Lagrange Multipliers — Question 9

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Question 9

A firm must choose positive inputs x,yx,y satisfying xy=100.xy=100. Its cost is C(x,y)=3x+2y.C(x,y)=3x+2y.

Tasks

  1. Use Lagrange multipliers to find the cost-minimizing inputs.

  2. Compute the minimum cost and interpret the multiplier balance.

  3. Verify global minimality by substitution or an inequality.

Original worksheet page 1: question and worked solution for 3-5-009
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Question 9 – Solution

Strategy. The multiplier equations balance marginal costs against the constraint normal; then a one-variable check rules out other behavior.

Step 1: Multiplier equations With g=xyg=xy, ⟨3,2⟩=λ⟨y,x⟩,xy=100.\left\langle 3,2\right\rangle=\lambda\left\langle y,x\right\rangle, \qquad xy=100. Thus 3=λy3=\lambda y and 2=λx2=\lambda x. Eliminating λ\lambda gives 3x=2y,y=32x.3x=2y, \qquad y=\frac 32x. The positive constraint then yields x2=2003,x^2=\frac{200}{3}, so x=1063,y=56.\boxed{x=\frac{10\sqrt 6}{3},\qquad y=5\sqrt 6}.

See the diagram in the original worksheet below.

Step 2: Cost and interpretation Cmin=3(1063)+2(56)=206.\boxed{C_{\min}=3\left(\frac{10\sqrt 6}{3}\right)+2(5\sqrt 6) =20\sqrt 6}. The relation 3/y=2/x=λ3/y=2/x=\lambda says the cost-gradient components are proportional to the production-constraint gradient components.

Step 3: Global verification Using y=100/xy=100/x for x>0x>0, C(x)=3x+200x→∞C(x)=3x+\frac{200}{x}\longrightarrow\infty as x→0+x\to 0^+ or x→∞x\to\infty. Its only critical point is the one found above, and C″(x)=400/x3>0C''(x)=400/x^3>0. Hence it is the unique absolute constrained minimum.

Original worksheet page 2: question and worked solution for 3-5-009

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