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    Leon Esquierro
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    The document forms a Lagrangian to maximize a function subject to a constraint. Taking the partial derivatives of the Lagrangian with respect to x1, x2, and λ yields three first-order conditions. Dividing the first condition by the second allows expressing x2 in terms of x1. Substituting this expression into the constraint gives an equation involving only x1. Solving this yields the optimal values of x1 and x2 in terms of the parameters of the original problem.

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    ex 1.20

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    The document forms a Lagrangian to maximize a function subject to a constraint. Taking the partial derivatives of the Lagrangian with respect to x1, x2, and λ yields three first-order conditions. Dividing the first condition by the second allows expressing x2 in terms of x1. Substituting this expression into the constraint gives an equation involving only x1. Solving this yields the optimal values of x1 and x2 in terms of the parameters of the original problem.

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    © All Rights Reserved
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    8 views1 page

    Ex 1.20

    Uploaded by

    Leon Esquierro
    The document forms a Lagrangian to maximize a function subject to a constraint. Taking the partial derivatives of the Lagrangian with respect to x1, x2, and λ yields three first-order conditions. Dividing the first condition by the second allows expressing x2 in terms of x1. Substituting this expression into the constraint gives an equation involving only x1. Solving this yields the optimal values of x1 and x2 in terms of the parameters of the original problem.

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    © All Rights Reserved
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    of 1

    Forming the Lagrangian:

    L = Ax1x21- + (y-p1x1-p2x2)

    F.O.C:

    L/x1 = Ax1-1x21- - p1 = 0 (1)

    L/x2 = A(1-)x1x2- - p2 = 0 (2)

    L/ = y-p1x1-p2x2 = 0 (3)

    Dividing (1) by (2) we obtain,

    ( / 1-)  ( x2 / x1 ) = (p1/ p2)

     x2 = (1- )/  (p1/ p2)  x1 (4)

    Substituting (4) into (3) we obtain:

    y = p1x1+p2  (1- )/  (p1/ p2)  x1

    = (p1x1)/

     x1 = (/p1)y

    Similarly:

     x2 = y(1-)/p2

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