Mathematics for Economic Analysis, 4ECON007C Semester 1, 2017-2018

`Tutorial 5 Derivative of Multivariable Functions

Key terms Notes Key terms Notes

Partial derivative Total differential
Second-order partial Marginal rate of
derivative technical substitution
Cross-price elasticity Utility
Income elasticity Marginal utility

Section Mathematics

1) Find the first-order partial derivatives of the following functions:

a) z = 5x4 y2 bH) z = 3x4y3 + 10y/x cH) z = 8x2y/(x3 y) d) z = (2x 5y)3

2) Find the second-order partial derivatives of the following functions. What do you notice?
a) z = 5x4 y2 b) f (x, y) = 2xy4 + 7x3y cH) f (x, y) = (y + 1)ln(x3y)

3) Find the total differential of: a) z = 8x2 + 18xy + 5y2 bH) z = ye5x + 2y cH) f (a, b, c) = sin(abc)

4) If z = xy 5x + 2y, then
a) Evaluate z/x and z/y at the point (2, 6).
b) Use the total differential formula to estimate the change in z as x decreases from 2 to 1.9 and
y increases from 6 to 6.1.
c) Confirm your estimate of part (b) by evaluating z at (2, 6) and (1.9, 6.1).

5H) If z = 4x2y2 3y2 + 7xy2, then evaluate zx and zy at the point (2, 3). Hence estimate the change in z as
x increases by 0.2 and y decreases by 0.1.

6) Find the partial derivatives of the following functions:

a) xy y3 + y = 0 bH) y4 = x2y + 12 c) x + x2z3 + yz = 0 dH) x2y3z5 + zlnx = 0

2U 2U 2U
2 2
7H) Show that U(x, y, z) = (x + y + z ) 2 -0.5
satisfies + + = 0.
x2 y2 z2
Section Economics

8) A student chooses between two brands of juice, apple (x) and orange (y), and has a utility function U =
xy + x + y + 2. Estimate:
a) the value of utility when the student consumes 10 bottles of apple juice and 15 bottles of orange
juice during a month.
b) the values of marginal utility of apple juice and marginal utility of orange juice when x = 10 and y =
15. Interpret your findings.
c) the change in utility resulting from a 3-unit increase of apple juice from 10 to 13 bottles and a 2-unit
decrease of orange juice from 15 to 13 bottles.

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Mathematics for Economic Analysis, 4ECON007C Semester 1, 2017-2018

9H) An individuals utility function is given by U = 900a + 350b + 4ab 2a2 b2 where a is the amount
of leisure measured in hours per week and b is earned income measured in dollars per week.
a) Determine the value of the marginal utilities when a = 138 and b = 400.
b) Estimate the change in the utility if the individual works for an extra hour, which increases his
earned income by $12 per week.

10) Given the demand function Q = 200 2P PA + 0.1Y2, where P = 10, PA = 15 and Y = 100, find:
a) Price elasticity of demand b) Cross-price elasticity of demand c) Income elasticity of demand
d) Estimate the percentage change in demand if the price of the alternative good rises by 3%. Is the
alternative good substitutable or complementary?
e) If income falls by 5%, calculate the corresponding percentage change in demand. Is the good
inferior or superior?

11H) Given the demand function Q = Y2PA/P where PA = 16, Y = 3 and P = 12,
a) Find and interpret the income elasticity of demand.
b) Estimate the percentage change in Y needed to raise Q by 5% assuming that PA and P are fixed.

12) Evaluate MPL and MPK for the production function Q = 2LK + L given that the current levels of K
and L are 7 and 4, respectively. Hence, write down the value of MRTS and estimate the increase in
capital needed to maintain the current level of output given a one-unit decrease in labor.

13H) If Q = 4K + L3K2, find an expression for MRTS. Given that L = 1, find the value of K for which
MRTS = 1.5.

14) Given the production function Q = 4(KL)1/2,

a) Estimate the effect on production of a two-unit increase in K and a one-unit decrease in L when K =
50 and L = 450.
bH) Confirm your estimate of part (a) by evaluating Q at (K, L) = (50, 450) and (K, L) = (52, 449).
cH) Find and interpret the marginal rate of technical substitution when K = 50 and L = 450.

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