Quiz 2, Math for Economics II (30 pts)

New York University

Note: Show all your work, clearly and in order, if you want to get full credit.
Let f (x, y) = x2 + y 2 + 4x − 4y and let g(x, y) = x2 + y 2 . Your goal is to find the absolute and local extrema of f on
the set x2 + y 2 ≤ 18.

1. (4 pts) Find all first and second partial derivatives of f and g. Solution:

fx = 2x + 4, fy = 2y − 4, fxx = 2, fxy = 0, fyy = 2,

gx = 2x, gy = 2y, gxx = 2, gxy = 0, gyy = 2.

2. (5 pts) Find all critical points of f in the open set x2 + y 2 < 18 (Hint: this is an unconstrained optimization
problem). Solution: we set ∇f = ~0:

fx = 2x + 4 = 0, fy = 2y − 4 = 0 → (x, y) = (−2, 2).

The only critical point is (−2, 2).

3. (3 pts) Use the second derivative test to classify these critical points as local maxima, local minima, or neither.
Solution: we evaluate the Hessian:
2
D = fxx fyy − fxy =4>0
which together with fxx = 2 > 0 tells us that (−2, 2) is a local minimum
4. (10 pts) Now use Lagrange multipliers find the critical points of f subject to the constraint x2 +y 2 = 18. Solution:
we set up the equations: 
  2x + 4 = λx,
∇f = λ∇g,
→ 2y − 4 = λy,
g(x, y) = 18,  2
x + y 2 = 18.
The first equation implies that x 6= 0, because setting x = 0 gives the contradiction 4 = 0. Hence we can divide
and set λ = (2x + 4)/x. Similarly, the second equation implies that λ = (2y − 4)/y. Setting these equal we get
that
2x + 4 2y − 4
= → (2x + 4)y = (2y − 4)x → 2xy + 4y = 2xy − 4x,
x y
which implies that y = −x. Substituting this into the last equation x2 + y 2 = 18, we get that 2x2 = 18 or x = ±3.
Hence there are two solutions (x, y, λ) = (3, −3, 10/3) and (x, y, λ) = (−3, 3, −2/3).
5. (6 pts) Put together all of this information to find the absolute extrema of f on the set x2 + y 2 ≤ 18.
Solution: we check the value of f at the three points that we’ve found in steps 2 and 4:

f (−2, 2) = −8, f (3, −3) = 42, f (−3, 3) = −6.

Hence (−2, 2) is the absolute minimum and (3, −3) is the absolute maximum.
6. (2 pts) Write down the Lagrangian function for the constrained optimization problem in part 4. Solution:

L(x, y, λ) = f (x, y) − λ(g(x, y) − 18) = x2 + y 2 + 4x − 4y − λ(x2 + y 2 − 18).