Mathematics for Economics

Homework 2

Do the following problems in the textbook.

Chapter 11.6. #2, #6 and #8 in page 395: See the text to find what Hessian matix means.

1. Suppose that p and q are differentiable functions of x and p > 0. Prove

µ ¶
q 0 q 0 p0 q
z(x) = p ⇒ z (x) = p q ln p + .
p

2. Is the function y = |x| + 2 continuous or differentiable? Answer with yes or no and

provide the reason.

3. Use the Intermediate Value Theorem to show that the equation 10x4 − 15x3 + x2 − 1 = 0
has a solution between −1 and 1.

4. Suppose that u is a concave function and that g is an increasing and concave function.
Assume that u and g are twice-differentiable. Show that f (x) = g(u(x)) for all x is
concave.

5. We assume that both f and g are single-variable functions. Define a new function,
L(x) ≡ f (x) − λg(x) where λ ≥ 0 is a constant.
a. Assume that f and g are twice differentiable. When is the function L(x) concave?
b. For (b) and (c), do not assume that f and g are differentiable. Show that if f (x) is
concave, then −f (x) is convex.
c. Show that if f (x) is concave and g(x) is convex, then L(x) is concave.

6. Consider two functions, f (x) = ax+b and g(x) = a1 x− ab (a 6= 0). The graphs are straight
lines which are symmetric about the line y = x. The slopes are a and a1 , respectively.
These two functions are inverse functions to each other.
a. Show that g(f (x)) = x using the functions.
b. In general, if f is strictly increasing (decreasing) in an interval, then it has an inverse
function g which is strictly increasing (decreasing) in the interval. It then follows
g(f (x)) = x. Consider the function f and pick a point x0 in the interval which
satisfies y0 = f (x0 ) and f 0 (x0 ) 6= 0. Prove that the differentiation of the function g
at y0 is
1
g0 (y0 ) = 0 .
f (x0 )