𝜕𝑧 𝜕𝑧 𝜕2 𝑧 𝜕2 𝑧 𝜕2 𝑧 𝜕2 𝑧

1. If 𝑧 = 𝑥 3 + 2𝑥 2 𝑦 + 𝑥𝑦 2 − 𝑦 3 , then find 𝜕𝑥, 𝜕𝑦 𝜕𝑥 2, , 𝜕𝑥𝜕𝑦, 𝜕𝑦𝜕𝑥

𝜕𝑦 2

Solution: Given 𝑧 = 𝑥 3 + 2𝑥 2 𝑦 + 𝑥𝑦 2 − 𝑦 3
𝜕𝑧 𝜕
Then, 𝜕𝑥 = 𝜕𝑥 (𝑥 3 + 2𝑥 2 𝑦 + 𝑥𝑦 2 − 𝑦 3 )
𝜕 𝜕 𝜕 𝜕
= 𝜕𝑥 (𝑥 3 ) + 2𝑦 𝜕𝑥 (𝑥 2 ) + 𝑦 2 𝜕𝑥 (𝑥) − 𝜕𝑥 (𝑦 3 )

= 3𝑥 2 + 2𝑦 ∙ 2𝑥 + 𝑦 2 ∙ 1 − 0
= 3𝑥 2 + 4𝑥𝑦 + 𝑦 2
𝜕𝑧 𝜕
= 𝜕𝑦 (𝑥 3 + 2𝑥 2 𝑦 + 𝑥𝑦 2 − 𝑦 3 )
𝜕𝑦
𝜕 𝜕 𝜕 𝜕
= 𝜕𝑦 (𝑥 3 ) + 2𝑥 2 𝜕𝑦 (𝑦) + 𝑥 𝜕𝑦 (𝑦 2 ) − 𝜕𝑦 (𝑦 3 )

= 0 + +2𝑥 2 ∙ 1 + 𝑥 ∙ 2𝑦 − 3𝑦 2
= 2𝑥 2 + 2𝑥𝑦 − 𝑦 2
𝜕2 𝑧 𝜕 𝜕𝑧
Now, = 𝜕𝑥 (𝜕𝑥)
𝜕𝑥 2
𝜕
= 𝜕𝑥 (3𝑥 2 + 4𝑥𝑦 + 𝑦 2 )
𝜕 𝜕 𝜕
= 𝜕𝑥 (3𝑥 2 ) + 𝜕𝑥 (4𝑥𝑦) + 𝜕𝑥 (𝑦 2 ))
𝜕 𝜕 𝜕
=3 (𝑥 2 ) + 4𝑦 (𝑥) + (𝑦 2 ))
𝜕𝑥 𝜕𝑥 𝜕𝑥

= 3 ∙ 2𝑥 + 4𝑦 ∙ 1 + 0
= 6𝑥 + 4𝑦
𝜕2 𝑧 𝜕 𝜕𝑧
And, = 𝜕𝑦 (𝜕𝑦)
𝜕𝑦 2
𝜕
= 𝜕𝑦 (2𝑥 2 + 2𝑥𝑦 − 𝑦 2 )
𝜕 𝜕 𝜕
= 𝜕𝑦 (2𝑥 2 ) + 𝜕𝑦 (2𝑥𝑦) − 𝜕𝑦 (𝑦 2 ))
𝜕 𝜕 𝜕
= 2 𝜕𝑦 (𝑥 2 ) + 2𝑥 𝜕𝑦 (𝑦) − 𝜕𝑥 (𝑦 2 ))

= 2 ∙ 2𝑥 + 2𝑥 ∙ 1 − 0
= 4𝑥 + 2𝑦
𝜕2 𝑧 𝜕 𝜕𝑧
Again, = 𝜕𝑥 (𝜕𝑦)
𝜕𝑥𝜕𝑦
𝜕
= 𝜕𝑥 (2𝑥 2 + 2𝑥𝑦 − 𝑦 2 )
 𝜕 𝜕 𝜕
= 2 𝜕𝑥 (𝑥 2 ) + 2𝑦 𝜕𝑥 (𝑥) − 𝜕𝑥 (𝑦 2 )

= 2 ∙ 2𝑥 + 2𝑦 ∙ 1 − 0
= 4𝑥 + 2𝑦
𝜕2 𝑧 𝜕 𝜕𝑧
And, = 𝜕𝑦 (𝜕𝑥)
𝜕𝑦𝜕𝑥
𝜕
= 𝜕𝑦 (3𝑥 2 + 4𝑥𝑦 + 𝑦 2 )
𝜕 𝜕 𝜕
= 𝜕𝑦 (3𝑥 2 ) + 𝜕𝑦 (4𝑥𝑦) + 𝜕𝑦 (𝑦 2 )
𝜕 𝜕 𝜕
= 3 𝜕𝑦 (𝑥 2 ) + 4𝑥 𝜕𝑦 (𝑦) + 𝜕𝑦 (𝑦 2 )

= 0 + 4𝑥 ∙ 1 + 2𝑦
= 4𝑥 + 2𝑦
𝑥𝑦 𝜕𝑧 𝜕𝑧
2. If 𝑧 = 𝑥 2 +𝑦 2, then prove that 𝑥 𝜕𝑥 + 𝑦 𝜕𝑦 = 0
𝑥𝑦
Proof. Given, 𝑧 = 𝑥 2 +𝑦 2

Partially differentiating the function w.r.t. 𝑥, we get

𝜕𝑧 𝜕 𝑥𝑦
= 𝜕𝑥 (𝑥 2 +𝑦 2 )
𝜕𝑥
𝜕 𝜕
(𝑥 2 +𝑦 2 ) (𝑥𝑦)−(𝑥𝑦) (𝑥 2 +𝑦 2 )
𝜕𝑥 𝜕𝑥
= (𝑥 2 +𝑦 2 )2

(𝑥 2 +𝑦 2 )(𝑦)−(𝑥𝑦)(2𝑥+0)
= (𝑥 2 +𝑦2 )2

𝑥 2 𝑦+𝑦 3 −2𝑥 2 𝑦
= (𝑥 2 +𝑦 2 )2

𝑦 3 −𝑥 2 𝑦
= (𝑥 2 +𝑦 2)2

Again, partially differentiating w.r.t. 𝑦, we get

𝜕𝑧 𝜕 𝑥𝑦
= 𝜕𝑦 (𝑥 2 +𝑦 2)
𝜕𝑦
𝜕 𝜕
(𝑥 2 +𝑦 2 ) (𝑥𝑦)−(𝑥𝑦) (𝑥 2 +𝑦2 )
𝜕𝑦 𝜕𝑦
= (𝑥 2 +𝑦 2 )2

(𝑥 2 +𝑦 2 )(𝑥∙1)−(𝑥𝑦)(0+2𝑦)
= (𝑥 2 +𝑦 2 )2

𝑥 3 +𝑥𝑦 2 −2𝑥𝑦 2
= (𝑥 2 +𝑦 2 )2

𝑥 3 −𝑥𝑦 2
= (𝑥 2 +𝑦 2)2
 𝜕𝑧 𝜕𝑧 𝑦 3 −𝑥2 𝑦 𝑥 3 −𝑥𝑦 2
Then , 𝑥 𝜕𝑥 + 𝑦 𝜕𝑦 = 𝑥 ((𝑥 2 +𝑦 2 )2 ) + 𝑦 ((𝑥 2 +𝑦 2)2 )
𝑥𝑦 3 −𝑥 3 𝑦 𝑥 3 𝑦−𝑥𝑦 3
= (𝑥 2 +𝑦 2)2 + (𝑥 2 +𝑦 2 )2
𝑥𝑦 3 −𝑥 3 𝑦+𝑥 3 𝑦−𝑥𝑦 3
= (𝑥 2 +𝑦2 )2
𝜕𝑧 𝜕𝑧
Hence, 𝑥 𝜕𝑥 + 𝑦 𝜕𝑦 = 0 (proved)
𝜕2 𝑢 𝜕2 𝑢
3. If 𝑢 = log(𝑥 2 + 𝑦 2 ), prove that 𝜕𝑥 2 + 𝜕𝑦 2 = 0

Proof. Given, 𝑢 = log(𝑥 2 + 𝑦 2 )

Differentiating with respect to x, we get
𝜕𝑢 𝜕
= 𝜕𝑥 (log(𝑥 2 + 𝑦 2 ))
𝜕𝑥
1 𝜕
= 𝑥 2 +𝑦 2 𝜕𝑥 (𝑥 2 + 𝑦 2 )
1
= 𝑥 2 +𝑦 2 (2𝑥 + 0)
2𝑥
= 𝑥 2 +𝑦 2
𝜕𝑢 𝜕
= 𝜕𝑦 (log(𝑥 2 + 𝑦 2 ))
𝜕𝑦
1 𝜕
= (𝑥 2 + 𝑦 2 )
𝑥 2 +𝑦 2 𝜕𝑦
1
= 𝑥 2 +𝑦 2 (0 + 2𝑦)
2𝑦
= 𝑥 2 +𝑦 2

Differentiating 2nd times, we get-

𝜕2 𝑢 𝜕 𝜕𝑢
= 𝜕𝑥 (𝜕𝑥 )
𝜕𝑥 2
𝜕 2𝑥
= 𝜕𝑥 (𝑥 2 +𝑦 2)
𝜕 𝜕
(𝑥 2 +𝑦 2 ) (2𝑥)−(2𝑥) (𝑥 2 +𝑦2 )
𝜕𝑥 𝜕𝑥
= (𝑥 2 +𝑦 2 )2

(𝑥 2 +𝑦 2 )(2∙1)−(2𝑥)(2𝑥)
= (𝑥 2 +𝑦 2 )2

2𝑥 2 +2𝑦 2 −4𝑥2
= (𝑥 2 +𝑦 2 )2

𝜕2 𝑢 2𝑦 2 −2𝑥 2
∴ = (𝑥 2 +𝑦 2 )2
𝜕𝑥 2
Similarly,
𝜕2 𝑢 𝜕 𝜕𝑢
= 𝜕𝑥 (𝜕𝑦)
𝜕𝑦 2
𝜕 2𝑦
= 𝜕𝑥 (𝑥 2 +𝑦 2)
𝜕 𝜕
(𝑥 2 +𝑦 2 ) (2𝑦)−(2𝑦) (𝑥 2 +𝑦2 )
𝜕𝑦 𝜕𝑦
= (𝑥 2 +𝑦 2 )2

(𝑥 2 +𝑦 2 )(2∙1)−(2𝑦)(2𝑦)
= (𝑥 2 +𝑦 2 )2

2𝑥 2 +2𝑦 2 −4𝑦2
= (𝑥 2 +𝑦2 )2

2𝑥 2 −2𝑦 2
= (𝑥 2 +𝑦 2)2

Then we get,
𝜕2 𝑢 𝜕2 𝑢 2𝑦 2 −2𝑥2 2𝑥 2 −2𝑦 2
+ 𝜕𝑦 2 = (𝑥 2 +𝑦 2 )2 + (𝑥 2 +𝑦 2 )2
𝜕𝑥 2

2𝑦 2 −2𝑥 2 +2𝑥2 −2𝑦2

= (𝑥 2 +𝑦 2 )2

𝜕2 𝑢 𝜕2 𝑢
∴ + 𝜕𝑦 2 = 0 (proved)
𝜕𝑥 2

Exercise
𝜕2 𝑧 𝜕2 𝑧
1. If 𝑧 = log(𝑥 + 𝑦), then prove that 𝜕𝑥𝜕𝑦 = 𝜕𝑦𝜕𝑥
𝜕2 𝑓 𝜕2 𝑓
2. If 𝑓(𝑥, 𝑦) = 𝑥 3 + 2𝑥 2 𝑦 + 𝑥𝑦 2 − 𝑦 3 , then prove that 𝜕𝑥𝜕𝑦 = 𝜕𝑦𝜕𝑥
𝜕2 𝑧 𝜕2 𝑧
3. If 𝑧 = log(𝑥 + 𝑦), then prove that𝜕𝑥 2 − 𝜕𝑦 2 = 0.

Partial derivatives, like derivative like a function of single (one) variable, can be interpreted as
slopes or rate of change. If the cost function of making 𝑥 units of pen and y units of pencil is given
by: 𝐶(𝑥, 𝑦) = 5𝑥 + 3𝑦 + 30,
𝜕𝐶 𝜕
Then, 𝐶𝑥 (𝑥, 𝑦) = 𝜕𝑥 = 𝜕𝑥 (5𝑥 + 3𝑦 + 30) = 5(1) + 0 + 0 = 5
𝜕𝐶 𝜕
And, 𝐶𝑦 (𝑥, 𝑦) = 𝜕𝑦 = 𝜕𝑦 (5𝑥 + 3𝑦 + 30) = 0 + 3(1) + 0 = 3

Then, we can say that if production of pencil is held constant, the cost of production increases at
the rate of 𝐶𝑥 = 5 taka for each additional unit of pen made, whereas if production of pen held
constant, cost increases at the rate of 𝐶𝑦 = 3 taka for each additional unit pencil made.
Example-*. The total profit in taka when 𝑥 units of product A and 𝑦 units of product B are
produced and sold is given by:
𝑃(𝑥, 𝑦) = 120𝑥 − 𝑥 2 − 3𝑥𝑦 + 210𝑦 − 3𝑦 2
Find 𝑃(10, 20), 𝑃𝑥 (10, 20) and 𝑃𝑦 (10, 20). Interpret the partials in rate terminology.
Solution: Given, 𝑃(𝑥, 𝑦) = 120𝑥 − 𝑥 2 − 3𝑥𝑦 + 210𝑦 − 3𝑦 2
First we find, 𝑃(10, 20) = 120(10) − (10)2 − 3(10)(20) + 210(20) − 3(20)2
= 1200 − 100 − 600 + 4200 − 1200
= 3500 Tk.
The first partial of 𝑃(𝑥, 𝑦) w.r.t. 𝑥 is:
𝜕
𝑃𝑥 (𝑥, 𝑦) = 𝜕𝑥 {𝑃(𝑥, 𝑦)}
𝜕
= 𝜕𝑥 (120𝑥 − 𝑥 2 − 3𝑥𝑦 + 210𝑦 − 3𝑦 2 )

= 120(1) − 2𝑥 − 3𝑦(1) + 0 − 0
∴ 𝑃𝑥 (𝑥, 𝑦) = 120 − 2𝑥 − 3𝑦
Then, 𝑃𝑥 (10, 20) = 120 − 2(10) − 3(20)
= 120 − 20 − 30
= 70
Which means, with production B keeping constant (at 𝑦 = 20), profit is increasing at the rate of
Tk.70 per additional unit of A produced and sold.
The first partial of 𝑃(𝑥, 𝑦) w.r.t. 𝑦 is:
𝜕
𝑃𝑦 (𝑥, 𝑦) = 𝜕𝑦 {𝑃(𝑥, 𝑦)}
𝜕
= 𝜕𝑦 (120𝑥 − 𝑥 2 − 3𝑥𝑦 + 210𝑦 − 3𝑦 2 )

= 120(0) − 0 − 3𝑥(1) + 210(1) − 3(2𝑦)

= −3𝑥 + 210 − 6𝑦
∴ 𝑃𝑦 (𝑥, 𝑦) = −3𝑥 − 6𝑦 + 210
Then, 𝑃𝑦 (10, 20) = −3(10) − 6(20) + 210
= −30 − 120 + 210
= 60
Which means, with production A held constant (at 𝑥 = 10), profit is increasing at the rate of Tk.60
per additional unit of B produced and sold.
Example-*. A producer produce and sells 𝑥 tons of oats and 𝑦 tons of hay during a period of
operation. Profit function of this product in thousand Taka is defined by: 𝑃(𝑥, 𝑦) = 50𝑥 −
0.05𝑥 2 + 110𝑦 − 0.10𝑦 2 . Compute each of the following and interpret the result in rate
terminology.
(a) 𝑃𝑥 (400, 500)
(b) 𝑃𝑦 (400, 500)
(c) 𝑃𝑥 (600, 500)
(d) 𝑃𝑦 (400, 600)
Solution: Given the profit function: 𝑃(𝑥, 𝑦) = 50𝑥 − 0.05𝑥 2 + 110𝑦 − 0.10𝑦 2 .
By 1st time partial differentiation, we get-
𝜕
𝑃𝑥 (𝑥, 𝑦) = 𝜕𝑥 (𝑃(𝑥, 𝑦))
𝜕
= 𝜕𝑥 (50𝑥 − 0.05𝑥 2 + 110𝑦 − 0.10𝑦 2 )
𝜕 𝜕 𝜕 𝜕
= 50 𝜕𝑥 (𝑥) − 0.05 𝜕𝑥 (𝑥 2 ) + 110 𝜕𝑥 (𝑦) − 0.10 𝜕𝑥 (𝑦 2 )

= 50 × 1 − 0.05 × 2𝑥 + 110 × 0 − 0.10 × 0)

∴ 𝑃𝑥 (𝑥, 𝑦) = 50 − 0.10𝑥
𝜕
Again, 𝑃𝑦 (𝑥, 𝑦) = 𝜕𝑦 (𝑃(𝑥, 𝑦))
𝜕
= 𝜕𝑦 (50𝑥 − 0.05𝑥 2 + 110𝑦 − 0.10𝑦 2 )
𝜕 𝜕 𝜕 𝜕
= 50 𝜕𝑦 (𝑥) − 0.05 𝜕𝑦 (𝑥 2 ) + 110 𝜕𝑦 (𝑦) − 0.10 𝜕𝑦 (𝑦 2 )

= 50 × 0 − 0.05 × 0 + 110 × 1 − 0.10 × 2𝑦)

∴ 𝑃𝑦 (𝑥, 𝑦) = 110 − 0.20𝑦
Then,
(a) 𝑃𝑥 (400, 500) = 50 − 0.10 × 400
= 50 − 40
= 10
Interpretation: With hay production held constant (at 𝑦 = 500), profit is increasing at the rate
of 10 thousand taka per additional ton of oats are produced and sale.
(b) 𝑃𝑦 (400, 500) = 110 − 0.20 × 500
= 110 − 100
 = 10
Interpretation: With oats production held constant (at 𝑥 = 500), profit is increasing at the rate
of 10 thousand taka per additional ton of hay are produced and sale.
(c) 𝑃𝑥 (600, 500) = 50 − 0.10 × 600
= 50 − 60
= −10
Which indicates that, with hay production keep constant (at 𝑦 = 400), profit is decreasing at
the rate of 10 thousand taka per additional ton of oats are produced and sale.
(d) 𝑃𝑦 (400, 600) = 110 − 0.20 × 600
= 110 − 120
= −10
Which means, with oats production keep constant (at 𝑥 = 400), profit is decreasing at the rate
of 10 thousand taka per additional ton of hay are produced and sale.

Example-*. Total production of an industry, 𝑃 in million Taka, is a function of 𝐿 (expenditure for

labor) and 𝐾 (Taka of capital invested in the industry). Suppose the production function is given
by:
𝑃(𝐿, 𝐾) = 24𝐿1/3 𝐾 2/3
Compute the following and interpret the result in rate terminology.
(a) 𝑃𝐿 (64, 27).
(b) 𝑃𝐾 (64, 27).
Solution: Given the production function 𝑃(𝐿, 𝐾) = 24𝐿1/3 𝐾 2/3
Differentiating partially w.r.t. 𝐿, we get-
𝜕
𝑃𝐿 (𝐿, 𝐾) = 𝜕𝐿 (𝑃(𝐿, 𝑘))
𝜕
= 𝜕𝐿 (24𝐿1/3 𝐾 2/3 )
𝜕
= 24𝐾 2/3 𝜕𝐿 (𝐿1/3 )
1 1
= 24𝐾 2/3 × 3 𝐿3−1
1
= 24𝐾 2/3 × 3 𝐿−2/3

∴ 𝑃𝐿 (𝐿, 𝐾) = 8𝐿−2/3 𝐾 2/3

Again differentiating partially w.r.t. 𝐾, we get-
𝜕
𝑃𝐾 (𝐿, 𝐾) = 𝜕𝐾 (𝑃(𝐿, 𝑘))
𝜕
= 𝜕𝐾 (24𝐿1/3 𝐾 2/3 )
𝜕
= 24𝐿1/3 𝜕𝐾 (𝐾 2/3 )
2
2
= 24𝐿1/3 × 3 𝐾 3−1

∴ 𝑃𝐾 (𝐿, 𝐾) = 16𝐿1/3 𝐾 −1/3

Then, for the given input values: 𝐿 = 64 and 𝐾 = 27, we get-
(a) 𝑃𝐿 (64, 27) = 8 × (64−2/3 )(272/3 ) [ 𝑃𝐿 (𝐿, 𝐾) = 8𝐿−2/3 𝐾 2/3 ]
= 8 × 16−1 × 9
8×9
= 16

= 4.5
Interpretation: with capital investment keeping constant (at 𝑘 = 27), production will be
increased at the rate of 4.5 million taka per additional one million taka expenses labor.
(b) 𝑃𝐾 (64, 27) = 16 × 641/3 27−1/3
= 16 × 4 × 3−1
64
= 3

= 21.33
Interpretation: with labor investment holding constant (at 𝐿 = 64), production will be increased
at the rate of 21.33 million taka per additional one million taka expenses capital.

Test of Local Optimum Points of a Function of Two Independent Variables:

Let 𝑓(𝑥, 𝑦) be a function of two independent variables. To find and test the optima of this function,
we need to follow the following steps (process):
𝜕𝑓 𝜕𝑓
1. Find 𝑓𝑥 (𝑥, 𝑦) = 𝜕𝑥 and 𝑓𝑦 (𝑥, 𝑦) = 𝜕𝑦.
𝜕𝑓 𝜕𝑓
2. Set both of and equal to zero, and solve the resultant equations simultaneously to
𝜕𝑥 𝜕𝑦

obtain the candidate values 𝑥 ∗ and 𝑦 ∗ .

3. Compute 𝑓𝑥𝑥 (𝑥 ∗ , 𝑦 ∗ ), 𝑓𝑦𝑦 (𝑥 ∗ , 𝑦 ∗ ) and 𝑓𝑥𝑦 (𝑥 ∗ , 𝑦 ∗ ).
4. Set 𝐴 = 𝑓𝑥𝑥 (𝑥 ∗ , 𝑦 ∗ )
 𝐵 = 𝑓𝑥𝑦 (𝑥 ∗ , 𝑦 ∗ )
𝐶 = 𝑓𝑦𝑦 (𝑥 ∗ , 𝑦 ∗ )
and 𝑫 = 𝑩𝟐 − 𝑨𝑪, where 𝐷 is called the discriminant of 𝑓(𝑥, 𝑦).
if 𝐴 and 𝐶 are negative, there is a local maximum a𝑡 (𝑥 ∗ , 𝑦 ∗ )
5. (a) If 𝐷 < 0, and {
if 𝐴 and 𝐶 are positivee, there is a local minumum a𝑡 (𝑥 ∗ , 𝑦 ∗ )
(b) If 𝐷 > 0: there is a saddle point (which is neither maximum nor minimum.
(d) If 𝐷 = 0: the test fails.
Note: To be 𝐷 = 𝐵 2 − 𝐴𝐶 < 0, both of 𝐴 and 𝐶 together have to be either positive or negative.
So, for testing the optima, checking the sign of any one of them is enough if 𝐷 < 0.

Example-*. The total cost of manufacture 𝑥 dozen ballpoints pens and 𝑦 dozen pencils is given
by 𝐶(𝑥, 𝑦) = 2𝑥𝑦 + 3𝑦 2 + 0.5𝑥 2 − 44𝑦 − 17𝑥 + 201.5
(a) Find the values of 𝑥 and 𝑦 that results in a minimum cost.
(b) What is the minimum cost?
Solution: Given the cost function 𝐶(𝑥, 𝑦) = 2𝑥𝑦 + 3𝑦 2 + 0.5𝑥 2 − 44𝑦 − 17𝑥 + 201.5
(a) Partially differentiating 𝐶(𝑥, 𝑦) w.r.t 𝑥, we get
𝜕𝐶 𝜕
𝐶𝑥 (𝑥, 𝑦) = 𝜕𝑥 = 𝜕𝑥 (2𝑥𝑦 + 3𝑦 2 + 0.5𝑥 2 − 44𝑦 − 17𝑥 + 201.5)
𝜕 𝜕 𝜕 𝜕 𝜕 𝜕
= 2𝑦 𝜕𝑥 (𝑥) + 3 𝜕𝑥 (𝑦 2 ) + 0.5 𝜕𝑥 (𝑥 2 ) − 44 𝜕𝑥 (𝑦) − 17 𝜕𝑥 (𝑥) + 𝜕𝑥 (201.5)

= 2𝑦 × 1 + 3 × 0 + 0.5 × 2𝑥 − 44 × 0 − 17 × 1 + 0)
𝜕𝐶
∴ = 2𝑦 + 𝑥 − 17
𝜕𝑥
𝜕𝐶 𝜕
Similarly, 𝐶𝑦 (𝑥, 𝑦) = 𝜕𝑦 = 𝜕𝑦 (2𝑥𝑦 + 3𝑦 2 + 0.5𝑥 2 − 44𝑦 − 17𝑥 + 201.5)
𝜕 𝜕 𝜕 𝜕 𝜕 𝜕
= 2𝑥 𝜕𝑦 (𝑦) + 3 𝜕𝑦 (𝑦 2 ) + 0.5 𝜕𝑦 (𝑥 2 ) − 44 𝜕𝑦 (𝑦) − 17 𝜕𝑦 (𝑥) + 𝜕𝑦 (201.5)

= 2𝑥 × 1 + 3 × 2𝑦 + 0.5 × 0 − 44 × 1 − 17 × 0 + 0
𝜕𝐶
∴ = 2𝑥 + 6𝑦 − 44
𝜕𝑦

At the stationary point-

𝜕𝐶
=0
𝜕𝑥

or, 2𝑦 + 𝑥 − 17 = 0
or, 𝑥 = −2𝑦 + 17 …. …. …. (1)
 𝜕𝐶
Also, =0
𝜕𝑦

or, 2𝑥 + 6𝑦 − 44 = 0
or, 𝑥 + 3𝑦 − 22 = 0 …. …. …. (2)
putting the value of 𝑥 from equation (1) in equation (2), we get-
𝑥 + 3𝑦 − 22 = 0
or, (−2𝑦 + 17) + 3𝑦 − 22 = 0
or, −2𝑦 + 17 + 3𝑦 − 22 = 0
or, 𝑦−5=0
or, 𝑦=5
Putting the value of 𝑦 = 5 in equation (1), we get-
𝑥 = −2(5) + 17
or, 𝑥=7
Now, for testing the optimum point is maximum or minimu.
𝜕2 𝐶 𝜕 𝜕𝐶
= 𝜕𝑥 (𝜕𝑥 )
𝜕𝑥 2
𝜕
= 𝜕𝑥 (2𝑦 + 𝑥 − 17)

=0+1−0
=1
According to the definition, at the stationary point (𝑥, 𝑦) = (7, 5):
𝜕2 𝐶
𝐴= 𝜕𝑥 2

∴ 𝐴=1
𝜕2 𝐶 𝜕 𝜕𝐶
Similarly, = 𝜕𝑥 (𝜕𝑦)
𝜕𝑥𝜕𝑦
𝜕
= 𝜕𝑥 (2𝑥 + 6𝑦 − 44)

=2+0−0
=2>0 (positive)
At the stationary point (𝑥, 𝑦) = (7, 5):
𝜕2 𝐶
𝐵= 𝜕𝑥𝜕𝑦

∴ 𝐵=2
 𝜕2 𝐶 𝜕 𝜕𝐶
Again, = 𝜕𝑦 (𝜕𝑦)
𝜕𝑦 2
𝜕
= 𝜕𝑦 (2𝑥 + 6𝑦 − 44)

=0+6−0
=6
According to the definition, at the stationary point (𝑥, 𝑦) = (7, 5):
𝜕2 𝐶
𝐶= 𝜕𝑦 2

∴ 𝐶=6>0 (positive)
Now, discriminant, 𝐷 = 𝐵 2 − 𝐴𝐶
= 22 − 1 × 6
= −2 < 0 (which is negative)
Since, 𝐷 = −2 < 0; and 𝐴 = 1 > 0 and 𝐶 = 6 > 0
So, the stationary point at (𝑥 = 7, 𝑦 = 5) is minimum.
Hence, the required cost will be minimum at the level of output ballpoints pen, 𝑥 = 7 dozen and
pencil, 𝑦 = 5 dozen.
(c) The minimum cost is
𝐶(7, 5) = 2 ∙ 7 ∙ 5 + 3 ∙ 52 + 0.5 ∙ 72 − 44 ∙ 5 − 17 ∙ 7 + 201.5
[Since, 𝐶(𝑥, 𝑦) = 2𝑥𝑦 + 3𝑦 2 + 0.5𝑥 2 − 44𝑦 − 17𝑥 + 201.5]
= 70 + 75 + 24.5 − 220 − 119 + 201.5
= 32
Example-*. Assume a store’s profit is depend on the number of sales persons, 𝑠, and the number
of inventory, 𝑖 (in lakhs of taka). If profit function is given by:
𝑃(𝑠, 𝑖) = 1400 − (12 − 𝑠)2 − (40 − 𝑖)2 ,
then what values of s and i will maximize the profit? Find the maximum profit.
Solution: Given the profit function: 𝑃(𝑠, 𝑖) = 1400 − (12 − 𝑠)2 − (40 − 𝑖)2
Partially differentiating 𝑃(𝑠, 𝑖) w.r.t. 𝑠, we get
𝜕𝐶 𝜕
𝑃𝑠 (𝑥, 𝑦) = = 𝜕𝑠 (1400 − (12 − 𝑠)2 − (40 − 𝑖)2 )
𝜕𝑠
𝜕 𝜕 𝜕
= 𝜕𝑠 (1400 − 𝜕𝑠 (12 − 𝑠)2 − 𝜕𝑠 (40 − 𝑖)2
𝜕
= 0 − 2(12 − 𝑠) 𝜕𝑠 (12 − 𝑠) − 0
 = 0 − 2(12 − 𝑠)(0 − 1)
= 2(12 − 𝑠)
𝜕𝐶
= 24 − 2𝑠
𝜕𝑠
𝜕𝐶
At the stationary point =0
𝜕𝑠

So, we get: 24 − 2𝑠 = 0
or, 2𝑠 = 24
or, 𝑠 = 12 (1)
Partially differentiating 𝑃(𝑠, 𝑖) w.r.t. 𝑖, we get
𝜕𝐶 𝜕
𝑃𝑖 (𝑥, 𝑦) = = 𝜕𝑖 (1400 − (12 − 𝑠)2 − (40 − 𝑖)2 )
𝜕𝑖
𝜕 𝜕 𝜕
= 𝜕𝑖 (1400 − 𝜕𝑖 (12 − 𝑠)2 − 𝜕𝑖 (40 − 𝑖)2
𝜕
= 0 − 0 − 2(40 − 𝑖) 𝜕𝑖 (40 − 𝑖)

= −2(40 − 𝑖)(0 − 1)
𝜕𝐶
= 80 − 2𝑖
𝜕𝑖
𝜕𝐶
At the stationary point =0
𝜕𝑖

So, we get: 80 − 2𝑖 = 0
or, 2𝑖 = 80
or, 𝑖 = 40 (2)
Partially differentiating𝑃𝑠 (𝑥, 𝑦) w.r.t. 𝑠, we get
𝜕 𝜕
𝑃𝑠𝑠 (𝑥, 𝑦) = 𝜕𝑠 𝑃𝑠 (𝑥, 𝑦) = 𝜕𝑠 (24 − 2𝑠)

= 0 − 2(1)
𝐴 = −2 < 0 [∵ 𝐴 = 𝑃𝑠𝑠 (𝑥 ∗ , 𝑦 ∗ )]
Partially differentiating𝑃𝑖 (𝑥, 𝑦) w.r.t. 𝑠, we get
𝜕 𝜕
𝑃𝑠𝑖 (𝑥, 𝑦) = 𝜕𝑠 𝑃𝑖 (𝑥, 𝑦) = 𝜕𝑠 (80 − 2𝑖)

=0−0
𝐵=0 [∵ 𝐵 = 𝑃𝑠𝑖 (𝑥 ∗ , 𝑦 ∗ ) = 𝑃𝑖𝑠 (𝑥 ∗ , 𝑦 ∗ )]
Partially differentiating𝑃𝑠 (𝑥, 𝑦) w.r.t. 𝑠, we get
𝜕 𝜕
𝑃𝑖𝑖 (𝑥, 𝑦) = 𝜕𝑖 𝑃𝑖 (𝑥, 𝑦) = 𝜕𝑖 (80 − 2𝑖)
 = 0 − 2(1)
𝐶 = −2 < 0 [∵ 𝐶 = 𝑃𝑖𝑖 (𝑥 ∗ , 𝑦 ∗ )]
Then, the discriminant: 𝐷 = 𝐵 2 − 𝐴𝐶
= 0 − (−2)(−2)
= −4 < 0
Since, 𝐷 = −4 < 0, 𝐴 = −2 < 0, and 𝐶 = −2 < 0, so the profit is maximum.
Hence, to maximize the profit, it is needed 𝑠 = 12 sales persons and inventory of taka 𝑖 = 40
lakhs.
The Maximum Profit is:
𝑃(12, 40) = 1400 − (12 − 12)2 − (40 − 40)2
= 1400

Example-*. To meet customer demand for a product, the producer makes a batch or lot of 𝐿 unit
of the product periodically. The producer’s strategy is to establish the period of time between lot
productions so that new lot is not made until some time after current inventory has been
exhausted. Thus there is a out-of-stock or stock-out interval. During this interval, orders received
from customer are placed in back order status and are filled immediately when a new lot is made.
Thus the producer makes 𝐿 units, uses some to fill back orders, and places the remainder 𝐼 units,
in inventory. Taking into account various cost, including a cost associated with being out-of-
stock, the producer has developed the following cost-function model:
750,000 20𝐼 2 25𝐿
𝐶(𝐿, 𝐼) = + + − 25𝐼
𝐿 𝐿 2
What values of 𝐿 and 𝐼 will minimize the cost to the producer? Compute the minimum cost.
750,000 20𝐼 2 25𝐿
Solution: Given the cost function 𝐶(𝐿, 𝐼) = + + − 25𝐼
𝐿 𝐿 2

Partially differentiating 𝐶(𝐿, 𝐼) w.r.t. 𝐿, we get-

𝜕𝐶 𝜕 750,000 20𝐼 2 25𝐿
𝐶𝐿 (𝐿, 𝐼) = = ( + + − 25𝐼)
𝜕𝐿 𝜕𝐿 𝐿 𝐿 2
𝜕 1 𝜕 1 25 𝜕 𝜕
= 750,000 𝜕𝐿 (𝐿) + 20𝐼 2 𝜕𝐿 (𝐿) + (𝐿) − 25 (𝐼)
2 𝜕𝐿 𝜕𝐿
1 1
= 750,000(−1) (𝐿2 ) + 20𝐼 2 (−1) (𝐿2 ) + 12.5 − 0
𝜕𝐶 750,000 20𝐼 2
𝜕𝐿
=− 𝐿2
− 𝐿2
+ 12.5

Partially differentiating 𝐶(𝐿, 𝐼) w.r.t. 𝐼, we get-

 𝜕𝐶 𝜕 750,000 20𝐼 2 25𝐿
𝐶𝐼 (𝐿, 𝐼) = = 𝜕𝐼 ( + + − 25𝐼)
𝜕𝐼 𝐿 𝐿 2
𝜕 1 20 𝜕 𝜕 25𝐿 𝜕
= 750,000 𝜕𝐼 (𝐿) + (𝐼 2 ) + ( ) − 25 𝜕𝐼 (𝐼)
𝐿 𝜕𝐼 𝜕𝐼 2
20
= 750,000 × 0 + 2𝐼 + 0 − 25 ∙ 1
𝐿
𝜕𝐶 40𝐼
= − 25
𝜕𝐼 𝐿

If there is a local optimum point, the first partial derivatives of the cost function must be equal to
zero. Therefore,
𝜕𝐶 750,000 20𝐼 2
=− − + 12.5 = 0
𝜕𝐿 𝐿2 𝐿2
12.5𝐿2 −20𝐼 2 −750,000
or, =0
𝐿2

or, 12.5𝐿2 − 20𝐼 2 − 750,000 = 0 (1)

𝜕𝐶 40𝐼
And, = − 25 = 0
𝜕𝐼 𝐿
40𝐼−25𝐿
or, =0
𝐿

or, 40𝐼 − 25𝐿 = 0

or, 40𝐼 = 25𝐿
25
or, 𝐼= 𝐿
40
5
or, 𝐼 = 8𝐿 (2)

Putting the value of I from equation (2) in equation (1), we get-

12.5𝐿2 − 20𝐼 2 − 750,000 = 0
5 2
or, 12.5𝐿2 − 20 (8 𝐿) − 750,000 = 0
25
or, 12.5𝐿2 − 20 × 64 𝐿2 − 750,000 = 0
125 2
or, 12.5𝐿2 − 𝐿 − 750,000 = 0
16
12.5×16𝐿2 −125𝐿2 −750,000×16
or, =0
16

or, 200𝐿2 − 125𝐿2 − 750,000 × 16 = 0

or, 75𝐿2 = 750,000 × 16
or, 𝐿2 = 10,000 × 16
or, 𝐿 = 400 units
Putting the value of 𝐿 = 100 in equation (2), we get
5
𝐼 = 8 × 400

or, 𝐼 = 250 units

Now, for testing the category of optimum points (maximum or minimum)

𝜕2 𝐶 𝜕 𝜕𝐶
= 𝜕𝐿 ( 𝜕𝐿 )
𝜕𝐿2
𝜕 750,000 20𝐼 2
= 𝜕𝐿 (− − + 12.5)
𝐿2 𝐿2
−2 −2
= −750,000 × 𝐿3 − 20𝐼 2 × 𝐿3 + 0
𝜕2 𝐶 1500,000 40𝐼 2
∴ = +
𝜕𝐿2 𝐿3 𝐿2

At the point 𝐿 = 400 and 𝐼 = 250

𝜕2 𝐶 1500,000 40×2502
= +
𝜕𝐿2 4003 4002

∴ 𝐴 = 15.648 > 0 (which is positive)

𝜕2 𝐶 𝜕 𝜕𝐶
Again, = 𝜕𝐿 ( 𝜕𝐼 )
𝜕𝐿𝜕𝐼
𝜕 40𝐼
( − 25)
𝜕𝐿 𝐿
𝜕 1 𝜕
= 40𝐼 × 𝜕𝐿 (𝐿) − 𝜕𝐿 (25)
1
= 40𝐼 × (−1) × 𝐿2 − 0
𝜕2 𝐶 40𝐼
=−
𝜕𝐿𝜕𝐼 𝐿2

At the point 𝐿 = 400 and 𝐼 = 250

𝜕2 𝐶 40×250
=−
𝜕𝐿𝜕𝐼 4002

𝐵 = −0.625
𝜕2 𝐶 𝜕 𝜕𝐶
And, = 𝜕𝐼 ( 𝜕𝐼 )
𝜕𝐼 2
𝜕 40𝐼
= 𝜕𝐼 ( − 25)
𝐿
40 𝜕 𝜕
= (𝐼) − (25)
𝐿 𝜕𝐼 𝜕𝐼
40
= ×1−0
𝐿
40
= 𝐿
At the point 𝐿 = 400 and 𝐼 = 250
40
𝐶 = 400

= 0.1 > 0 (which is positive)

Now, discriminant, 𝐷 = 𝐵 2 − 𝐴𝐶
= (−0.625)2 − 15.648 × 0.1
= −1.174175 < 0 (which is negative)
Since, 𝐷 = −1.174175 < 0; and 𝐴 = 15.648 > 0 and 𝐶 = 0.1 > 0
So, the stationary point at (𝐿 = 400, 𝐼 = 250) is minimum.
Hence, the required cost will be minimum at the level inventory 𝐿 = 400 and 𝐼 = 250.

2nd Part
750,000 20×2502 25×400
The minimum cost is 𝐶(400, 250) = + + − 25 × 250
400 400 2
750,000 20𝐼 2 25𝐿
[Since, 𝐶(𝐿, 𝐼) = + + − 25𝐼]
𝐿 𝐿 2

= 1875 + 3125 + 5000 − 6250

= 3750
Constrained Optimization:
Partial derivative may use to optimize (maximize or minimize) a function under certain condition
or constrain. For example, maximization of a utility function under a certain condition or constrain;
or minimizing a cost function under certain constrains. These type of optimization is called
constrain optimization.
To understand the mathematical application of partial derivative to constrain optimization, we
should understand some related terms and references.

Utility: Utility may be defined as the power or property of a commodity or service to satisfy a
human want. But utility is not inherent in the commodity or service and universal for all. It depend
on the mental attitude or feeling of the user or consumer. Therefore, utility is subjective concept.
Utility of same product or service may vary from consumer to consumer.

Total Utility: A consumer may not use only one unit of product or service. He may require more
units. The more are the units utilized, greater is the utility derived. Thus the total utility is the sum
of utilities derived from the consumption of all units of a commodity. Total utility increases with
the increase in the unit utilized.

Marginal Utility: The marginal utility of a commodity is the utility of a commodity derived from
the consumption of an extra unit of an commodity. That is, marginal utility is the utility of a
marginal unit.
Note: Marginal utility can be Positive, Negative, or Zero.

Utility Function: Every consumer allocates his money income in different commodities in such a
manner as to obtain maximum satisfaction from their consumption. For example, let a consumer
wants to buy two commodities 𝐴 and 𝐵. Suppose he purchases 𝑥 units of 𝐴 and 𝑦 units of 𝐵. Then
the total utility 𝑈 will be depend on x and y. That is U is a function of x and y.
Therefore, 𝑈 = 𝑓(𝑥, 𝑦).
𝑈 = 𝑓(𝑥, 𝑦) is said to be consumer’s utility function and it follow the following assumptions:
1. 𝑈, 𝑥, and 𝑦 all are positive.
2. For any given value of 𝑈, if 𝑥 increases then 𝑦 decreases.
3. 𝑓(𝑥, 𝑦) is a continuous function of 𝑥 and 𝑦.
4. The first and second order partial derivatives of that function are also continuous.

I. Partial Derivatives for Obtaining Maximum Utility: Let a consumer want to maximize his
utility by purchasing/consuming two commodities A and 𝐵. In doing so, he has to consider the
restriction of his limited income.
If the price of the commodity 𝐴 is 𝑃𝑥 and commodity 𝐵 is 𝑃𝑦 per unit and if he purchases 𝑥 units
of A and 𝑦 units of B, then his total expenditure will be 𝑥𝑃𝑥 + 𝑦𝑃𝑦 .
Suppose his budget is 𝐼, then 𝐼 = 𝑥𝑃𝑥 + 𝑦𝑃𝑦 is said to be consumer’s budget equation.
Then we want to is to maximize the consumer’s utility function
𝑈 = 𝑓(𝑥, 𝑦)
Subject to the budget constraint (equation)
𝐼 = 𝑥𝑃𝑥 + 𝑦𝑃𝑦
The problem is to determine such values of 𝑥 and 𝑦 which maximize 𝑈 = 𝑓(𝑥, 𝑦).

Optimization by Lagrange’s Multiplier Method:

We have, the utility function and the budget equations respectively as:
 𝑈 = 𝑓(𝑥, 𝑦) (1)
𝐼 = 𝑥𝑃𝑥 + 𝑦𝑃𝑦 (2)
Budget equation (2), can be written as
𝑥𝑃𝑥 + 𝑦𝑃𝑦 − 𝐼 = 0 (3)
From equation (1), and (2) we can get a new function 𝐹 as follows:
𝐹(𝑥, 𝑦, 𝜆) = 𝑈 + 𝜆(𝑥𝑃𝑥 + 𝑦𝑃𝑦 − 𝐼)
= 𝑓(𝑥, 𝑦) + 𝜆(𝑥𝑃𝑥 + 𝑦𝑃𝑦 − 𝐼) (4)
Where 𝜆 is a constant, and it is called a Lagrange’s multiplier.
To maximize 𝐹, we equate the first order partial derivatives of 𝐹(𝑥, 𝑦, 𝜆) with respect to 𝑥 and 𝑦
to zero.
𝜕𝐹 𝜕𝐹
Therefore, = 0 and =0
𝜕𝑥 𝜕𝑦

Then, we have a system of equations as

𝜕𝐹
=0
𝜕𝑥
𝜕𝐹
=0
𝜕𝑦

𝑥𝑃𝑥 + 𝑦𝑃𝑦 − 𝐼 = 0
Now, by solving the above three equations simultaneously, we will get such values of 𝑥 and 𝑦,
which will maximize the utility function 𝑈 = 𝑓(𝑥, 𝑦).

I. Partial Derivatives in Minimizing Cost under Constraints:

Let, for a particular production, a cost function for 𝑥 units of input 𝐴 and 𝑦 units of input 𝐵 is
given by:
𝐶 = 𝑓(𝑥, 𝑦) (1)
Let, for 𝑃 units of production, the production function is 𝑃 = 𝑔(𝑥, 𝑦). Which can be written as:
ℎ(𝑥, 𝑦) = 𝑃 − 𝑔(𝑥, 𝑦) = 0 (2)
In this case, equation (2) is the constraint of this system.
Then, applying the Lagrange’s multiplier as above, we get a new function as:
𝐹(𝑥, 𝑦, 𝜆) = 𝐶 + 𝜆ℎ(𝑥, 𝑦)
= 𝑓(𝑥, 𝑦) + 𝜆(𝑃 − 𝑔(𝑥, 𝑦) (4)
Partially differentiating 𝐹(𝑥, 𝑦, 𝜆) w.r.t. 𝑥 and 𝑦 respectively and equating to zero, we get a
system of equations (as above section) as follows:
𝜕𝐹
=0
𝜕𝑥
𝜕𝐹
=0
𝜕𝑦

𝑃 − 𝑔(𝑥, 𝑦) = 0
Then, by solving the above three equations simultaneously, we will get such values of 𝑥 and 𝑦,
that will minimize the cost function 𝐶 = 𝑓(𝑥, 𝑦).

Example-*. The utility function of a consumer is given by 𝑈 = 4𝑥 3 𝑦 3 . His budget equation is

𝑥 + 2𝑦 = 12. Determine the quantities 𝑥 and 𝑦 such that the consumers gets maximum
satisfaction.
Solution: Given the utility function: 𝑈 = 4𝑥 3 𝑦 3 (1)
And the budget equation is 𝑥 + 2𝑦 = 12
Which can be written as 𝑥 + 2𝑦 − 12 = 0 (2)
Applying Lagrange’s multiplier ‘𝜆’ using equation (1) and (2), we get
𝐹(𝑥, 𝑦, 𝜆) = 4𝑥 3 𝑦 3 + 𝜆(𝑥 + 2𝑦 − 12) (3)
Partially differentiating (3), w.r.t. 𝑥, and 𝑦 respectively we get
𝜕𝐹 𝜕
= 𝜕𝑥 (4𝑥 3 𝑦 3 + 𝜆(𝑥 + 2𝑦 − 12))
𝜕𝑥
𝜕 𝜕
= 4𝑦 3 𝜕𝑥 (𝑥 3 ) + 𝜆 𝜕𝑥 (𝑥 + 2𝑦 − 12)

= 4𝑦 3 (3𝑥 2 ) + 𝜆(1 + 0 − 0)
𝜕𝐹
= 12𝑥 2 𝑦 3 + 𝜆 (4)
𝜕𝑥
𝜕𝐹 𝜕
And, = 𝜕𝑦 (4𝑥 3 𝑦 3 + 𝜆(𝑥 + 2𝑦 − 12))
𝜕𝑦
𝜕 𝜕
= 4𝑥 3 (𝑦 3 ) + 𝜆 (𝑥 + 2𝑦 − 12)
𝜕𝑦 𝜕𝑦

= 4𝑥 3 (3𝑦 2 ) + 𝜆(0 + 2(1) − 0)

𝜕𝐹
= 12𝑥 3 𝑦 2 + 2𝜆 (5)
𝜕𝑦
𝜕𝐹 𝜕𝐹
At the stationary (optimum) point(s) both of 𝜕𝑥 = 0 and 𝜕𝑦 = 0.

Then from equation (4) and (5), we get

 𝜕𝐹
= 12𝑥 2 𝑦 3 + 𝜆 = 0
𝜕𝑥

or, 𝜆 = −12𝑥 2 𝑦 3 (6)

Similarly,
𝜕𝐹
= 12𝑥 3 𝑦 2 + 2𝜆 = 0
𝜕𝑥

or, 2𝜆 = −12𝑥 3 𝑦 2
or, 𝜆 = −6𝑥 3 𝑦 2 (7)
Equating (6) and (7), for 𝜆, we get
−6𝑥 3 𝑦 2 = −12𝑥 2 𝑦 3
or, 𝑥 = 2𝑦 (8)
Putting the value of x in equation (2), we get
2𝑦 + 2𝑦 = 12 [since, 𝑥 + 2𝑦 = 12]
Which gives, 𝑦 = 3 units
From equation (8), we get-
𝑥 = 2×3 [since, 𝑥 = 2𝑦]
or, 𝑥=6 units
Hence, for 𝑥 = 6 and 𝑦 = 3 that consumer’s utility will be maximum.

Example-*. Given 𝑈 = 𝑥𝑦 + 2𝑥 is the utility function of a consumer. If the consumer’s income

is Tk.1240 and price of two commodities are respectively Tk.40 and Tk.20. Find the quantities of
𝑥 and 𝑦 which maximize the consumer’s utility (utility function) subject to the budget constraint.
Solution: Here given, 𝑈 = 𝑥𝑦 + 2𝑥 (1)
Let, the consumer consumed 𝑥 units of the first product and 𝑦 units of the second product.
Given, the price of the first commodity, 𝑃𝑥 = 40,
the price of the second commodity, 𝑃𝑦 = 20, and
the consumer’s total income, 𝐼 = 1240
Then, the budget equation is: 𝑥𝑃𝑥 + 𝑦𝑃𝑦 = 𝐼
Which gives us: 𝑥(40) + 𝑦(20) = 1240
or, 40𝑥 + 20𝑦 = 1240
or, 2𝑥 + 𝑦 = 62
or, 2𝑥 + 𝑦 − 62 = 0 (2)
Using equation (1) and (2) and applying Lagrange’s multiplier ‘𝜆’, we get
𝐹(𝑥, 𝑦, 𝜆) = 𝑥𝑦 + 2𝑥 + 𝜆(2𝑥 + 𝑦 − 62) (3)
Partially differentiating 𝐹(𝑥, 𝑦, 𝜆), w.r.t. 𝑥, we get
𝜕𝐹 𝜕
= 𝜕𝑥 {𝑥𝑦 + 2𝑥 + 𝜆(2𝑥 + 𝑦 − 62}
𝜕𝑥
𝜕 𝜕
= 𝜕𝑥 (𝑥𝑦 + 2𝑥) + 𝜆 𝜕𝑥 (2𝑥 + 𝑦 − 62)

= (𝑦(1) + 2(1)) + 𝜆(2(1) + 0 − 0)

𝜕𝐹
= 𝑦 + 2 + 2𝜆
𝜕𝑥
𝜕𝐹
At the stationary point, 𝜕𝑥 = 0
𝜕𝐹
So, we get: = 𝑦 + 2 + 2𝜆 = 0
𝜕𝑥

or, 2𝜆 = −𝑦 − 2
1
or, 𝜆 = − 2 (𝑦 + 2) (4)

Again, partially differentiating 𝐹(𝑥, 𝑦, 𝜆), w.r.t. 𝑦, we get

𝜕𝐹 𝜕
= 𝜕𝑦 {𝑥𝑦 + 2𝑥 + 𝜆(2𝑥 + 𝑦 − 62}
𝜕𝑦
𝜕 𝜕
= 𝜕𝑦 (𝑥𝑦 + 2𝑥) + 𝜆 𝜕𝑦 (2𝑥 + 𝑦 − 62)

= (𝑥(1) + 0) + 𝜆(0 + 1 − 0)
𝜕𝐹
=𝑥+𝜆
𝜕𝑦
𝜕𝐹
At the stationary point, also 𝜕𝑦 = 0
𝜕𝐹
Then, we get: =𝑥+𝜆 =0
𝜕𝑦

or, 𝜆 = −𝑥 (5)
Equating equation (4) and (5) for 𝜆, we get
1
− 2 (𝑦 + 2) = −𝑥

or, 𝑦 + 2 = 2𝑥
or, 𝑦 = 2𝑥 − 2 (6)
Putting the value of 𝑦 = 2𝑥 − 2 in equation (2)
2𝑥 + 2𝑥 − 2 − 62 = 0 [equation (2): 2𝑥 + 𝑦 − 62 = 0]
or, 4𝑥 = 64
 or, 𝑥 = 16 units
Putting value of 𝑥 = 16 in equation (6), we get
𝑦 = 2(16) − 2
= 32 − 2
= 30
Hence, for 𝑥 = 16 and 𝑦 = 30 units of consumption, the utility of the consumer will be
maximized.
Example-*. The cost function of manufacturing a particular product is 𝐶(𝑥, 𝑦) = 𝑥 + 3𝑦 and its
production function is 𝑥𝑦 = 75. Find the value of x and y such that the cost is minimum.
Solution: Given the cost function: 𝐶(𝑥, 𝑦) = 𝑥 + 3𝑦 (1)
And, the production function 𝑥𝑦 = 75
This production function can be written as: 𝑥𝑦 − 75 = 0 (2)
Applying the Lagrange’s multiplier ‘𝜆’, we get a new function as:
𝐹(𝑥, 𝑦, 𝜆) = 𝑥 + 3𝑦 + 𝜆(𝑥𝑦 − 75) (3)
Partially differentiating 𝐹(𝐿, 𝐾, 𝜆), w.r.t. 𝑥, we get
𝜕𝐹 𝜕
= 𝜕𝑥 {𝑥 + 3𝑦 + 𝜆(𝑥𝑦 − 75)}
𝜕𝑥
𝜕 𝜕
= 𝜕𝑥 (𝑥 + 3𝑦) + 𝜆 𝜕𝑥 (𝑥𝑦 − 75)

= (1 + 0) + 𝜆(𝑦 × 1 − 0)
𝜕𝐹
= 1 + 𝜆𝑦
𝜕𝑥
𝜕𝐹
At the stationary point 𝜕𝑥 = 0

we get 1 + 𝜆𝑦 = 0
1
or, 𝜆 = −𝑦 (4)

Partially differentiating (3), w.r.t. 𝑦, we get

𝜕𝐹 𝜕
= 𝜕𝑦 {𝑥 + 3𝑦 + 𝜆(𝑥𝑦 − 75)}
𝜕𝑦
𝜕 𝜕
= 𝜕𝑦 (𝑥 + 3𝑦) + 𝜆 𝜕𝑦 (𝑥𝑦 − 75)

= (0 + 3 × 1) + 𝜆(𝑥 × 1 − 0)
𝜕𝐹
𝜕𝑦
= 3 + 𝜆𝑥
 𝜕𝐹
At the stationary point 𝜕𝑦 = 0

we get 3 + 𝜆𝑥 = 0
3
or, 𝜆 = −𝑥 (5)

Equating the value of 𝜆 from equation (4) and (5), we get-

1 3
−𝑦 = −𝑥

or, 𝑥 = 3𝑦 (6)
Putting the value of 𝑥 = 3𝑦 in equation (2), we get
(3𝑦)𝑦 − 75 = 0 [equation (2): 𝑥𝑦 − 75 = 0]
or, 𝑦 2 = 25
or, 𝑦=5 [since 𝑦 ≠ −5]
Putting the value of 𝑦 = 5 in equation (6), we get
𝑥 = 3×5
= 15
Hence, the cost will be minimum for 𝑥 = 15 and 𝑦 = 5.

Example-*. To manufacture a commodity, it is needed 𝐿 units of labor and 𝐾 units of capital. If

the cost function of that commodity is 𝐶(𝐿, 𝐾) = 4𝐿 + 5𝐾, and the production function is
𝐿𝐾 2 = 40000, find the values of 𝐿 and 𝐾 such that the cost is minimum.
Solution: Given the cost function 𝐶(𝐿, 𝐾) = 4𝐿 + 5𝐾 and production function 𝐿𝐾 2 = 40,000.
Which can be written as 𝐿𝐾 2 − 40,000 = 0 (1)
Applying the Lagrange’s multiplier ‘𝜆’, we get a new function as:
𝐹(𝐿, 𝐾, 𝜆) = 4𝐿 + 5𝐾 + 𝜆(𝐿𝐾 2 − 40,000) (2)
Partially differentiating 𝐹(𝐿, 𝐾, 𝜆) w.r.t. 𝐿, we get
𝜕𝐹 𝜕
= 𝜕𝐿 (4𝐿 + 5𝐾 + 𝜆(𝐿𝐾 2 − 40,000))
𝜕𝐿
𝜕 𝜕 𝜕
= 𝜕𝐿 (4𝐿) + 𝜕𝐿 (5𝐾) + 𝜆 𝜕𝐿 (𝐿𝐾 2 − 40,000)

= 4 + 0 + 𝜆(𝐾 2 − 0)
𝜕𝐹
= 4 + 𝜆𝐾 2
𝜕𝐿
𝜕𝐹
At the stationary (optimum) point 𝜕𝐿
=0
 𝜕𝐹
= 4 + 𝜆𝐾 2 = 0
𝜕𝐿

or, 4 + 𝜆𝐾 2 = 0
or, 𝜆𝐾 2 = −4
4
or, 𝜆 = − 𝐾2 (3)

Partially differentiating 𝐹(𝐿, 𝐾, 𝜆) w.r.t. 𝐾, we get

𝜕𝐹 𝜕
= 𝜕𝐾 (4𝐿 + 5𝐾 + 𝜆(𝐿𝐾 2 − 4000))
𝜕𝐾
𝜕 𝜕 𝜕
= 𝜕𝐾 (4𝐿) + 𝜕𝐾 (5𝐾) + 𝜆 𝜕𝐾 (𝐿𝐾 2 − 4000)

= 0 + 5 × 1 + 𝜆(𝐿(2𝐾) − 0)
𝜕𝐹
= 5 + 2𝜆𝐿𝐾
𝜕𝐾
𝜕𝐹
At the stationary points 𝜕𝐾 = 0
𝜕𝐹
Then we get = 5 + 2𝜆𝐿𝐾 = 0
𝜕𝐾

or, 5 + 2𝜆𝐿𝐾 = 0
or, 2𝜆𝐿𝐾 = −5
5
or, 𝜆 = − 2𝐿𝐾 (4)

Equating equations (3) and (4), we get:

5 4
− 2𝐿𝐾 = − 𝐾2
8
or, 𝐾 = 5𝐿 (5)

Putting the value of 𝐾 in equation (1), we get

8
𝐿(5 𝐿)2 = 40,000
64 3
or, 𝐿 = 40,000
25
40,000×25
or, 𝐿3 = 64
3
or, 𝐿 = 15,625
or, 𝐿 = 25 units.
From equation (5), we get
8
𝐾 = 5 (25)

or, 𝐾 = 40 units
Hence, with 𝐿 = 25 units and 𝐾 = 40 units the cost of production will be minimum.

Exercise:
1. During a period of operation, a gasoline producer makes and sells 𝑥 gallons of regular and
𝑦 gallons of super at a cost, in cents, of 𝐶(𝑥, 𝑦) = 2𝑥 2 − 4𝑥𝑦 + 3𝑦 2 − −6𝑥 + 10𝑦.
Find 𝐶𝑥 (10, 15), and 𝐶𝑦 (10, 15) and interpret the result in rate terminology.
2. The total output of an industry, V million dollars, is a function of L (expenditure for labor)
1 2
and K (dollars of capital invested in the industry). Suppose 𝑉(𝐿, 𝐾) = 12𝐿3 𝐾 3 , then
compute the following and interpret the result in rate terminology:
𝜕𝑉
(a) for (𝐿, 𝐾) = (27, 8)
𝜕𝐿
𝜕𝑉
(b) for (𝐿, 𝐾) = (27, 8)
𝜕𝐾

3. One unit of a product can be made by using Machine A for x hours and Machine B for y
hours. The cost in dollars of making one unit is: C ( x, y)  3x2  2 xy  y 2  12 x  4 y  50 .
(i) What number of hours on each machine will minimize the cost of making one unit?
(ii) Compute the minimum cost?
4. Profit in dollars earned by making and selling 𝑥 gallons of molasses and 𝑦 gallons of
maple syrup is given by𝑃(𝑥, 𝑦) = 50𝑥 − 0.05𝑥 2 + 110𝑦 − 0.10𝑦 2.
(a) What number of units of each product will maximize the profit?
(b) Compute the maximum profit.
5. To meet customer demand for a product, the producer makes a batch or lot of 𝐿 unit of the
product periodically. The producer’s strategy is to establish the period of time between lot
productions so that new lot is not made until some time after current inventory has been
exhausted. Thus there is a out-of-stock or stock-out interval. During this interval, orders
received from customer are placed in back order status and are filled immediately when a
new lot is made. Thus the producer makes 𝐿 units, uses some to fill back orders, and places
the remainder 𝐼 units, in inventory. Taking into account various cost, including a cost
 associated with being out-of-stock, the producer has developed the following cost-function
model:
1350,000 20𝐼 2
𝐶(𝐿, 𝐼) = + + 15𝐿 − 30𝐼
𝐿 𝐿
What values of 𝐿 and 𝐼 will minimize the cost to the producer? What would be the
minimum cost?
6. If the cost function of a commodity is C  4 x  5 y and the production is x y 2  40,000 ,
find the value of x and y such that the cost is minimum.
7. The cost function of a commodity is 𝐶 = 2𝑥 + 5𝑦, where 𝑥 shows the labor and 𝑦 shows
the capital and its production function is 𝑥√𝑦 = 625. Find the value of 𝑥 and 𝑦 such that
the cost is minimum.
8. The utility function of a consumer is 𝑈 = 4𝑥 3 𝑦 3 . His budget equation is 𝑥 + 2𝑦 = 12.
Determine the quantities x and y such that the consumers gets maximum satisfaction.