Answer to Question #204214 in Economics for Amna

Question

Does the function y = x1x2 ever achieve a maximum? Explain.

Answer 1

To maximize (minimize) a function of many variables you use the technique of partial differentiation. We take a partial derivative for each of the unknown choice variables and set them equal to zero.

y'(x1) = x2 = 0,

y'(x2) = x1 = 0.

So, there is a minimum point (0; 0), but no maximum point for this function.