max
b𝑗 x′
where b𝑗 is the 𝑗th row of 𝐵 1 . 𝛼 is chosen so that
𝛼𝐵 1 x > 𝐵 1 x′
By direct computation
𝐵 1 x̄ = 𝛼𝐵 1 x + 𝐵 1 x′ > 0
𝐶 1 x̄ = 𝛼𝐶 1 x + 𝐶 1 x′ ≩ 0
𝐵 2 x̄ > 0
𝐶 2 x̄ = 0
Either
Case 1 𝐶 2 x ≩ 0 has no solution and the result is proved or
Case 2 𝐶 2 x ≩ 0 has a solution x′′ .
In the second case, we can repeat the previous procedure, generating another decom-
position 𝐵 3 , 𝐶 3 and so on. At each stage 𝑘, the matrix 𝐵 𝑘 get larger and 𝐶 𝑘 smaller.
The algorithm must terminate before 𝐵 𝑘 equals 𝐴, since we began with the assumption
that 𝐴x > 0 has no solution.
3.247 There are three possible cases to consider.
Case 1: y = 0 is the only solution of 𝐴𝑇 y = 0. Then 𝐴x > 0 has a solution x′ by
Gordan’s theorem and
𝐴x′ + 0 > 0
𝐴0 + y > 0
𝐵x > 0
𝐶x = 0
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𝐴x∗ ≥ 0, x∗ ≥ 0, 𝐴𝑇 y∗ + z∗ = 0, y∗ ≥ 0, z∗ ≥ 0
𝐴x + y > 0
𝐼x∗ + 𝐼z > 0
𝐴𝑇 y ≤ 0
and
x − 𝐴𝑇 y∗ > 0
𝐴x ≥ 0 and 𝐴𝑇 y = 0, y ≥ 0
Assume that 𝐴x > 0 has no solution (Gordan I). Then there exists some 𝑗 such that
(𝐴x∗ )𝑗 = 0 and (3.77) implies that 𝑦𝑗∗ > 0. Therefore y∗ ≩ 0 and solves Gordan II.
Conversely, assume that 𝐴𝑇 y = 0 has no solution y > 0 (Stiemke II). Then, there
exists some 𝑗 such that 𝑦𝑗∗ = 0 and (3.77) implies that (𝐴x∗ )𝑗 > 0). Therefore x∗
solves 𝐴x ≩ 0 (Stiemke I).
3.250 We have already shown that Farkas I and II are mutually inconsistent. Assume
that Farkas system I
𝐴x ≥ 0, c𝑇 x < 0
( )
𝐴
has no solution. Define the (𝑚 + 1) × 𝑛 matrix 𝐵 = . Our assumption is that
−c′
the system
𝐵x ≥ 0
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has no solution with (𝐵x)𝑚+1 = −cx > 0. By Tucker’s theorem, the dual system
𝐵′z = 0
has a solution z ∈ ℜ𝑚+1
+ with z𝑚+1 > 0. Without loss of generality, we can normalize
so that z𝑚+1 = 1. Decompose z into z = (y, 1) with y ∈ ℜ𝑚 ′ 𝑇
+ . Since 𝐵 = (𝐴 , −c),
′
𝐵 z = 0 implies
𝐵 ′ z = (𝐴𝑇 , −c)(y, 1) = 𝐴𝑇 y − c = 0
or
𝐴𝑇 y = c
y ∈ ℜ𝑚
+ solves Farkas II.
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has no solution 𝑦 ∈ ℜ𝑚
+ . If 𝐴 is the 𝑚×n matrix whose rows are a𝑖 , the latter
system can be written as
𝐴𝑇 y = 0
𝐴x > 0 (3.78)
has a solution x̄ ∕= 0.
4. Without loss of generality, we can take ∥x̄∥ = 1. (3.78) implies that
a𝑖 x̄ = x̄a𝑖 > 0
∩𝑚
5. We have shown that for every finite set {a1 , a2 , . . . , a𝑚 } ⊆ 𝑆, 𝑖=1 𝑆a∗𝑖 is non-
empty closed subset of the compact set 𝐵 = {𝑥 ∈ ℜ𝑛 : ∥x∥ = 1}. By the Finite
intersection property (Exercise 1.116)
∩
𝑆a∗ ∕= ∅
a∈𝑆
∩
6. For every p ∈ a∈𝑆 𝑆a∗
pa ≥ 0 for every a ∈ 𝑆
where a𝑗 is the 𝑗th column of 𝐴. The expected payoff to 1 for all possible responses
of player 2 is the vector (p𝐴)′ = 𝐴𝑇 p. The mixed strategy p ensures player 1 a
nonnegative security level provided 𝐴𝑇 p ≥ 0.
Similarly, if 2 adopts the mixed strategy q = (𝑞1 , 𝑞2 , . . . , 𝑞𝑛 ), the expected payoff to 2
if 1 plays his 𝑖 strategy is a𝑖 q where a𝑖 is the 𝑖th row of 𝐴. The expected outcome for
all the possible responses of player 1 is the vector 𝐴q. The mixed strategy q ensures
player 2 a nonpositive security level provided 𝐴q ≤ 0.
By the von Neumann alternative theorem (Exercise 3.245), at least one of these alter-
natives must be true. That is, either
Either I 𝐴𝑇 p > 0, p ≩ 0 for some p ∈ ℜ𝑚
or II 𝐴q ≤ 0, q ≩ 0 for some q ∈ ℜ𝑛
Since p ≩ 0 and q ≩ 0, we can normalize so that p ∈ Δ𝑚−1 and q ∈ Δ𝑛−1 . At least
one of the players has a strategy which guarantees she cannot lose.
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𝑢ˆ(a1 , a2 ) = 𝑢(a1 , a2 ) − 𝑐
with
That is
Either 𝑣1 ≥ 𝑐 or 𝑣2 ≤ 𝑐
𝑣1 ≤ 𝑣2
𝑣1 < 𝑐 < 𝑣2
2. Let 𝑢(p, q) denote the expected outcome when player 1 adopts mixed strategy p
and player 2 plays q. That is
𝑚 ∑
∑ 𝑛
𝑢(p, q) = 𝑝𝑖 𝑞𝑖 𝑎𝑖𝑗
𝑖=1 𝑗=1
Then
∑
𝑣 = 𝑢(p∗ , q∗ ) = max 𝑢(𝑖, q∗ ) ≥ 𝑝𝑖 𝑢(𝑖, q∗ ) = 𝑢(p, q∗ ) for every p ∈ Δ𝑚−1
𝑖
𝑖
Similarly
∑
𝑣 = 𝑢(p∗ , q∗ ) = min 𝑢(p∗ , 𝑗) ≤ 𝑞𝑗 𝑢(p∗ , 𝑗) = 𝑢(p∗ , q) for every q ∈ Δ𝑛−1
𝑗
𝑗
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3.256 By the Minimax theorem, every finite two person zero-sum game has a value.
The previous result shows that this is attained at a Nash equilibrium.
3.257 If player 2 adopts the strategy 𝑡1
Therefore
We conclude that
𝑣1 = max 𝑣1 (p) = 0
p
z ∈ 𝑍 ∩ int ℜ𝑛−
That is, there exists some strategy q ∈ Δ𝑛−1 such that 𝐴q < 0 and therefore
𝑣2 < 0, contrary to the hypothesis.
3. There exists a hyperplane with nonnegative normal separating 𝑍 from ℜ𝑛− (Ex-
ercise 3.227). That is, there exists p∗ ∈ ℜ𝑛+ , p∗ ∕= 0 such that
and therefore
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4. Consequently
𝑓p (z̄) ≤ 0
and therefore
so that
𝑣1 = max 𝑣1 (p) ≤ 0
p
We conclude that
𝑣1 = 0 = 𝑣2
3.259 Consider the game with the same strategies and the payoff function
ˆ(a1 , a2 ) = 𝑢(a1 , a2 ) − 𝑐
𝑢
3.260 Assume that p1 and p2 are both optimal strategies for player 1. Then
In any partition, at most one coalition can have two or more players, and therefore
𝐾
∑
𝑤(𝑆𝑘 ) ≤ 1
𝑘=1
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𝑥1 + 𝑥2 ≥ 1 = 𝑤({1, 2})
𝑥1 + 𝑥3 ≥ 1 = 𝑤({1, 3})
𝑥2 + 𝑥3 ≥ 1 = 𝑤({2, 3})
2(𝑥1 + 𝑥2 + 𝑥3 ) ≥ 3
or
𝑥1 + 𝑥2 + 𝑥3 ≥ 3/2
which implies that x exceeds the sum available. This contradiction establishes
that the core is empty.
Alternatively, observe that the three person majority game is a simple game with
no veto players. By Exercise 1.69, its core is empty.
3.263 Assume that the game (𝑁, 𝑤) is not cohesive. Then there exists a partition
{𝑆1 , 𝑆2 , . . . , 𝑆𝐾 } of 𝑁 such that
𝐾
∑
𝑤(𝑁 ) < 𝑤(𝑆𝑘 )
𝑘=1
∑ 𝐾 ∑
∑ 𝑁
∑
𝑥𝑖 = 𝑥𝑖 ≥ 𝑤(𝑆𝑘 ) > 𝑤(𝑁 )
𝑖∈𝑁 𝑘=1 𝑖∈𝑆𝑘 𝑘=1
which contradicts the assumption that x ∈ core. This establishes that cohesivity is
necessary for the existence of the core.
To show that cohesivity is not sufficient, we observe that the three person majority
game is cohesive, but its core is empty.
3.264 The other balanced families of coalitions in a three player game are
1. ℬ = {𝑁 } with weights
{
1 𝑆=𝑁
𝑤(𝑆) =
0 otherwise
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Weights
{123}, {124}, {34} 1/2, 1/2, 1/2
{12}, {13}, {23}, {4} 1/2, 1/2, 1/2, 1
{123}, {14}, {24}, {3} 1/2, 1/2, 1/2, 1/2
{123}, {14}, {24}, {34} 2/3, 1/3, 1/3, 1/3
{123}, {124}, {134}, {234} 1/3, 1/3, 1/3, 1/3
3.266 Both sides of the expression
∑
e𝑁 = 𝜆𝑆 e𝑆
𝑆∈ℬ
are vectors, with each component corresponding to a particular player. For player 𝑖,
the 𝑖𝑡 ℎ component of e𝑁 is 1 and the 𝑖𝑡 ℎ component of e𝑆 is 1 if 𝑖 ∈ 𝑆 and 0 otherwise.
Therefore, for each player 𝑖, the preceding expression can be written
∑
𝜆𝑆 = 1
𝑆∈ℬ∣𝑆∋𝑖
The condition
∑
𝑔𝑁 = 𝜆𝑆 𝑔𝑆
𝑆∈ℬ
Substituting (3.79)
∑
e𝑁 ẋ = 𝜆𝑆 𝑒𝑆 ẋ
𝑆∈ℬ
3.267 By construction, 𝜇 ≥ 0. If 𝜇 = 0,
∑
𝜆𝑆 𝑔𝑆 − 𝜇𝑔𝑁 = 0
𝑆⊆𝑁
is trivially satisfied. On the other hand, if 𝜇 > 0, we can divide both conditions by 𝜇.)
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3.268 Let (𝑁, 𝑤1 ) and (𝑁, 𝑤2 ) be balanced games. By the Bondareva-Shapley theorem,
they have nonempty cores. Let x1 ∈ core(𝑁, 𝑤1 ) and x2 ∈ core(𝑁, 𝑤2 ). That is,
Adding, we have
which contradicts the assumption that the game is balanced. We conclude that
𝐴 and 𝐵 are disjoint if the game is balanced.
2. (a) Substituting y = (e∅ , 0) in (3.36) gives
(z, 𝑧0 )′ (0, 0) = 0 ≥ 𝑐
e′𝑆 z − 𝑤(𝑆) ≥ 0
that is
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This establishes that z belongs to the core. Hence the core is nonempty.
∑
3.270 1. Let 𝛼 = 𝑤(𝑁 ) − 𝑖∈𝑁 𝑤𝑖 > 0 since (𝑁, 𝑤) is essential. For every 𝑆 ⊆ 𝑁 ,
define
( )
1 ∑
0
𝑤 (𝑆) = 𝑤(𝑆) − 𝑤𝑖
𝛼
𝑖∈𝑆
Then
𝑤0 is 0–1 normalized.
2. Let y ∈ core(𝑁, 𝑤0 ). Then for every 𝑆 ⊆ 𝑁
∑
𝑦𝑖 ≥ 𝑤0 (𝑆) (3.82)
𝑖∈𝑆
∑
𝑦𝑖 = 1 (3.83)
𝑖∈𝑁
core(𝑁, 𝑤) = 𝛼core(𝑁, 𝑤0 ) + w
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core(𝑁, 𝑤) = ∅ ⇐⇒ core(𝑁, 𝑤0 ) = ∅
𝑥𝑖 ≥ 𝑤𝑖 = 0 (3.84)
∑
𝑥𝑖 = 𝑤(𝑁 ) = 1 (3.85)
𝑖∈𝑁
∑
𝑥𝑖 ≥ 𝑤(𝑆) for every 𝑆 ∈ 𝒜 (3.86)
𝑖∈𝑆
(3.84) and (3.85) ensure that x = (𝑥1 , 𝑥2 , . . . , 𝑥𝑛 ) is a mixed strategy for player 1 in the
two-person zero-sum game. Using this mixed strategy, the expected payoff to player I
for any strategy 𝑆 of player II is
∑ ∑ 1
𝑢(x, 𝑆) = 𝑥𝑖 𝑢(𝑖, 𝑆) = 𝑥𝑖
𝑤(𝑆)
𝑖∈𝑁 𝑖∈𝑆
(3.86) implies
∑ 1
𝑢(x, 𝑆) = 𝑥𝑖 ≥ 1 for every 𝑆 ∈ 𝒜
𝑤(𝑆)
𝑖∈𝑆
That is any x ∈ core(𝑁, 𝑤) provides a mixed strategy for player I which ensures a
payoff at least 1. That is
core(𝑁, 𝑤) ∕= ∅ =⇒ 𝛿 ≥ 1
Conversely, if the 𝛿 < 1, there is no mixed strategy for player I which satisfies (3.86) and
consequently no x which satisfies (3.84), (3.85) and (3.86). In other words, core(𝑁, 𝑤) =
∅.
3.272 If 𝛿 is the value of 𝐺, there exists a mixed strategy which will guarantee that II
pays no more than 𝛿. That is, there exists numbers 𝑦𝑆 ≥ 0 for every coalition 𝑆 ∈ 𝒜
such that
∑
𝑦𝑆 = 1
𝑆∈𝒜
and
∑
𝑦𝑆 𝑢(𝑖, 𝑆) ≤ 𝛿 for every 𝑖 ∈ 𝑁
𝑆∈𝒜
that is
∑ 1
𝑦𝑆 ≤𝛿 for every 𝑖 ∈ 𝑁
𝑤(𝑆)
𝑆∈𝒜
𝑆∋𝑖
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or
∑ 𝑦𝑆
≤1 for every 𝑖 ∈ 𝑁 (3.87)
𝛿𝑤(𝑆)
𝑆∈𝒜
𝑆∋𝑖
in (3.87)
∑
𝜆𝑆 ≤ 1
𝑆∈𝒜
𝑆∋𝑖
Augment the collection 𝒜 with the single-player coalitions to form the collection
ℬ = 𝒜 ∪ { {𝑖} : 𝑖 ∈ 𝑁 }
that is
1
1≥ (3.88)
𝛿
If I plays the mixed strategy x̄ = (1/𝑛, 1/𝑛, . . . , 1/𝑛), the payoff is
∑ 1 1
𝑢(x̄, 𝑆) = = > 0 for every 𝑆 ⊆ 𝒜
𝑛𝑤(𝑆) 𝑤(𝑆)
𝑖∈𝑁
𝛿≥1
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𝜆𝑆 𝑔𝑆 (x) ≥ 𝜆𝑆 𝑤(𝑆)
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4.1 Along the demand curve, price and quantity are related according to the equation
𝑝 = 10 − 𝑥
This is called the inverse demand function. Total revenue 𝑅(𝑥) (price times quantity)
is given by
𝑅(𝑥) = 𝑝𝑥
= (10 − 𝑥)𝑥
= 10𝑥 − 𝑥2
= 𝑓 (𝑥)
𝑔(𝑥) = 21 + 4(𝑥 − 3)
At 𝑥 = 3, the price is 7 but the marginal revenue of an additional unit is only 4. The
function 𝑔 decomposes (approximately) the total revenue into two components — the
revenue from the sale of 3 units (21 = 3 × 7) plus the marginal revenue from the sale
of additional units (4(𝑥 − 3)).
4.2 If your answer is 5 per cent, obtained by subtracting the inflation rate from the
growth rate of nominal GDP, you are implicitly using a linear approximation. To see
this, let
𝑝 = price level at the beginning of the year
𝑞 = real GDP at the beginning of the year
𝑑𝑝 = change in prices during year
𝑑𝑞 = change in output during year
We are told that nominal GDP at the end of the year, (𝑝 + 𝑑𝑝)(𝑞 + 𝑑𝑞), equals 1.10
times nominal GDP at the beginning of the year, 𝑝𝑞. That is
Furthermore, the price level at the end of the year, 𝑝 + 𝑑𝑝 equals 1.05 times the price
level of the start of year, 𝑝:
𝑝 + 𝑑𝑝 = 1.05𝑝
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To show how the estimate of 5 per cent involves a linear approximation, we expand the
expression for real GDP at the end of the year.
Dividing by 𝑝𝑞
For small changes, the error term 𝑑𝑝𝑑𝑞/𝑝𝑞 is insignificant, and we can approximate the
growth rate of output according to the sum
and therefore
𝑓 (x0 + x) − 𝑓 (x0 ) − 𝑔(x)
𝜂(x) =
∥x∥
𝜂(x) → 0𝑌 as x → 0𝑋
can be expressed as
lim 𝜂(x) = 0𝑌
x→0𝑋
4.4 Suppose not. That is, there exist two linear maps such that
with
lim 𝜂𝑖 (x) = 0, 𝑖 = 1, 2
x→0
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Subtracting we have
and
𝑔1 (x) − 𝑔2 (x)
lim =0
x→0 ∥x∥
𝑔1 (x) ∕= 𝑔2 (x)
𝑔1 (x) − 𝑔2 (x)
𝜂=
∥x∥
By linearity,
𝑔1 (𝑡x) − 𝑔2 (𝑡x)
= 𝜂 for every ∀𝑡 > 0
∥𝑡x∥
and therefore
𝑔1 (𝑡x) − 𝑔2 (𝑡x)
lim = 𝜂 ∕= 0
𝑡→0 ∥𝑡x∥
𝑓 is continuous.
4.6
4.7
4.8 The approximation error at the point (2, 16) is
𝑓 (2, 16) =8.0000
𝑔(2, 16) =11.3333
Absolute error =-3.3333
Percentage error =-41.6667
Relative error =-4.1667
By contrast, ℎ(2, 16) = 8 = 𝑓 (2, 16). Table 4.1 shows that ℎ gives a good approximation
to 𝑓 in the neighborhood of (2, 16).
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𝑟((1, 2, 3, 4, 5) + (66, 55, 75, 81, 63)) = 𝑟(67, 57, 78, 85, 68)
= (85, 78, 68, 67, 58)
∕= (5, 4, 3, 2, 1) + (81, 75, 67, 63, 55)
To show that 𝑟 is differentiable, consider a particular point, say (66, 55, 75, 81, 63).
Consider the permutation 𝑔 : ℜ𝑛 → ℜ𝑛 defined by
𝑔(𝑥1 , 𝑥2 , . . . , 𝑥5 ) = (𝑥4 , 𝑥3 , 𝑥1 , 𝑥5 , 𝑥2 )
𝑔 is linear and
𝑔(66, 55, 75, 81, 63) = (81, 75, 67, 63, 55) = 𝑟(66, 55, 75, 81, 63)
Furthermore, 𝑔(x) = 𝑟(x) for all x close to (66, 55, 75, 81, 63). Hence, 𝑔(x) approxi-
mates 𝑟(x) in a neighborhood of (66, 55, 75, 81, 63) and so 𝑟 is differentiable at (66, 55, 75, 81, 63).
The choice of (66, 55, 75, 81, 63) was arbitrary, and the argument applies at every x such
that x𝑖 ∕= x𝑗 .
In summary, each application of 𝑟 involves a permutation, although the particular
permutation depends upon the argument, x. However, for any given x0 with x0𝑖 ∕=
x0𝑗 , the same permutation applies to all x in the neighborhood of x0 , so that the
permutation (which is a linear function) is the derivative of 𝑟 at x0 .
4.10 Using (4.3), we have for any x
that is
0 0
⃗ x 𝑓 [x0 ] = lim 𝑓 (x + 𝑡x) − 𝑓 (x ) = 𝐷𝑓 [x0 ](x)
𝐷
𝑡→0 𝑡
4.11 By direct calculation
ℎ(x0𝑖 + 𝑡) − ℎ(x0𝑖 )
𝐷𝑥𝑖 𝑓 [x0 ] = lim
𝑡→0 𝑡
𝑓 (x01 , x02 , . . . , x0𝑖 + 𝑡, . . . , x0𝑛 ) − 𝑓 (x01 , x02 , . . . , x0𝑖 , . . . , x0𝑛 )
= lim
𝑡→0 𝑡
𝑓 (x0 + 𝑡e𝑖 ) − 𝑓 (x0 )
= lim
𝑡→0 𝑡
⃗ 0
= 𝐷e𝑖 𝑓 [x ]
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Generalization of this example reveals that the directional derivative of 𝑓 along any
ray through the origin equals 1, that is 𝐷⃗ x0 𝑓 [x0 ] = 1 for every x0 . Economically,
this means that increasing inputs in the same proportions leads to a proportionate
increase in output, which is the property of constant returns to scale. We will study
this property of homogeneity is some depth in Section 4.6.
4.13 Let p = ∇𝑓 (x0 ). Each component of p represents the action of the derivative on
an element of the standard basis {e1 , e2 , . . . , e𝑛 }(see proof of Theorem 3.4)
𝑝𝑖 = 𝐷𝑓 [x0 ](e𝑖 )
Since ∥e𝑖 ∥ = 1, 𝐷𝑓 [x0 ](e𝑖 ) is the directional derivative at x0 in the direction e𝑖 (Exer-
cise 4.10)
⃗ e𝑖 (x0 )
𝑝𝑖 = 𝐷𝑓 [x0 ](e𝑖 ) = 𝐷
4.14 Using the standard inner product on ℜ𝑛 (Example 3.26) and Exercise 4.13
𝑛
∑
< ∇𝑓 (x0 ), x >= 𝐷𝑥𝑖 𝑓 [x0 ]x𝑖 = 𝐷𝑓 [x0 ](x)
𝑖=1
𝐷𝑥𝑖 𝑓 (x1 ) ≥ 0, 𝑖 = 1, 2, . . . , 𝑛
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4.16 The directional derivative 𝐷 ⃗ x 𝑓 (x0 ) measures the rate of increase of 𝑓 in the di-
rection x. Using Exercises 4.10, 4.14 and 3.61, assuming x has unit norm,
⃗ x 𝑓 (x0 ) = 𝐷𝑓 [x0 ](x) =< ∇𝑓 (x0 ), x >≤ ∇𝑓 (x0 )
𝐷
This bound is attained when x = ∇𝑓 (x0 )/ ∇𝑓 (x0 ) since
∇𝑓 (x0 ) ∇𝑓 (x0 )2
⃗ 0 0
𝐷x 𝑓 (x ) =< ∇𝑓 (x ), >= = ∇𝑓 (x0 )
0
∥∇𝑓 (x )∥ 0
∥∇𝑓 (x )∥
Then
⎛ ⎞
𝑓1 (x0 + x) − 𝑓1 [x0 ] − 𝐷𝑓1 [x0 ]x
⎜ 𝑓2 (x0 + x) − 𝑓2 [x0 ] − 𝐷𝑓2 [x0 ]x ⎟
⎜ ⎟
f (x0 + x) − f [x0 ] − 𝐷f [x0 ]x = ⎜ .. ⎟
⎝ . ⎠
𝑓𝑚 (x0 + x) − 𝑓𝑚 (x0 ) − 𝐷𝑓𝑚 [x0 ]x
and
𝑓𝑗 (x0 + x) − 𝑓𝑗 (x0 ) − 𝐷𝑓𝑗 [x0 ]x
→ 0 as ∥x∥ → 0
∥x∥
for every 𝑗 implies
f (x0 + x) − f (x0 ) − 𝐷f [x0 ](x)
→ 0 as ∥x∥ → 0 (4.43)
∥x∥
Therefore f is differentiable with derivative
Each 𝐷𝑓𝑗 [x0 ] is represented by the gradient ∇𝑓𝑗 [x0 ] (Exercise 4.13) and therefore
𝐷𝑓 [x0 ] is represented by the matrix
⎛ ⎞ ⎛ ⎞
∇𝑓1 [x0 ] 𝐷𝑥1 𝑓1 [x0 ] 𝐷𝑥2 𝑓1 [x0 ] . . . 𝐷𝑥𝑛 𝑓1 [x0 ]
⎜ ∇𝑓2 [x0 ] ⎟ ⎜ 𝐷𝑥1 𝑓2 [x0 ] 𝐷𝑥2 𝑓2 [x0 ] . . . 𝐷𝑥𝑛 𝑓2 [x0 ] ⎟
⎜ ⎟ ⎜ ⎟
𝐽 =⎜ .. ⎟=⎜ .. .. .. .. ⎟
⎝ . ⎠ ⎝ . . . . ⎠
∇𝑓𝑚 [x0 ] 𝐷𝑥1 𝑓𝑚 [x0 ] 𝐷𝑥2 𝑓𝑚 [x0 ] . . . 𝐷𝑥𝑛 𝑓𝑚 [x0 ]
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for every 𝑗.
4.19 If 𝐷𝑓 [x0 ] has full rank, then it is one-to-one (Exercise 3.25) and onto (Exercise
3.16). Therefore 𝐷𝑓 [x0 ] is nonsingular. The Jacobian 𝐽𝑓 (x0 ) represents 𝐷𝑓 [x0 ], which
is therefore nonsingular if and only if det 𝐽𝑓 (x0 ) ∕= 0.
4.20 When 𝑓 is a functional, rank 𝑋 ≥ 𝑟𝑎𝑛𝑘𝑌 = 1. If 𝐷𝑓 [x0 ] has full rank (1), then
𝐷𝑓 [x0 ] maps 𝑋 onto ℜ (Exercise 3.16), which requires that ∇𝑓 (x0 ) ∕= 0.
4.21
4.23 If 𝑓 : 𝑋 × 𝑌 → 𝑍 is bilinear
Defining
and therefore
NOTE This is not quite right. See Spivak p. 23. Avez (Tilburg) has
( )2
∥𝑓 (x, y)∥ ≤ 𝑀 ∥x∥ ∥y∥ ≤ 𝑀 ∥x∥ + ∥y∥ ≤ 𝑀 ∥(x, y)∥2
∥𝑓 (x, y)∥
→ 0 as (x, y) → 0
∥(x, y)∥
𝑓 (x1 , x2 )
lim =0
x1 ,x2 →0 ∥x1 ∥ ∥x2 ∥
4.24 Define 𝑚 : ℜ2 → ℜ by
𝑚(𝑧1 , 𝑧2 ) = 𝑧1 𝑧2
Then 𝑚 is bilinear (Example 3.23) and continuous (Exercise 2.79) and therefore differ-
entiable (Exercise 4.23) with derivative
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Now assume it is true for 𝑛 − 1 and let 𝑔(𝑥) = 𝑥𝑛−1 , so that 𝑓 (x) = 𝑥𝑔(𝑥). By the
product rule
where 𝑝0 = 𝑓 (𝑥0 ). Marginal revenue equals one unit at the current price minus the
reduction in revenue caused by reducing the price on existing sales.
( )−1
4.27 Fix some x0 and let 𝑔 = 𝐷𝑓 [x0 ] . Let y0 = 𝑓 (x0 ). For any y, let x =
𝑓 (y + y) − 𝑓 (y ) so that 𝑔(y) = 𝑓 (x + x) − 𝑓 (x) and
−1 0 −1 0 0
−1 0 ( )
𝑓 (y + y) − 𝑓 −1 (y0 ) − 𝑔(y) = (x − 𝑔 𝑓 (x0 + x) − 𝑓 (x0 ))
Substituting
−1 0 ( )
𝑓 (y + y) − 𝑓 −1 (y0 ) − 𝑔(y) =
x − 𝑔 𝑔 −1 (x) + 𝜂(x) ∥x∥
( )
= 𝑔 𝜂(x) ∥x∥
( )
= ∥x∥ 𝑔 𝜂(x)
( )
with 𝜂(x) → 0𝑌 as x → 0𝑋 . Since 𝑓 −1 and 𝑔 are continuous, 𝑔 𝜂(x) → 0𝑋 as y → 0.
( )−1
We conclude that 𝑓 −1 is differentiable with derivative 𝑔 = 𝐷𝑓 [x0 ] .
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4.28
log 𝑓 (𝑥) = 𝑥 log 𝑎
and therefore
( )
𝑓 (𝑥) = exp log 𝑓 (𝑥) = 𝑒𝑥 log 𝑎
( )1−𝜌
𝑓 (x)
= 𝑎𝑖
𝑥𝑖
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4.34 Define
𝑓 (𝑏) − 𝑓 (𝑎)
ℎ(𝑥) = 𝑓 (𝑥) − (𝑥 − 𝑎)
𝑏−𝑎
Then ℎ is continuous on [𝑎, 𝑏] and differentiable on (𝑎, 𝑏) with
𝑓 (𝑏) − 𝑓 (𝑎)
ℎ(𝑏) = 𝑓 (𝑏) − (𝑏 − 𝑎)𝑓 (𝑎) = ℎ(𝑎)
𝑏−𝑎
By Rolle’s theorem (Exercise 5.8), there exists 𝑥 ∈ (𝑎, 𝑏) such that
𝑓 (𝑏) − 𝑓 (𝑎)
ℎ′ (𝑥) = 𝑓 ′ (𝑥) − =0
𝑏−𝑎
4.35 Assume ∇𝑓 (x) ≥ 0 for every x ∈ 𝑋. By the mean value theorem, for any x2 ≥ x1
in 𝑋, there exists x̄ ∈ (x1 , x2 ) such that
Using (4.6)
𝑛
∑
𝑓 (x2 ) = 𝑓 (x1 ) + 𝐷𝑥𝑖 𝑓 (x̄)(𝑥2𝑖 − 𝑥1𝑖 ) (4.44)
𝑖=1
and therefore 𝑓 (x2 ) ≥ 𝑓 (x1 ). 𝑓 is increasing. The converse was established in Exercise
4.15
4.36 ∇𝑓 (x̄) > 0 and x2 ≥ x1 implies that
𝑛
∑
𝐷𝑥𝑖 𝑓 (x̄)(𝑥2𝑖 − 𝑥1𝑖 ) > 0
𝑖=1
Substituting in (4.44)
𝑛
∑
𝑓 (x2 ) = 𝑓 (x1 ) + 𝐷𝑥𝑖 𝑓 (x̄)(𝑥2𝑖 − 𝑥1𝑖 ) > 𝑓 (x1 )
𝑖=1
𝑓 is strictly increasing.
4.37 Differentiability implies the existence of the gradient and hence the partial deriv-
atives of 𝑓 (Exercise 4.13). Continuity of 𝐷𝑓 [x] implies the continuity of the partial
derivatives.
To prove the converse, choose some x0 ∈ 𝑆 and define for the partial functions
so that ℎ′𝑖 (𝑡) = 𝐷𝑥𝑖 𝑓 (x𝑖 ) where x𝑖 = (𝑥01 , 𝑥02 , . . . , 𝑥0𝑖 , 𝑡, 𝑥0𝑖+1 + 𝑥𝑖+1 , . . . , 𝑥0𝑛 + 𝑥𝑛 ). Fur-
ther, ℎ1 (𝑥01 + 𝑥1 ) = 𝑓 (x0 + x), ℎ𝑛 (𝑥0𝑛 ) = 𝑓 (x0 ), and ℎ𝑖 (𝑥0𝑖 + 𝑥𝑖 ) = ℎ𝑖−1 (𝑥0𝑖 ) so that
𝑛
∑ ( )
𝑓 (x0 + x) − 𝑓 (x0 ) = ℎ𝑖 (𝑥0𝑖 + 𝑥𝑖 ) − ℎ𝑖 (𝑥0𝑖 )
𝑖=1
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By the mean value theorem, there exists, for each 𝑖, 𝑡¯𝑖 between 𝑥0𝑖 + 𝑥𝑖 and 𝑥𝑖 such
that
ℎ𝑖 (𝑥0𝑖 + 𝑥𝑖 ) − ℎ𝑖 (𝑥𝑖 ) = 𝐷𝑥𝑖 𝑓 (x̄𝑖 )𝑥𝑖
where x̄𝑖 = (𝑥01 , 𝑥02 , . . . , 𝑥0𝑖 , 𝑡¯, 𝑥0𝑖+1 + 𝑥𝑖+1 , . . . , 𝑥0𝑛 + 𝑥𝑛 ). Therefore
𝑛
∑
𝑓 (x0 + x) − 𝑓 (x0 ) = 𝐷𝑥𝑖 𝑓 (x̄𝑖 )𝑥𝑖
𝑖=1
Then
𝑛 (
∑ )
𝑓 (x0 + x) − 𝑓 (x0 ) − 𝑔(x) = 𝐷𝑥𝑖 𝑓 (x̄𝑖 ) − 𝐷𝑥𝑖 𝑓 (x0 ) 𝑥𝑖
𝑖=1
and
𝑛
∑
𝑓 (x0 + x) − 𝑓 (x0 ) − 𝑔(x) ≤ (𝐷𝑥𝑖 𝑓 (x̄𝑖 ) − 𝐷𝑥𝑖 𝑓 (x0 ) ∣𝑥𝑖 ∣
𝑖=1
so that
𝑓 (x0 + x) − 𝑓 (x0 ) − 𝑔(x) ∑ 𝑛
lim ≤ (𝐷𝑥𝑖 𝑓 (x̄𝑖 ) − 𝐷𝑥𝑖 𝑓 (x0 ) ∣𝑥𝑖 ∣
x→0 ∥x∥ 𝑖=1
∥x∥
𝑛
∑
≤ (𝐷𝑥𝑖 𝑓 (x̄𝑖 ) − 𝐷𝑥𝑖 𝑓 (x0 )
𝑖=1
=0
since the partial derivatives 𝐷𝑥𝑖 𝑓 (x) are continuous. Therefore 𝑓 is differentiable with
derivative
𝑛
∑
𝑔(x) = 𝐷𝑥𝑖 𝑓 [x0 ]𝑥𝑖
𝑖=1
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for every x ∈ 𝐵. Given 𝜖 > 0, there exists 𝑁 such that for every 𝑚, 𝑛 > 𝑁
Letting 𝑚 → ∞
( )
𝑓𝑛 (x) − 𝑓 (x) − 𝑓𝑛 (x0 ) − 𝑓 (x0 ) ≤ 𝜖 ∥x − x0 ∥ (4.45)
for 𝑛 ≥ 𝑁 and x ∈ 𝐵. Applying the mean value inequality to 𝑓𝑛 , there exists 𝛿 such
that
Using (4.45) and (4.46) and the fact that ∥𝐷𝑓𝑛 − 𝑔∥ < 𝜖 we deduce that
𝑒𝑥+𝑦
𝑓 ′ (𝑥) = = 𝑓 (𝑥)
𝑒𝑦
which implies (Example 4.21) that
𝑒𝑥+𝑦
𝑓 (𝑥) = = 𝐴𝑒𝑥 for some 𝐴 ∈ ℜ
𝑒𝑦
Evaluating at 𝑥 = 0 using 𝑒0 = 1 gives
𝑒𝑦
𝑓 (0) = = 𝐴 for some 𝐴 ∈ ℜ
𝑒𝑦
so that
𝑒𝑥+𝑦 𝑒𝑦 𝑥
𝑓 (𝑥) = = 𝑒
𝑒𝑦 𝑒𝑦
which implies that
𝑒𝑥+𝑦 = 𝑒𝑥 𝑒𝑦
𝑎𝐴𝑥𝑎−1
𝐸(𝑥) = 𝑥 =𝑎
𝐴𝑥𝑎
To show that this is the only function with constant elasticity, define
𝑓 (𝑥)
𝑔(𝑥) =
𝑥𝑎
𝑔 is differentiable (Exercise 4.30) with derivative
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If
𝑓 ′ (𝑥)
𝐸(𝑥) = 𝑥 =𝑎
𝑓 (𝑥)
then
𝑥𝑓 ′ (𝑥) = 𝑎𝑓 (𝑥)
Substituting in (4.47)
𝑥𝑓 ′ (𝑥) − 𝑎𝑓 (𝑥)
𝑔 ′ (𝑥) = = 0 for every 𝑥 ∈ ℜ
𝑥𝑎+1
Therefore, 𝑔 is a constant function (Exercise 4.38). That is, there exists 𝐴 ∈ ℜ such
that
𝑓 (𝑥)
𝑔(𝑥) = = 𝐴 or 𝑓 (𝑥) = 𝐴𝑥𝑎
𝑥𝑎
4.42 Define 𝑔 : 𝑆 → 𝑌 by
𝑔 is differentiable with
∥𝑓 (x1 ) − 𝐷𝑓 [x0 ](x1 ) − 𝑓 (x2 ) + 𝐷𝑓 [x0 ](x2 )∥ = ∥𝑓 (x1 ) − 𝑓 (x2 ) − 𝐷𝑓 [x0 ](x1 − x2 )∥
≤ sup ∥𝐷𝑓 [x] − 𝐷𝑓 [x0 ]∥ ∥x1 − x2 ∥
x∈[x1 ,x2 ]
4.44 By the previous exercise (Exercise 4.43), there exists a neighborhood such that
∥𝑓 (x1 ) − 𝑓 (x2 )∥ − ∥𝐷𝑓 [x0 ](x1 − x2 )∥ ≤ ∥𝑓 (x1 ) − 𝑓 (x2 ) − 𝐷𝑓 [x0 ](x1 − x2 )∥ ≤ 𝜖 ∥x1 − x2 ∥
and therefore
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4.49 Average cost is given by 𝑐(𝑦)/𝑦 which is undefined at 𝑦 = 0. We seek lim𝑦→0 𝑐(𝑦)/𝑦.
By L’Hôpital’s rule
𝑐(𝑦) 𝑐′ (𝑦)
lim = lim
𝑦→0 𝑦 𝑦→0 1
= 𝑐′ (0)
𝑓 (𝑥) − 𝑓 (𝑎) 𝑓 ′ (¯
𝑥)
= ′
𝑔(𝑥) − 𝑔(𝑎) 𝑔 (¯ 𝑥)
2.
𝑓 (𝑥) 𝑓 (𝑥) − 𝑓 (𝑎) 𝑓 (𝑥) 𝑔(𝑥) − 𝑔(𝑎)
= × ×
𝑔(𝑥) 𝑔(𝑥) − 𝑔(𝑎) 𝑓 (𝑥) − 𝑓 (𝑎) 𝑔(𝑥)
𝑔(𝑎)
𝑓 (𝑥) − 𝑓 (𝑎) 1 − 𝑔(𝑥)
= ×
𝑔(𝑥) − 𝑔(𝑎) 1− 𝑓 (𝑎)
𝑓 (𝑥)
For fixed 𝑎
𝑔(𝑎)
1− 𝑔(𝑥)
lim 𝑓 (𝑎)
=1
𝑥→∞ 1− 𝑓 (𝑥)
4.51 We know that the result holds for 𝑛 = 1 (Exercise 4.22). Assume that the result
holds for 𝑛 − 1. By the chain rule
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𝐷1 𝑓 = 2𝑎𝑥1 + 2𝑏𝑥2
𝐷2 𝑓 = 2𝑏𝑥1 + 2𝑐𝑥2
𝐷11 𝑓 = 2𝑎 𝐷21 𝑓 = 2𝑏
𝐷12 𝑓 = 2𝑏 𝐷22 𝑓 = 2𝑐
𝑔 is differentiable on 𝑆 with
𝑔(𝑥1 ) − 𝑔(𝑥0 ) = 𝑝′ (¯
𝑥)(𝑥1 − 𝑥0 ) = 𝑓 ′′ (¯
𝑥)(𝑥1 − 𝑥0 ) − 2𝑎2 (𝑥1 − 𝑡) = 0
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𝑔(𝑥1 ) − 𝑔(𝑥0 ) = 𝑔 ′ (¯
𝑥)(𝑥1 − 𝑥0 ) = 0
Similarly
( )
ℎ′′ (𝑡) = 𝐷 𝐷𝑓 [𝑔(𝑡)](x)
= 𝐷2 𝑓 [𝑔(𝑡)] ∘ 𝐷𝑔[𝑡](x − x0 )
= 𝐷2 𝑓 [𝑔(𝑡)](x)(2)
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2. Let 𝑇 = 𝑓 (𝑆). Since the restriction of 𝑓 to 𝑆 is one-to-one and onto, and therefore
there exists an inverse 𝑓 −1 : 𝑇 → 𝑆. For any y1 , y2 ∈ 𝑇 , let x1 = 𝑓 −1 (y1 ) and
x2 = 𝑓 −1 (y2 ). Substituting in (4.53)
𝜖 𝑓 −1 (y1 ) − 𝑓 −1 (y2 ) ≤ ∥y1 − y2 ∥
so that
−1
𝑓 (y1 ) − 𝑓 −1 (y2 ) ≤ 1 ∥y1 − y2 ∥
𝜖
𝑓 −1 is continuous.
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Then
ℎ(0) = 0 = ℎ(1)
By the mean value theorem (Mean value theorem), there exists 0 < 𝛼 < 1 such that
𝑔(𝛼) ∈ 𝑆 and
ℎ′ (𝛼) = x𝑇 𝐷𝑓 [𝑔(𝛼)]x = x𝑇 𝐽𝑓 (𝑔(𝛼))x = 0
which contradicts the definiteness of 𝐽𝑓 .
4.63 Substituting the linear functions in (4.35) and (4.35), the IS-LM model can be
expressed as
(1 − 𝐶𝑦 )𝑦 − 𝐼𝑟 𝑟 = 𝐶0 + 𝐼0 + 𝐺 − 𝐶𝑦 𝑇
𝐿𝑦 𝑦 + 𝐿𝑟 𝑟 = 𝑀/𝑃
which can be rewritten in matrix form as
( )( ) ( )
1 − 𝐶𝑦 𝐼𝑟 𝑦 𝑍 − 𝐶𝑦 𝑇
=
𝐿𝑦 𝐿𝑟 𝑟 𝑀/𝑃
where 𝑍 = 𝐶0 + 𝐼0 + 𝐺. Provided the system is nonsingular, that is
1 − 𝐶𝑦 𝐼𝑟
𝐷= ∕= 0
𝐿𝑦 𝐿𝑟
the system can be solved using Cramer’s rule (Exercise 3.103) to yield
(1 − 𝐶𝑦 )𝑀/𝑃 − 𝐿𝑦 (𝑍 − 𝐶𝑦 𝑇 )
𝑟=
𝐷
𝐿𝑟 (𝑍 − 𝐶𝑦 )𝑇 − 𝐼𝑟 𝑀/𝑃
𝑦=
𝐷
4.64 The kernel
kernel 𝐷𝐹 [(x0 , 𝜽0 )] = { (x, 𝜽) : 𝐷𝐹 [(x0 , 𝜽0 )](x, 𝜽) = 0 }
is the set of solutions to the equation
( ) ( ) ( )
x 𝐷x 𝑓 (x0 , 𝜽0 )x + 𝐷𝜽 𝑓 (x0 , 𝜽0 )𝜽 0
𝐷𝐹 [x0 , 𝜽0 ] = =
𝜽 𝜽 0
Only 𝜽 = 0 satisfies this equation. Substituting 𝜽 = 0, the equation reduces to
𝐷x 𝑓 (x0 , 𝜽0 )x = 0
which has a unique solution x = 0 since 𝐷x 𝑓 [x0 , 𝜽0 ] is nonsingular. Therefore the
kernel of 𝐷𝐹 [x0 , 𝜽0 ] consists of the single point (0, 0) which implies that 𝐷𝐹 [x0 , 𝜽 0 ] is
nonsingular (Exercise 3.19).
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Since 𝑓 is differentiable, this implies that 𝑔 is unique (Remark 4.14) and equal to the
derivative of 𝑓 . Hence ℎ is differentiable at x0 with 𝐷ℎ[x0 ] = 𝐷𝑓 [x0 ].
4.69 Assume 𝑓 is convex. For every x, x0 ∈ 𝑆, Exercise 4.67 implies
( )
𝑓 (x) ≥ 𝑓 (x0 ) + ∇𝑓 (x0 )𝑇 x − x0
( )
𝑓 (x0 ) ≥ 𝑓 (x) + ∇𝑓 (x)𝑇 x0 − x
Adding
( ) ( )
𝑓 (x) + 𝑓 (x0 ) ≥ 𝑓 (x) + 𝑓 (x0 ) + ∇𝑓 (x)𝑇 x0 − x + ∇𝑓 (x0 )𝑇 x − x0
or
( ) ( )
∇𝑓 (x)𝑇 x − x0 ≥ ∇𝑓 (x0 )𝑇 x − x0
and therefore
∇𝑓 (x) − ∇𝑓 (x0 )𝑇 x − x0 ≥ 0
By assumption
∇𝑓 (x̄) − ∇𝑓 (x0 )𝑇 x̄ − x0 ≥ 0
But
and therefore
so that
∇𝑓 (x̄)𝑇 x − x0 ≥ ∇𝑓 (x0 )𝑇 x − x0 ≥ 0
and therefore
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or
Therefore, the power function is convex if 𝑛 is even, and neither convex if 𝑛 ≥ 3 is odd.
It is both convex and concave when 𝑛 = 1.
4.73 Assume 𝑓 is quasiconcave, and 𝑓 (x) ≥ 𝑓 (x0 ). Differentiability at x0 implies for
all 0 < 𝑡 < 1
and therefore
∇𝑓 (x0 )(x − x0 ) ≥ 0
We need to show that ℎ(𝑡) ≥ ℎ(1) for every 𝑡 ∈ (0, 1). Suppose to the contrary that
ℎ(𝑡1 ) < ℎ(1). Then (see below) there exists 𝑡0 with ℎ(𝑡0 ) < ℎ(1) and ℎ′ (𝑡0 ) < 0. By
the Chain Rule, this implies
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∇𝑓 (x0 )(x2 − x0 ) ≥ 0
contradicting (4.55).
To show that there exists 𝑡0 with ℎ(𝑡0 ) < ℎ(1) and ℎ′ (𝑡0 ) < 0: Since 𝑓 is continuous,
there exists an open interval (𝑎, 𝑏) with 𝑎 < 𝑡1 < 𝑏 with ℎ(𝑎) = ℎ(𝑏) = ℎ(1) and
ℎ(𝑡) < ℎ(1) for every 𝑡 ∈ (𝑎, 𝑏). By the Mean Value Theorem, there exist 𝑡0 ∈ (𝑎, 𝑡1 )
such that
and −𝑓 is pseudoconcave.
4.76 1. If 𝑓 ∈ 𝐹 [𝑆] is concave (and differentiable)
𝑓 is pseudoconcave.
2. Assume to the contrary that 𝑓 is pseudoconcave but not quasiconcave. Then,
there exists x̄ = 𝛼x1 + (1 − 𝛼)x2 , x1 , x2 ∈ 𝑆 such that
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ℎ(𝑡) = 𝑓 (𝑡x)
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from (4.59). Since this holds for every 𝑡, ℎ(𝑡)𝑡−𝑘 must be constant (Exercise 4.38), that
is there exists 𝑐 ∈ ℜ such that
ℎ(𝑡) = 𝑡𝑘 ℎ(1)
𝑓 is homogeneous of degree 𝑘.
4.81 If 𝑓 is linearly homogeneous and quasiconcave, then 𝑓 is concave (Proposition
3.12). Therefore, its Hessian is nonpositive definite (Proposition 4.1). and its diagonal
elements 𝐷𝑥2 𝑖 𝑥𝑖 𝑓 (x) are nonpositive (Exercise 3.95). By Wicksell’s law, 𝐷𝑥2 𝑖 𝑥𝑗 𝑓 (x) is
nonnegative.
4.82 Assume 𝑓 is homogeneous of degree 𝑘, that is
By Euler’s theorem
𝐷𝑡 𝑓 [𝑡x](𝑡x) = 𝑘𝑓 (𝑡x)
that is
𝐷𝑡 𝑓 (𝑡x) = 𝑘𝑓 (𝑡x)
𝐷𝑓 [x](x) = 𝑘𝑓 (x) ∕= 0
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or
𝑛
∑
(𝑘 − 1)𝐷𝑗 𝑓 (x) = 𝐷𝑖𝑗 𝑓 (x)𝑥𝑖 𝑗 = 1, 2, . . . , 𝑛
𝑖=1
(𝑘 − 1)𝑘𝑓 (x) = x′ 𝐻x
and therefore
𝐷𝑥𝑖 𝑓 (𝑡x) 𝑡𝑔 ′ (𝑓 (𝑡x))𝐷𝑥𝑖 ℎ(x)
=
𝐷𝑥𝑗 𝑓 (𝑡x) 𝐷𝑥𝑗 𝑡𝑔 ′ (𝑓 (𝑡x))𝐷𝑥𝑗 ℎ(x)
𝐷𝑥𝑖 ℎ(x)
= 𝐷𝑥𝑗 ℎ(x)
𝐷𝑥𝑗
𝑔 ′ (𝑓 (x)𝐷𝑥𝑖 ℎ(x)
=
𝐷𝑥𝑗 𝑔 ′ (𝑓 (x))𝐷𝑥𝑗 ℎ(x)
𝐷𝑥𝑖 𝑓 (x)
= 𝐷𝑥𝑗 𝑓 (x)
𝐷𝑥𝑗
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Chapter 5: Optimization
5.1 As stated, this problem has no optimal solution. Revenue 𝑓 (𝑥) increases without
bound as the rate of exploitation 𝑥 gets smaller and smaller. Given any positive ex-
ploitation rate 𝑥0 , a smaller rate will increase total revenue. Nonexistence arises from
inadequacy in modeling the island leaders’ problem. For example, the model ignores
any costs of extraction and sale. Realistically, we would expect per-unit costs to de-
crease with volume (increasing returns to scale) at least over lower outputs. Extraction
and transaction costs should make vanishingly small rates of output prohibitively ex-
pensive and encourage faster utilization. Secondly, even if the government weights
future generations equally with the current generation, it would be rational to value
current revenue more highly than future revenue and discount future returns. Dis-
counting is appropriate for two reasons
∙ Current revenues can be invested to provide a future return. There is an oppor-
tunity cost (the interest foregone) to delaying extraction and sale.
∙ Innovation may create substitutes which reduce the future demand for the fertil-
izer. If the government is risk averse, it has an incentive to accelerate exploitation,
trading-off of lower total return against reduced risk.
5.2 Suppose that x∗ is a local optimum which is not a global optimum. That is, there
exists a neighborhood 𝑆 of x∗ such that
By concavity of 𝑓
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By strict quasiconcavity of 𝑓
𝑓 (x∗∗ , 𝜽) = 𝑓 (x∗ , 𝜽)
By strict quasiconcavity of 𝑓
where 𝜂(x) → 0 as x → x∗ . (5.80) implies that there exists a ball 𝐵𝑟 (x∗ ) such that
𝐷𝑓 [x∗ ](x − x∗ ) ≤ 0
𝐷𝑓 [x∗ ](x − x∗ ) = 0
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5.5 We apply the reasoning of Example 5.5 to each component. Formally, for each 𝑖,
let 𝑓ˆ𝑖 be the projection of 𝑓 along the 𝑖𝑡ℎ axis
Substituting
yields
𝑓 (x∗ ) ≤ 𝑓 (x)
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(1,2,3)
3
2 𝑥
2
0
1 1
𝑥1 2
Figure 5.1: The strictly concave function 𝑓 (𝑥1 , 𝑥2 ) = 𝑥1 𝑥2 + 3𝑥2 − 𝑥21 − 𝑥22 has a unique
global maximum.
1. ∇𝑓 (x∗ ) = 0 and
2. 𝐻𝑓 (x∗ ) is positive definite
and letting dx → 0, we conclude that
which have the unique solution 𝑥∗1 = 1, 𝑥∗2 = 2. (1, 2) is the only stationary point of
𝑓 and hence the only possible candidate for a maximum. To verify that (1, 2) satisfies
the second-order condition for a maximum, we compute the Hessian of 𝑓
( )
−2 1
𝐻(x) =
1 −2
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𝐷1 𝑓 (𝑥) = 2𝑥1 = 0
𝐷2 𝑓 (𝑥) = 2𝑥2 = 0
which have a unique solution 𝑥1 = 𝑥2 = 0. This is the only stationary point of 𝑓 . Since
the Hessian of 𝑓
( )
2 0
𝐻=
0 2
1 1/6 1 1/3 1
𝑦= =
9 9 3
and its profit is
1 1 1 11 1 1
Π( , ) = − − − =0
3 3 3 29 9 6
5.12 By the Chain Rule
𝐷x (ℎ ∘ 𝑓 )[x∗ ] = 𝐷ℎ ∘ 𝐷x 𝑓 [x∗ ] = 0
Since 𝐷ℎ > 0
𝐷x (ℎ ∘ 𝑓 )[𝑥∗ ] = 0 ⇐⇒ 𝐷x 𝑓 [x∗ ] = 0
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5.13 Since the log function is monotonic, finding the maximum likelihood estimators is
equivalent to solving the maximization problem ( Exercise 5.12)
𝑇
𝑇 1 ∑
max log 𝐿(𝜇, 𝜎) = − log 2𝜋 − 𝑇 log 𝜎 − 2 (𝑥𝑡 − 𝜇)2
𝜇,𝜎 2 2𝜎 𝑡=1
A necessary condition for the optimal solution is that these be proportional that is
( ) ( )
−2(𝑥1 − 1) 2𝑥1
∇𝑓 (𝑥) = =𝜆 = ∇𝑔(x)
−2(𝑥2 − 1) 2𝑥2
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subject to 𝑔(x) = 𝑥1 + 𝑝2 𝑥2 − 𝑚 = 0
𝑦𝑖∗ > 0 𝑖 = 1, 2, . . . , 𝑘
𝑦𝑖∗ = 0 𝑖 = 𝑘 + 1, 𝑘 + 2, . . . , 𝑛
max 𝑓 (x)
subject to g(x) = 0
𝑦𝑖 = 0 𝑖 = 𝑘 + 1, 𝑘 + 2, . . . , 𝑛
By Theorem 5.2, there exist multipliers 𝜆1 , 𝜆2 , . . . , 𝜆𝑚 and 𝜇𝑘+1 , 𝜇𝑘+2 , . . . , 𝜇𝑛 such that
𝑚
∑
𝐷x 𝑓 [x∗ , y∗ ] = 𝜆𝑗 𝐷x 𝑔𝑗 [x∗ , y∗ ]
𝑗=1
∑𝑚 𝑛
∑
𝐷y 𝑓 [x∗ , y∗ ] = 𝜆𝑗 𝐷y 𝑔𝑗 [x∗ , y∗ ] + 𝜇𝑖 𝑦 𝑖
𝑗=1 𝑖=𝑘+1
with
𝑚
∑
𝐷𝑦𝑖 𝑓 [x∗ , y∗ ] = 𝜆𝑗 𝐷𝑦𝑖 𝑔𝑗 [x∗ , y∗ ] if 𝑦𝑖 > 0
𝑗=1
max 𝑓 (𝑥1 , 𝑥2 )
𝑥1 ,𝑥2
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subject to
𝑔(𝑥1 , 𝑥2 ) = 0
𝑥1 = ℎ(𝑥2 ) (5.83)
and
𝑔(ℎ(𝑥2 ), 𝑥2 ) = 0
𝐷𝑥1 𝑔[x∗ ]
𝐷ℎ[𝑥∗2 ] = − (5.84)
𝐷𝑥2 𝑔[x∗ ]
Using (5.41), we can convert the original problem into the unconstrained maximization
of a function of a single variable
max 𝑓 (ℎ(𝑥2 ), 𝑥2 )
𝑥2
If 𝑥∗2 maximizes this function, it must satisfy the first-order condition (applying the
Chain Rule)
max 𝑢(x)
x∈𝑋
subject to p𝑇 x = 𝑚
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which reduces to
𝑝1
𝐷𝑥1 𝑢(x∗ )(− ) + 𝐷𝑥𝑗 𝑢(x∗ ) = 0
𝑝𝑗
or
𝐷𝑥1 𝑢(x∗ ) 𝑝1
∗
= 𝑗 = 2, 3, . . . , 𝑛
𝐷𝑥𝑗 𝑢(x ) 𝑝𝑗
This is the familiar equality between the marginal rate of substitution and the price
ratio (Example 5.15). Since our selection of 𝑥1 was arbitrary, this applies between any
two goods.
5.19 Adapt Exercise 5.6.
5.20 Corollary 5.1.2 implies that x∗ is a global maximum of 𝐿(x, 𝝀), that is
which implies
∑ ∑
𝑓 (x∗ ) − 𝜆𝑗 𝑔𝑗 (x∗ ) ≥ 𝑓 (x) − 𝜆𝑗 𝑔𝑗 (x) for every x ∈ 𝑋
A fortiori
5.21 Suppose that x∗ is a local maximum of 𝑓 on 𝐺. That is, there exists a neighborhood
𝑆 such that
and therefore
Base = 𝑤2 = 𝐴/3
Sides = 4𝑤ℎ
√ √
𝐴 𝐴
=4
3 12
4𝐴
=
16
2𝐴
=
3
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subject to 𝑤 × 𝑙 × ℎ = 32
The Lagrangean is
𝐷𝑤 𝐿 = 𝑙 + 2ℎ − 𝜆𝑙ℎ = 0 (5.86)
𝐷𝑙 𝐿 = 𝑤 + 2ℎ − 𝜆𝑤ℎ = 0 (5.87)
𝐷ℎ 𝐿 = 2𝑤 + 2𝑙 − 𝜆𝑤𝑙 = 0 (5.88)
𝑤𝑙ℎ = 32
𝑙 − 𝑤 = 𝜆(𝑙 − 𝑤)ℎ
𝑤 + 2ℎ = 𝜆𝑤ℎ
4𝑤 = 𝜆𝑤2
𝐴 = 𝑤𝑙 + 2𝑤ℎ + 2𝑙ℎ = 48
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which simplifies to
𝛼𝑥2 𝑝1 (1 − 𝛼)
= or 𝑝2 𝑥2 = 𝑝1 𝑥1
(1 − 𝛼)𝑥1 𝑝2 𝛼
Substituting in the budget constraint (5.50)
(1 − 𝛼)
𝑝1 𝑥1 + 𝑝1 𝑥1 = 𝑚
𝛼
𝛼 + (1 − 𝛼)
𝑝1 𝑥1 = 𝑚
𝛼
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so that
𝛼 𝑚
𝑥∗1 =
𝛼 + (1 − 𝛼) 𝑝1
(1 − 𝛼) 𝑚
𝑥∗2 =
𝛼 + (1 − 𝛼) 𝑝2
𝐿(x, 𝜆) = 𝑥𝛼1 𝛼2 𝛼𝑛
1 𝑥2 . . . 𝑥𝑛 − 𝜆(𝑝1 𝑥1 + 𝑝2 𝑥2 + ... + 𝑝𝑛 𝑥𝑛 )
𝑢(x) 𝑚
=
𝜆 𝛼
Substituting in (5.93)
𝛼𝑖
𝑝𝑖 𝑥𝑖 = 𝑚
𝛼
or
𝛼𝑖 𝑚
𝑥∗𝑖 = 𝑖 = 1, 2, . . . , 𝑛
𝛼 𝑝𝑖
5.27 The Lagrangean is
or
𝑤1 = 𝜆𝜌𝑥𝜌−1
1
𝑤2 = 𝜆𝜌𝑥𝜌−1
2
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which reduce to
𝑤1 𝑥𝜌−1
= 1𝜌−1
𝑤2 𝑥 2
𝜌−1 𝑤2 𝜌−1
𝑥2 = 𝑥
𝑤1 1
( ) 𝜌−1𝜌
𝑤2
𝑥𝜌2 = 𝑥𝜌1
𝑤1
we can solve 𝑥1
( ( 𝜌 )−1
) 𝜌−1
𝑤2
𝑥𝜌1 = 1+ 𝑦𝜌
𝑤1
( ( 𝜌 )−1/𝑝
) 𝜌−1
𝑤2
𝑥1 = 1+ 𝑦
𝑤1
Similarly
( ( 𝜌 )−1/𝑝
) 𝜌−1
𝑤1
𝑥2 = 1+ 𝑦
𝑤2
5.28 Example 5.27 is flawed. The optimum of the constrained maximization problem
(ℎ = 𝑤/2) is in fact a saddle point of the Lagrangean. It maximizes the Lagrangean in
the feasible set, but not globally.
The net benefit approach to the Lagrange multiplier method is really only applicable
when the Lagrangean (net benefit function) is concave, so that every stationary point
is a global maximum. This requirement is satisfied in many standard examples, such
as the consumer’s problem (Example 5.21) and cost minimization (Example 5.28). It
is also met in Example 5.29. The requirement of concavity is not recognized in the
text, and Section 5.3.6 should be amended accordingly.
5.29 The Lagrangean
𝑛
( 𝑛
)
∑ ∑
𝐿(x, 𝜆) = 𝑐𝑖 (𝑥𝑖 ) + 𝜆 𝐷 − 𝑥𝑖 (5.94)
𝑖=1 𝑖=1
can be rewritten as
𝑛
∑ ( )
𝐿(x, 𝜆) = − 𝜆𝑥𝑖 − 𝑐𝑖 (𝑥𝑖 ) + 𝜆𝐷 (5.95)
𝑖=1
The 𝑖th term in the sum is the net profit of plant 𝑖 if its output is valued at 𝜆. Therefore,
if the company undertakes to buy electricity from its plants at the price 𝜆 and instructs
each plant manager to produce so as to maximize the plant’s net profit, each manager
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will be induced to choose an output level which maximizes the profit of the company
as a whole. This is the case whether the price 𝜆 is the market price at which the
company can buy electricity from external suppliers or the shadow price determined
by the need to satisfy the total demand 𝐷. In this way, the shadow price 𝜆 can be used
to decentralize the production decision.
5.30 The Lagrangean for this problem is
𝐿(𝑥1 , 𝑥2 , 𝜆1 , 𝜆2 ) = 𝑥1 𝑥2 − 𝜆1 (𝑥21 + 2𝑥22 − 3) − 𝜆2 (2𝑥21 + 𝑥22 − 3)
The first-order conditions for stationarity
𝐷𝑥1 𝐿 = 𝑥2 − 2𝜆1 𝑥1 − 4𝜆2 𝑥1 = 0
𝐷𝑥2 𝐿 = 𝑥1 − 4𝜆1 𝑥2 − 2𝜆2 𝑥2 = 0
can be written as
𝑥2 = 2(𝜆1 + 2𝜆2 )𝑥1 (5.96)
𝑥1 = 2(2𝜆1 + 𝜆2 )𝑥2 (5.97)
which must be satisfied along with the complementary slackness conditions
𝑥21 + 2𝑥22 − 3 ≤ 0 𝜆1 ≥ 0 𝜆1 (𝑥21 + 2𝑥22 − 3) = 0
2𝑥21 + 𝑥22 − 3 ≤ 0 𝜆2 ≥ 0 𝜆2 (2𝑥21 + 𝑥22 − 3) = 0
First suppose that both constraints are slack so that 𝜆1 = 𝜆2 = 0. Then the first-order
conditions (5.96) and (5.97) imply that 𝑥1 = 𝑥2 = 0. (0, 0) satisfies the Kuhn-Tucker
conditions. Next suppose that the first constraint is binding while the second constraint
√ (𝜆2 = 0).√ The first-order
is slack √ conditions (5.96)
√ and (5.97) √ have two solutions,
√
𝑥1 = 3/2, 𝑥2 = 3/2, 𝜆 = 1/(2 2) and 𝑥1 = − 3/2, 𝑥2 = − 3/2, 𝜆 = 1/(2 2),
but these violate the second constraint. Similarly, there is no solution in which the first
constraint is slack and the second constraint binding. Finally, assume that the both
constraints are binding. This implies that 𝑥1 = 𝑥2 = 1 or 𝑥1 = 𝑥2 = −1, which points
satisfy the first-order conditions (5.96) and (5.97) with 𝜆1 = 𝜆2 = 1/6.
We conclude that three points satisfy the Kuhn-Tucker conditions, namely (0, 0), (1, 1)
and (−1, −1). Noting the objective function, we observe that (0, 0) in fact minimizes
the objective. We conclude that there are two local maxima, (1, 1) and (−1, −1), both
of which achieve the same level of the objective function.
5.31 Dividing the first-order conditions, we obtain
𝐷𝑘 𝑅(𝑘, 𝑙) 𝑟 𝜆(𝑠 − 𝑟)
= −
𝐷𝑙 𝑅(𝑘, 𝑙) 𝑤 (1 − 𝜆)𝑤
Using the revenue function
𝑅(𝑘, 𝑙) = 𝑝(𝑓 (𝑘, 𝑙))𝑓 (𝑘, 𝑙)
the marginal revenue products of capital and labor are
𝐷𝑘 𝑅(𝑘, 𝑙) = 𝐷𝑦 𝑝(𝑦)𝐷𝑘 𝑓 (𝑘, 𝑙)
𝐷𝑙 𝑅(𝑘, 𝑙) = 𝐷𝑦 𝑝(𝑦)𝐷𝑙 𝑓 (𝑘, 𝑙)
𝐷𝑘 𝑅(𝑘, 𝑙) 𝐷𝑘 𝑓 (𝑘, 𝑙)
=
𝐷𝑙 𝑅(𝑘, 𝑙) 𝐷𝑙 𝑓 (𝑘, 𝑙
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max 𝑓 (x)
x
subject to g(x) ≤ 0
max 𝑓 (x)
x,s
through the addition of nonnegative slack variables s. Letting ĝ(x, s) = g(x) + s, the
first-order conditions a local optimum are (Exercise 5.16)
∑ ∑
𝐷x 𝑓 (x∗ ) = 𝜆𝑗 𝐷x 𝑔ˆ𝑗 (x∗ , s∗ ) = 𝜆𝑗 𝐷x 𝑔𝑗 (x∗ )
∑
0 = 𝐷s 𝑓 (x∗ ) ≤ 𝜆𝑗 𝐷s 𝑔ˆ𝑗 (x, s) = 𝝀 (5.98)
s≥0 𝝀𝑇 s = 0 (5.99)
Condition (5.98) implies that 𝜆𝑗 ≥ 0 for every 𝑗. Furthermore, rewriting the constraint
as
s = −g(x)
g(x) ≤ 0 𝝀𝑇 g(x) = 0
max 𝑓 (x)
x
subject to g(x) = 0
max 𝑓 (x)
x
subject to g(x) ≤ 0
−g(x) ≤ −0
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with
𝜆+ −
𝑗 𝑔𝑗 (x) = 0 and 𝜆𝑗 𝑔𝑗 (x) = 0 𝑗 = 1, 2, . . . , 𝑚
Defining 𝜆𝑗 = 𝜆+ −
𝑗 − 𝜆𝑗 , (5.100) can be written as
∑
𝐷𝑓 (x∗ ) = 𝜆𝑗 𝐷𝑔𝑗 [x∗ ]
𝑔(x∗ ) = 0
max c𝑇 x subject to 𝐴x ≤ 0
x
with Lagrangean
𝐿 = c𝑇 x − 𝝀𝑇 𝐴x
𝐷x 𝐿 = c𝑇 − 𝝀𝑇 𝐴 = 0
c𝑇 x > c𝑇 0 = 0
𝑔(𝑥1 , 𝑥2 ) = 𝑥1 + 𝑥2 ≤ 4
ℎ(𝑥1 , 𝑥2 ) = −𝑥2 ≤ 0
with gradients
∇𝑔(4, 0) = (1, 1)
∇ℎ(4, 0) = (0, 1)
which are linearly independent. Therefore the binding constraints are regular at (0, 4).
5.36 The Lagrangean for this problem is
𝐷𝑥𝑖 𝐿[x∗ , 𝜆] = 𝐷𝑥𝑖 𝑢[x∗ ] − 𝜆𝑝𝑖 ≤ 0 x∗𝑖 ≥ 0 𝑥∗𝑖 (𝐷𝑥𝑖 𝑢[x∗ ] − 𝜆𝑝𝑖 ) = 0 (5.101)
𝑇 ∗ 𝑇 ∗
p x ≤𝑚 𝜆≥0 𝜆(p x − 𝑚) = 0 (5.102)
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Case 1 𝜆 > 0 This implies that p𝑇 x = 𝑚, the consumer spends all her income.
Condition (5.101) implies
𝐷𝑥𝑖 𝑢[x∗ ] ≤ 𝜆𝑝𝑖 for every 𝑖 with 𝐷𝑥𝑖 𝑢[x∗ ] = 𝜆𝑝𝑖 for every 𝑖 for which 𝑥𝑖 > 0
This case was analyzed in Example 5.17.
Case 2 𝜆 = 0 This allows the possibility that the consumer does not spend all her
income. Substituting 𝜆 = 0 in (5.101) we have 𝐷𝑥𝑖 𝑢[x∗ ] = 0 for every 𝑖. At the
optimal consumption bundle x∗ , the marginal utility of every good is zero. The
consumer is satiated, that is no additional consumption can increase satisfaction.
This case was analyzed in Example 5.31.
In summary, at the optimal consumption bundle x∗ , either
∙ the consumer is satiated (𝐷𝑥𝑖 𝑢[x∗ ] = 0 for every 𝑖) or
∙ the consumer consumes only those goods whose marginal utility exceeds the
threshold 𝐷𝑥𝑖 𝑢[x∗ ] ≥ 𝜆𝑝𝑖 and adjusts consumption so that the marginal
utility is proportional to price for all consumed goods.
5.37 Assume x ∈ 𝐷(x∗ ). Then there exists 𝛼 ¯ ∈ ℜ such that x∗ + 𝛼x ∈ 𝑆 for every
0 ≤ 𝛼 ≤ 𝛼.¯ Define 𝑔 ∈ 𝐹 ([0, 𝛼¯ ]) by 𝑔(𝛼) = 𝑓 (x∗ + 𝛼x). If x∗ is a local maximum, 𝑔
has a local maximum at 0, and therefore 𝑔 ′ (0) ≤ 0 (Theorem 5.1). By the chain rule
(Exercise 4.22), this implies
𝑔 ′ (0) = 𝐷𝑓 [x∗ ](x) ≤ 0
/ 𝐻 + (x∗ ).
and therefore x ∈
5.38 If x is a tangent vector, so is 𝛽x for any nonnegative 𝛽 (replace 1/𝛼𝑘 by 𝛽/𝛼𝑘 in
the preceding definition. Also, trivially, x = 0 is a tangent vector (with x𝑘 = x∗ and
𝛼𝑘 = 1 for all 𝑘). The set 𝑇 of all vectors tangent to 𝑆 at x∗ is therefore a nonempty
cone, which is called the cone of tangents to 𝑆 at x∗ .
To show that 𝑇 is closed, let x𝑛 be a sequence in 𝑇 converging to some x ∈ ℜ𝑛 . We
need to show that x ∈ 𝑇 . Since x𝑛 ∈ 𝑇 , there exist feasible points x𝑚𝑛 ∈ 𝑆 and 𝛼𝑚𝑛
such that
(x𝑚𝑛 − x∗ )/𝛼𝑚𝑛 → x𝑛 as 𝑚 → ∞
For any 𝑁 choose 𝑛 such that
1
∥x𝑛 − x∥ ≤ 𝑁
2
and then choose 𝑚 such that
1
∥x𝑚𝑛 − x∗ ∥ ≤ 𝑁 and ∥(x𝑚𝑛 − x∗ )/𝛼𝑚𝑛 − x𝑛 ∥ ≤ 𝑁
2
and
𝑁
(x − x∗ )/𝛼𝑁 − x ≤ (x𝑁 − x∗ )/𝛼𝑁 − x𝑛 + ∥x𝑛 − x∥ ≤ 1 𝑁
1
Letting 𝑁 → ∞, x𝑁 converges to x∗ and (x𝑁 − x∗ )/𝛼𝑁 converges to x, which proves
that x ∈ 𝑇 as required.
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5.39 Assume x ∈ 𝐷(x∗ ). That is, there exists 𝛼 ¯ such that x∗ + 𝛼x ∈ 𝑆 for every
𝛼 ∈ [0, 𝛼 ¯ /𝑘. Then x𝑘 = x∗ + 𝛼𝑘 x ∈ 𝑆, x𝑘 → x∗ and
¯ ]. For 𝑘 = 1, 2, . . . , let 𝛼𝑘 = 𝛼
(x − x )/𝛼𝑘 = (x + 𝛼𝑘 x − x )/𝛼𝑘 = x. Therefore, x ∈ 𝑇 (x∗ ).
𝑘 ∗ ∗ ∗
5.40 Let dx ∈ 𝑇 (x∗ ). Then there exists a feasible sequence {x𝑘 } converging to x∗ and a
sequence {𝛼𝑘 } of nonnegative scalars such that the sequence {(x𝑘 − x∗ )/𝛼𝑘 } converges
to dx. For any 𝑗 ∈ 𝐵(x∗ ), 𝑔𝑗 (x∗ ) = 0 and
𝑔𝑗 (x𝑘 ) = 𝐷𝑔𝑗 [x∗ ](x𝑘 − x∗ ) + 𝜂𝑗 x𝑘 − x∗
1 1
𝑘
𝑔𝑗 (x𝑘 ) = 𝑘 𝐷𝑔𝑗 [x∗ ](x𝑘 − x∗ ) + 𝜂𝑗 (x𝑘 − x∗ )/𝛼𝑘
𝛼 𝛼
Since x𝑘 is feasible
1
𝑔𝑗 (x𝑘 ) ≤ 0
𝛼𝑘
and therefore
𝐷𝑔𝑗 [x∗ ]((x𝑘 − x∗ )/𝛼𝑘 ) + 𝜂 𝑖 (x𝑘 − x∗ )/𝛼𝑘 ≤ 0
That is, dx ∈ 𝐿.
5.41 𝐿0 ⊆ 𝐿1 by definition. Assume dx ∈ 𝐿1 . That is
Furthermore, since 𝑔𝑗 (x∗ ) < 0 for all 𝑗 ∈ 𝑆(x∗ ), there exists some 𝛼𝑆 > 0 such that
Setting 𝛼
¯ = min{𝛼𝑁 , 𝛼𝑆 } we have
or
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5.42 Assume that g satisfies the Quasiconvex CQ condition at x∗ . That is, for every
𝑗 ∈ 𝐵(x∗ ), 𝑔𝑗 is quasiconvex, ∇𝑔𝑗 (x∗ ) ∕= 0 and there exists x̂ such that 𝑔𝑗 (x̂) < 0.
Consider the perturbation dx = x̂ − x∗ . Quasiconvexity and regularity implies that
for every binding constraint 𝑗 ∈ 𝐵(x∗ ) (Exercises 4.74 and 4.75)
𝑔𝑗 (x̂) < 𝑔𝑗 (x∗ ) =⇒ ∇𝑔𝑗 (x∗ )𝑇 (x̂ − x∗ ) = ∇𝑔𝑗 (x∗ )𝑇 dx < 0
That is
𝐷𝑔𝑗 [x∗ ](dx) < 0
Therefore, dx ∈ 𝐿0 (x∗ ) ∕= ∅ and g satisfies the Cottle constraint qualification condition.
5.43 If the binding constraints 𝐵(x∗ ) are regular at x∗ , their gradients are linearly
independent. That is, there exists no 𝜆𝑗 ∕= 0, 𝑗 ∈ 𝐵(x∗ ) such that
∑
𝜆𝑗 ∇𝑔𝑗 [x∗ ] = 0
𝑗∈𝐵(x∗ )
where 𝐵 𝐶 (x∗ ) and 𝐵 𝑁 (x∗ ) are respectively the concave and nonconcave constraints
binding at x∗ . If 𝑔𝑗 satisfies the AHUCQ condition, 𝐿1 (x∗ ) ∕= ∅ and Exercise 1.219
implies that
⎛ ⎞ ⎛ ⎞
∩ ∩ ∩
𝐿1 = ⎝ 𝑆𝑖 ⎠ ⎝ 𝑆𝑖 ⎠
𝑖∈𝐵 𝑁 (x∗ ) 𝑖∈𝐵 𝐶 (x∗ )
Now
𝑆𝑖 = { dx : 𝐷𝑔𝑗 [x∗ ](dx) ≤ 0 }
and therefore
∩
𝐿1 = 𝑆𝑖 = 𝐿
𝑗∈𝐵(x∗ )
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If
∑ ( )𝑇
∇𝑓 (x∗ ) ≤ 𝜆𝑗 ∇𝑔𝑗 (x∗ ) x∗ ≥ 0 ∇𝑓 (x∗ ) − 𝜆𝑗 ∇𝑔𝑗 (x∗ ) x∗ = 0
and therefore
( )𝑇
∇𝑓 (x∗ ) − 𝜆𝑗 ∇𝑔𝑗 (x∗ ) (x − x∗ ) ≤ 0
or
∑
∇𝑓 (x∗ )𝑇 (x − x∗ ) ≤ 𝜆𝑗 ∇𝑔𝑗 (x∗ )𝑇 (x − x∗ ) ≤ 0
2𝑥𝑐 ≤ 30
2𝑥𝑐 ≤ 25
𝑥𝑐 ≤ 20
The first and third conditions are redundant, which implies that 𝜆𝑓 = 𝜆𝑚 = 0. Com-
plementary slackness requires that, if 𝑥𝑐 > 0,
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Following the hint, we allow 𝑥𝑑 > 0, retaining the assumption that 𝑥𝑏 = 0. We must
be alert to the possibility that 𝑥𝑐 = 0. With 𝑥𝑏 = 0, the constraints become
2𝑥𝑐 + 𝑥𝑑 ≤ 30
2𝑥𝑐 + 3𝑥𝑑 ≤ 25
𝑥𝑐 + 𝑥𝑑 ≤ 20
𝐷𝑥𝑑 𝐿 = 3 − 3𝜆𝑙 − 𝜆𝑚 = 0
or
𝜆𝑚 = 3(1 − 𝜆𝑙 ) (5.105)
implies that
𝑥𝑑 ≤ 30
3𝑥𝑑 ≤ 25
𝑥𝑑 ≤ 20
The first and third are redundant, so that 𝜆𝑓 and 𝜆𝑚 = 0. Equation (5.105) implies
that 𝜆𝑙 = 1.
Evaluating the Lagrangean at this point (𝜆 = 0, 1, 0), we have
2𝑥𝑏 + 2𝑥𝑐 ≤ 30
𝑥𝑏 + 2𝑥𝑐 ≤ 25
2𝑥𝑏 + 𝑥𝑐 ≤ 20
These three constraints are linearly dependent, so that any one of them is redundant
and can be eliminated. For example, 3/2 times the first constraint is equal to the sum of
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the second and third constraints. The feasible solution 𝑥𝑏 = 0, 𝑥𝑐 = 5, 𝑥𝑑 = 10, where
the constraints are linearly dependent, is known as a degenerate solution. Degeneracy
is a significant feature of linear programming, allowing the theoretical possibility of a
breakdown in the simplex algorithm. Fortunately, such breakdown seems very rare in
practice. Degeneracy at the optimal solution indicates multiple optima.
One way to proceed in this example is to arbitrarily designate one constraint as redun-
dant, assuming the corresponding multiplier is zero. Arbitrarily choosing 𝜆𝑚 = 0 and
proceeding as before, complementary slackness (𝑥𝑑 > 0) requires that
𝐷𝑥𝑑 𝐿 = 3 − 2𝜆𝑓 − 𝜆𝑙 = 0
or
𝜆𝑙 = 3 − 2𝜆𝑓 (5.106)
c1 ≤ 0 𝑧1 ≥ 𝑧 ∗
c2 ≤ 0 𝑧2 ≥ 𝑧 ∗
and therefore (c̄, 𝑧¯) ∈ 𝐵. This shows that 𝐵 is convex. Let 1 = (1, 1, . . . , 1) ∈ ℜ𝑚 .
Then (c − 1, 𝑧 + 1) ∈ int 𝐵 ∕= ∅. There 𝐵 has a nonempty interior.
5.49 Let (c, 𝑧) ∈ int 𝐵. This implies that c < 0 and 𝑧 > 𝑧 ∗ . Since 𝑣 is monotone
𝐿(c, 𝑧) = 𝛼𝑧 − 𝜑(c)
𝐿(c, 𝑧) = 𝛼𝑧 − 𝝀𝑇 c
𝐿(0, 𝑧 ∗ ) ≤ 𝐿(0, 𝑧 ∗ + 1)
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𝛼𝑧 ∗ − 𝝀𝑇 0 ≤ 𝛼(𝑧 ∗ + 1) − 𝝀𝑇 0
𝑧 ∗ − 𝝀𝑇 (0 − e𝑗 ) = 𝑧 ∗ + 𝜆𝑗 ≥ 𝑧 ∗ − 𝝀𝑇 0 = 𝑧 ∗
𝝀𝑇 𝑐ˆ < 0 (5.107)
𝑧 − 𝝀𝑇 ĉ ≤ 𝛼𝑧 ∗ − 𝝀𝑇 0
𝛼ˆ
𝝀𝑇 𝑐ˆ ≥ 0
The demand independence assumption ensures that the objective function 𝑆 is concave,
since its Hessian
⎛ ⎞
𝐷𝑝1 0 . . . 0 0
⎜ 0 𝐷𝑝2 . . . 0 0⎟
𝐻𝑆 = ⎜
⎝ 0
⎟
... 𝐷𝑝𝑛 0⎠
0 ... 0 0
is nonpositive definite (Exercise 3.96). The constraints are linear and hence convex.
Moreover, there exists a point (0, 1) such that for every 𝑖 = 1, 2, . . . , 𝑛
𝑔𝑖 (0, 1) = 0 − 1 < 0
Therefore the problem satisfies the conditions of Theorem 5.6. The optimal solution
(y∗ , 𝑌 ∗ ) satisfies the Kuhn-Tucker conditions, that is there exist multipliers 𝜆1 , 𝜆2 , . . . , 𝜆𝑚
such that for every period 𝑖 = 1, 2, . . . , 𝑛
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𝑛
( 𝑛
)
∑ ∑
𝐷 𝑌 𝐿 = 𝑐0 − 𝜆𝑖 ≤ 0 𝑌 ≥0 𝑌 𝑐0 − 𝜆𝑖 =0 (5.109)
𝑖=1 𝑖=1
In off-peak periods (𝑦𝑖 < 𝑌 ), complementary slackness requires that 𝜆𝑖 = 0 and there-
fore from (5.108)
𝑝𝑖 (𝑦𝑖 ) = 𝑐𝑖
𝑝𝑖 (𝑦𝑖 ) = 𝑐𝑖 + 𝜆𝑖
We conclude that it is optimal to price at marginal cost in off-peak periods and charge
a premium during peak periods. Furthermore, (5.109) implies that the total premium
is equal to the marginal capacity cost
𝑛
∑
𝜆𝑖 = 𝑐0
𝑖=1
Under the optimal pricing policy, revenue equals cost and the utility breaks even.
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𝐻𝐿 x + 𝐽g𝑇 y = 0 (6.29)
𝐽g x = 0 (6.30)
But (6.30) implies that the second term is 0 and therefore x𝑇 𝐻𝐿 x = 0. Since 𝐻𝐿 is
positive definite on 𝑇 = { x : 𝐽g x = 0 }, we must have x = 0. Then (6.29) reduces to
𝐽g𝑇 y = 0
Since 𝐽g has rank 𝑚, this has only the trivial solution y = 0 (Section 3.6.1). We have
shown that the system (6.38) has only the trivial solution (0, 0). This implies that the
matrix 𝐽 is nonsingular.
6.2 The Lagrangean for this problem is
( )
𝐿 = 𝑓 (x) − 𝝀𝑇 g(x) − c
By Corollary 6.1.1
∇𝑣(c) = 𝐷c 𝐿 = 𝝀
In particular
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𝑓 (x1 − x2 , 𝜽1 ) ≥ 𝑓 (x1 − x2 , 𝜽2 )
and
𝑓 (x1 − x2 , 𝜽 1 − 𝜽 2 ) ≥ 0
6.4 Let 𝑝1 denote the profit maximizing price with the cost function 𝑐1 (𝑦) and let 𝑦1 be
the corresponding output. Similarly let 𝑝2 and 𝑦2 be the profit maximizing price and
output when the costs are given by 𝑐2 (𝑦).
With cost function 𝑐1 , the firms profit is
Π = 𝑝𝑦 − 𝑐1 (𝑦)
Since this is maximised at 𝑝1 and 𝑦1 (although the monopolist could have sold 𝑦2 at
price 𝑝2 )
𝑝1 𝑦1 − 𝑐1 (𝑦1 ) ≥ 𝑝2 𝑦2 − 𝑐1 (𝑦2 )
Rearranging
The increase in revenue in moving from 𝑦2 to 𝑦1 is greater than the increase in cost.
Similarly
𝑝2 𝑦2 − 𝑐2 (𝑦2 ) ≥ 𝑝1 𝑦1 − 𝑐2 (𝑦1 )
𝑐2 (𝑦1 ) − 𝑐2 (𝑦2 ) ≥ 𝑝1 𝑦1 − 𝑝2 𝑦2
and therefore
2
𝐷𝑝 𝑦(𝑝, w) = 𝐷𝑝𝑝 Π(𝑝, w) ≥ 0
2
𝐷𝑤𝑖 𝑥𝑖 (𝑝, w) = −𝐷𝑤 𝑖 𝑤𝑖
Π(𝑝, w) ≤ 0
2
𝐷𝑤𝑗 𝑥𝑖 (𝑝, w) = −𝐷𝑤 𝑖 𝑤𝑗
Π(𝑝, w) = 𝐷𝑤𝑖 𝑥𝑗 (𝑝, w)
2
𝐷𝑝 𝑥𝑖 (𝑝, w) = −𝐷𝑤 𝑖𝑝
Π(𝑝, w) = −𝐷𝑤𝑖 𝑦(𝑝, w)
since Π is convex and therefore 𝐻Π (w, 𝑝) is symmetric (Theorem 4.2) and nonnegative
definite (Proposition 4.1).
6.6 By Shephard’s lemma (6.17)
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Therefore
6.7 The demand functions must satisfy the budget contraint identically, that is
𝑛
∑
𝑝𝑖 𝑥𝑖 (p, 𝑚) = 𝑚 for every p and 𝑚
𝑖=1
This is the Engel aggregation condition, which simply states that any additional income
be spent on some goods. Multiplying each term by 𝑥𝑖 𝑚/(𝑥𝑖 𝑚)
𝑛
∑ 𝑝𝑖 𝑥𝑖 𝑚
𝐷𝑚 𝑥𝑖 [p, 𝑚] = 1
𝑖=1
𝑚 𝑥𝑖 (p, 𝑚)
where 𝛼𝑖 = 𝑝𝑖 𝑥𝑖 /𝑚 is the budget share of good 𝑖. On average, goods must have unit
income elasticities.
Differentiating the budget constraint with respect to 𝑝𝑗
𝑛
∑
𝑝𝑖 𝐷𝑝𝑗 𝑥𝑖 [p, 𝑚] + 𝑥𝑗 (𝑝, 𝑚) = 0
𝑖=1
This is the Cournot aggregation condition, which implies that an increase in the price
of 𝑝𝑗 is equivalent to a decrease in real income of 𝑥𝑗 𝑑𝑝𝑗 . Multiplying each term in the
sum by 𝑥𝑖 /𝑥𝑖 gives
𝑛
∑ 𝑝𝑖 𝑥𝑖
𝐷𝑝𝑗 𝑥𝑖 [p, 𝑚] = −𝑥𝑗
𝑖=1
𝑥𝑖
Multiplying through by 𝑝𝑗 /𝑚
𝑛
∑ 𝑝𝑖 𝑥𝑖 𝑝𝑗 𝑝𝑗 𝑥𝑗
𝐷𝑝𝑗 𝑥𝑖 [p, 𝑚] = −
𝑖=1
𝑚 𝑥𝑖 𝑚
𝑛
∑
𝛼𝑖 𝜖𝑖𝑗 = −𝛼𝑗
𝑖=1
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6.8 Supermodularity of Π(x, 𝑝, −w) follows from Exercises 2.50 and 2.51. To show
strictly increasing differences, consider two price vectors w2 ≥ w1
𝑛
∑ 𝑛
∑
Π(x, 𝑝, −w1 ) − Π(x, 𝑝, −w2 ) = (−𝑤𝑖1 )𝑥𝑖 − (−𝑤𝑖2 )𝑥𝑖
𝑖=1 𝑖=1
𝑛
∑
= (𝑤𝑖2 − 𝑤𝑖1 )𝑥𝑖
𝑖=1
∑𝑛
Since w2 ≥ w1 , w2 − w1 ≥ 0 and 2
𝑖=1 (𝑤𝑖 − 𝑤𝑖1 )𝑥𝑖 is strictly increasing in x.
6.9 For any 𝑝2 ≥( 𝑝1 , 𝑦 2 = 𝑓 (𝑝2 ) ≤ 𝑓 (𝑝1 ) = 𝑦 1 and 𝑐(𝑦 1 , 𝜃) − 𝑐(𝑦 2 , 𝜃) is increasing in 𝜃
and therefore − 𝑐(𝑓 (𝑝2 ), 𝜃) − 𝑐(𝑓 (𝑝1 ), 𝜃)) is increasing in 𝜃.
6.10 The firm’s optimization problem is
is
∙ supermodular in 𝑦 (Exercise 2.49)
∙ displays strictly increasing differences in (𝑦, 𝜃) since
( )
𝑓 (𝑦 2 , 𝑝, 𝜃) − 𝑓 (𝑦 1 , 𝑝, 𝜃) = 𝜃𝑝(𝑦 2 − 𝑦 1 ) − 𝑐(𝑦 2 ) − 𝑐(𝑦 1 )
where Δ = 𝑓11 𝑓22 − 𝑓12 𝑓21 ≥ 0 by the second-order condition. Therefore, the Jacobian
of the demand functions is
( ) ( )
𝐷𝑤1 𝑥1 𝐷𝑤2 𝑥1 1 −1 1 𝑓22 −𝑓12
= 𝐻𝑓 =
𝐷𝑤1 𝑥2 𝐷𝑤2 𝑥2 𝑝 𝑝Δ −𝑓21 𝑓11
Therefore
{
𝑓21 <0 if 𝑓21 > 0
𝐷𝑤1 𝑥2 = −
𝑝Δ ≥0 otherwise
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