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# Chapter 4

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

f :U R

## 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

## 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 )

## 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.

or

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Chapter 4

Functions

For, let f : R

## 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

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,
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

## 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..

Theorem 5: Let

f :U Rn R

## 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

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

## 120 Mathematical Economics

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

Ck( x )

x1
2 f
x 12
2 f

xk x1

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

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

constraints.
The function

## 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

Functions

Suppose

hj

## 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

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h j
j
g

(2)

Chapter 4

Functions
xi
x

xi
x

h j( x i )
j
m

(3)

(xi )
g
(xi )
n

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