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  • First and Second Order Conditions

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    GatorTutoring
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    This document discusses the first order conditions (FOC) and second order conditions (SOC) for maximizing and minimizing functions. It provides examples of finding the critical points that satisfy the FOC by setting the first derivative equal to zero and checking that the SOC is satisfied by the second derivative being negative for a maximum or positive for a minimum at that point. Specifically, it works through examples of maximizing functions f(x)=-x^2, f(x)=x^3-2x^2+6, and π(q)=4q-2.5q^2+12 and minimizing functions f(x)=6x^2+5x and C(q)=1.5q^

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    This document discusses the first order conditions (FOC) and second order conditions (SOC) for maximizing and minimizing functions. It provides examples of finding the critical points that satisfy the FOC by setting the first derivative equal to zero and checking that the SOC is satisfied by the second derivative being negative for a maximum or positive for a minimum at that point. Specifically, it works through examples of maximizing functions f(x)=-x^2, f(x)=x^3-2x^2+6, and π(q)=4q-2.5q^2+12 and minimizing functions f(x)=6x^2+5x and C(q)=1.5q^

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    Attribution Non-Commercial (BY-NC)
    Descargue como PDF, TXT o lea en línea desde Scribd
    Marcar por contenido inapropiado
    15 vistas1 página

    First and Second Order Conditions

    Cargado por

    GatorTutoring
    This document discusses the first order conditions (FOC) and second order conditions (SOC) for maximizing and minimizing functions. It provides examples of finding the critical points that satisfy the FOC by setting the first derivative equal to zero and checking that the SOC is satisfied by the second derivative being negative for a maximum or positive for a minimum at that point. Specifically, it works through examples of maximizing functions f(x)=-x^2, f(x)=x^3-2x^2+6, and π(q)=4q-2.5q^2+12 and minimizing functions f(x)=6x^2+5x and C(q)=1.5q^

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Descargue como PDF, TXT o lea en línea desde Scribd
    Marcar por contenido inapropiado
    de 1

    First and Second Order Conditions 

    What are the FOC and SOC for the following problems? 
    1.  Max  f (x) = −x 2  
    Answer: We get the FOC by setting the first derivative equal to zero:  f '(x) = −2x = 0 , which 
    gives  x = 0 . Since we’re maximizing, the SOC is that the second derivative must be 
    negative:  −2 < 0 . Since it is, the point  x = 0  is the point that maximizes the function. 
     
    2. Max  f (x) = x 3 − 2x 2 + 6  

    Answer: FOC:  f '(x) = 3x 2 − 4x = 0 . SOC:  f ''(x) = 6x − 4 < 0  or  x < 4 6 . (You could solve the 


    FOC for the answer). 
     
    3. Min  f (x) = 6x 2 + 5x  
    Answer: FOC:  f '(x) = 12x + 5 = 0 . SOC:  f ''(x) = 12 > 0  (since we’re minimizing here, we 
    need the second derivative to be positive). 
     
    4. Max  π (q) = 4q − 2.5q 2 + 12  

    Answer: FOC:  π '(q) = 4 − 5q = 0  or  q = 5 4 . SOC:  −5 < 0 . 

     
    5. Min  C(q) = 1.5q 2 − q + 45  
    Answer: FOC:  3q − 1 = 0  or  q = 1 / 3 . SOC:  3 > 0 . 

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