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ECON 2050 SEMESTER
Quiz 2
Due on Blackboard on Friday 27 October 2023 at 16:00
Question 1 (15 marks)
Prove that S =
{
(x, y) ∈ R2 : 2x2 − y ≤ 3} is a convex set by directly verifying that
S satisfies the definition of a convex set.
Question 2 (15 marks)
Let D be a convex subset of Rn. If f : D → R is a concave function and k ∈ R,
then the upper contour set S = {x ∈ D : f(x) ≥ k} is a convex set. Using this
theorem, show that if a ∈ [−1, 1] and b ∈ R, then the following set M , is convex.
M = {(x, y, z) ∈ (0, 2)× R2 : lnx− 2y2 − axy ≥ 0, x+ by + z ≤ 0}
Question 3 (15 marks)
Consider the function f : R2 → R, (x, y) 7→ − 6x4 − 34y2 + 6xy. Find all critical
points of f and classify each critical point as A) a local maximum, B) a local minimum
or C) a saddle point. Show each of your steps.
Question 4 (20 marks)
For all possible values of a and c, solve the constrained maximization problem
max
(x,y,z)∈R3
2xy + 2xz + 2yz s.t. x2 + y2 = 8, ax− ay + z = c
using the Lagrange approach. You may assume that the constraint set is compact without
proof. Explain each of your steps.
1
ECON 2050 SEMESTER 2 2023
Question 5 (20 marks)
Consider the following maximization problem:
max
(x,y)∈R2
−(x+ 1)2 − (y − 4)2 s.t. x+ (y − 3)3 ≤ 0, y ≥ 2x2, x ≥ 0, y ≥ 0
You may use without proof the fact that this problem has a solution.
(a) Determine and explain whether any points of the constraint set violate the non-
degenerate constraint qualification of the Kuhn-Tucker theorem. (7 marks)
(b) Solve this problem by applying the Kuhn-Tucker theorem. (13 marks)
Question 6 (15 marks)
Consider the following maximization problem:
max
(x,y)∈R2
−x2 − y2 s.t. − x− y ≤ −4, y + 2x ≤ 5
(a) Can you apply the Extreme Value Theorem to conclude that this problem does have
a solution? Explain why or why not. (2 marks)
(b) Is the objective function convex and/or concave? Prove your answer. (2 marks)
(c) Is the constraint set convex? You do not need to prove your answer. (1 mark)
(d) Solve this problem by applying the Kuhn-Tucker theorem. Carefully explain each of
your steps. You may use without proof the fact that all points of the constraint set
satisfy the non-degenerate constraint qualification. (8 marks)
(e) Without solving any other maximization problem, estimate whether the function f :
R2 → R, (x, y) 7→ − x2 − y2. attains a higher value in the set C1 = {(x, y) ∈ R2 :
−x−y ≤ −3, y+2x ≤ 5} or in the set C2 = {(x, y) ∈ R2 : −x−y ≤ −4, y+2x ≤
6}. (2 marks)