Math Problem Statement

Solve for the critical points of the utility function U = (e2 / (e1 + e2)) * (100 - Ce2) by analyzing its derivative.

Solution

From the image provided, the mathematical expressions seem to involve a utility function UU, defined as:

U=e2e1+e2(100Ce2),U = \frac{e_2}{e_1 + e_2}(100 - C e_2),

and its derivative with respect to e2e_2:

Ue2=e1(e1+e2)2(100Ce2)e2Ce1+e2.\frac{\partial U}{\partial e_2} = \frac{e_1}{(e_1 + e_2)^2}(100 - C e_2) - \frac{e_2 C}{e_1 + e_2}.

The condition set by this derivative is Ue2=0\frac{\partial U}{\partial e_2} = 0, which implies solving the equation for critical points of UU with respect to e2e_2.

Steps for Analysis:

  1. Expression Breakdown:

    • The utility function UU combines proportions (via e2e1+e2\frac{e_2}{e_1 + e_2}) with the linear term 100Ce2100 - C e_2.
    • The derivative combines a quotient rule application with the simplification of terms.
  2. Critical Points: Solving Ue2=0\frac{\partial U}{\partial e_2} = 0 involves:

    • Equating the numerator of the derivative's simplified form to 0.

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Math Problem Analysis

Mathematical Concepts

Calculus
Utility Function Analysis
Critical Points

Formulas

U = (e2 / (e1 + e2)) * (100 - Ce2)
∂U/∂e2 = (e1 / (e1 + e2)^2) * (100 - Ce2) - (Ce2 / (e1 + e2))

Theorems

Critical Point Theorem

Suitable Grade Level

Undergraduate Level (Economics/Mathematics)