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Chapter 4

Quasiconcave and Quasiconvex


Functions

1. Chapter Objectives: In this chapter we shall consider the new class


of functions known as Quasiconcave and Quasiconvex functions and
their relations with concave and convex functions. We shall
characterize these functions and study the properties of their
derivatives. We shall state prove the Kuhn Tucker theorem for this class
of functions in optimization.

2. Quasiconcave and Quasiconvex Functions


Quasiconcave Function: Let U be a convex subset of R n. A real
valued function defined on U is quasiconcave if for each a in R, the set
U f ( a )={x U f (x ) a } is a convex set.

Quasiconvex Function: Let U be a convex subset of Rn. A real valued


function defined on U is quasiconvex if for each a in R, the set
U f ( a )={x U f (x ) a } is a convex set.
Theorem 1: A function
for all

x , y U

A function
x , y U

f :U R

and for all


f :U R

and for all

is Quasiconcave on D if and only if

( 0,1) ,

f ( x+ (1 ) y ) min ( f ( x ) , f ( y ) )

is Quasiconvex on D if and only if for all


( 0,1) ,

f ( x+ (1 ) y ) max ( f ( x ) , f ( y ) )

Proof: Suppose f is quasiconcave.


U f ( a ) is a convex set for each a R
Let x , y U ( 0,1 ) f ( x ) f ( y)
Letting f(y) = a, we observe that , x, y

Uf (a )

is a convex set

U f (a)

x + ( 1 ) y U f (a)

f ( x+ ( 1 ) y ) a=f ( y ) =min {f ( x ) , f ( y ) }

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Chapter 4

Quasiconcave and Quasiconvex


Functions

Conversely,

Uf (a )

If

f ( x + ( 1 ) y ) min { f ( x ) , f ( y ) }

for all x , y in U

(0,1) , a R

is empty or contains only one point then it is clearly convex. Let

us assume that it contains at least two points x and y.


Then,

f ( x ) af ( y ) a .

min { f ( x ) , f ( y ) }
By hypothesis

f ( x + ( 1 ) y ) min { f ( x ) , f ( y ) } a

x + ( 1 ) y U f ( a ) . Hence U f ( a )

is a convex set. Thus, f is quasiconcave.

Similar argument proves the theorem for quasiconvex function.

Note: A function f is said to be strictly quasiconcave


quasiconvex if strict inequality is used in the definition.
Theorem 2: Let

f :U R R

is concave on U, it is also quasi concave

on U. If f is convex on U, it is quasiconvex on U.
Proof: Suppose f is concave.
f ( x+ ( 1 ) y ) f (x )+ (1 ) f ( y)

f (x+ ( 1 ) y ) min { f ( x ) , f ( y ) }+ ( 1 ) min { f ( x ) , f ( y ) }


= min { f ( x ) , f ( y ) }

f is quasiconcave.

Note: The converse of the result is not true.

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or

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Chapter 4

Quasiconcave and Quasiconvex


Functions

For, let f : R

be a non decreasing function. Then f is both

quasiconcave and quasiconvex function. To see this, let x > y

x >

( 0,1)

x+ ( 1 ) y > y ,

f (x) f ( x + ( 1 ) y ) f ( y )
max {f ( x ) , f ( y ) } f ( x + ( 1 ) y ) min { f ( x ) , f ( y ) }

Therefore, f is both quasiconcave and quasiconvex.


Consider f = x3, f is a nondecreasing function, hence f is both
quasiconcave and quasi convex. However, f is not a concave function.
f :U Rn R

Theorem 3:

is quasiconcave on U and

:R R

monotone non decreasing function, then the composite function

is a

is

a quasiconcave function from U to R. In particular, any monotone


transformation of a concave function results in quasiconcave function.
Proof: Let x, y in U and

(0,1)

Since f is quasiconcave , we have

is

nondecreasing

f ( x+ (1 ) y) min {f ( x ) , f ( y ) }

function

( f ( x + ( 1 ) y ))

(min { f ( x ) , f ( y ) })

= min ( (f ( x ) ), ( f ( y )) ,
Therefore,

f Quasiconcave function.

Note:
1. Quasi-concave and Quasi- convex functions are not necessarily
continuous in the interior of the domains
2. Quasi-concave functions can have local maxima that are not global
maxima, quasi-convex functions that have local minima that are not
global minima.

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Chapter 4

Quasiconcave and Quasiconvex


Functions

3. First order conditions are not sufficient to identify even local optima
under quasiconvexity.
For, let us consider the function,

x 3 x [ 0,1]
f ( x )= 1, x [ 1,2]
x 3 , x >2
Clearly, f is nondecreasing function. It is both quasiconcave and
quasiconvex on R.
The function is discontinuous at x = 2.
f is constant on (1, 2). Every point is a local maximum as well as local
minimum.
No point in (0, 1) is either a global maximum or global minimum.
f(0) = 0 but 0 is neither a local maximum nor a local minimum.
Theorem 4: If the production function f(K,L) is concave and f(0,0) = 0,
then it has decreasing or constant return to scale. However, quasiconcave
Cobb-Douglas production function can have increasing return to scale.
Proof: Suppose that s > 1.

f ( K , L )=f

0 < 1/s < 1. The function f is concave implies that

1
1
( sK , sL ) + 1 f (0,0)
s
s

( )

1
1
f ( sK , sL )+ 1 f (0,0)
s
s

( )

1
f ( sK , sL) f (sK , sL) sf ( K , L)
s
We know that if

+ >1 , the Cobb-Douglas production function has an

increasing return to scale. The production function is not concave but it is


quasiconcave as it can be written as an monotonic transformation of a convex
function. For,

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Chapter 4

Quasiconcave and Quasiconvex


Functions

K L = K + L +

K L =(r)

where r= K + L +

K L =q ( r )=( r ) +
When

+ > 0 , q(r) is a strictly increasing function.

Therefore,

K L

quasiconcave function.

Note: Recall the assumption that the indifference curve is concave.


Then this implies that the indifference curve is quasiconcave..

3. Derivatives of Quasiconcave and Quasiconvex functions


Theorem 5: Let

f :U Rn R

be a C1 function and where U is

convex and open. Then f is Quasiconcave on D if and only if for any x ,


y in U f ( y) f ( x ) Df ( x)( yx) 0

Proof: Suppose that f is quasiconcave in U and x , y in U


f ( y) f ( x ) .
Let t

( 0,1) . Since f is quasiconcave , we have

f ( x +t ( y x ) ) =f ( ( 1t ) x+ ty ) min { f ( x ) , f ( y ) } =f ( x )
x+ t ( yx )f (x )

.
f

x+ t ( yx )f (x )

Letting t
f

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0 , we get Df(x)(y-x)

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such that

Chapter 4

Quasiconcave and Quasiconvex


Functions
f ( y) f ( x )

Conversely, for x, y in U,

min { f ( x ) , f ( y ) }=f ( x ) .

Let

f ( ( 1t ) x+ ty ) min { f ( x ) , f ( y ) } =f ( x )

We

shall

Df ( x )( yx ) 0

show

that

, so that f becomes quasiconcave.

g ( 0 )=f ( x ) f ( y )=g( 1)

f ( x +t ( y x ) )

Let g(t) =

we have

'

g ( t )=Df ( (1t ) x +ty ) ( yx) 0


This implies that g is a non decreasing function.
Therefore,

g(o)

f(x)

g(t)

f ( x +t ( y x ) ) .

Hence

is

Quasiconcave.
Similar result for quasiconvex function can be established.
Second Derivative Test for QuasiConcavity and Quasiconvexity
n

f :U R R

Let

Then, if

(1 ) k|C k ( x )|>0

The matrix

0
f
x1
f
xk

be a C2 function and where U is convex and open.

Ck( x )

x1
2 f
x 12
2 f

xk x1

for all k = 1,2,n then f is quasiconcave on D.

is
f
xk
2 f

x1 xk
2 f
2
xk

4. Kuhn-Tucker Theorem with quasiconcavity and quasiconvexity


Suppose that the function g defined on U is quasiconcave and
differentiable and that the derivatives of g at x* are not all zero.
Suppose that the functions h1, h2,.,hm defined on U are quasiconvex
and differentiable. Then the Kuhn Tucker conditions are sufficient for X*
to solve the problem of

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Chapter 4

Quasiconcave and Quasiconvex


Functions
maximizing g(x)
h j ( x ) k j , j=1,2 m

on

subject

to

the

constraints

The K-T conditions are:


x

x
(1)

The first order condition Dg


(2)The Lagrange multipliers are non negative.
(3)The solution x* must be feasible, that is h(x*)

k h

(4)The Complementary slackness condition are satisfied,

Proof: Suppose that the theorem does not hold.

There is solution x in U such that g(x) >g(x*) satisfying the

constraints.
The function

g is quasiconcave and differentiable and the derivatives g

at x* are not all zero. Therefore we have,


xi
x

(xi )

(1)

If h j

(x*)

h j( x)

then by CS condition

j=0, so

xi
x

h j( x i )=0
j

(x i )
n

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Chapter 4

Quasiconcave and Quasiconvex


Functions

Suppose

hj

(x*)=k, then the multipliers are non negative and the

constraints are convex and hence

xi
x

h j( x i ) 0
j

(x i )
n

xi
x

h j( x i ) 0
j
Combining the above two cases, we have,

(x i )
n

From KT first order conditions, we have

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h j
j
g

(2)

Chapter 4

Quasiconcave and Quasiconvex


Functions
xi
x

xi
x

h j( x i )
j
m

(3)

(xi )
g
(xi )
n

The equations (1) and (2) contradicts(3). The result is true.

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