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a) Differentiate between Kuhn-Tucker Sufficiency Theorem and Arrow- Enthoven Sufficiency Theorem. [4 Marks] b) Tajiriba Investments is a firm in Kisumu which wants to
a) Differentiate between Kuhn-Tucker Sufficiency Theorem and Arrow- Enthoven Sufficiency Theorem. [4 Marks] b) Tajiriba Investments is a firm in Kisumu which wants to improve its revenue from sales faces the following problem. Max R = R(Q) Subject to C(Q)-R(Q)-o (o > 0) and Q0 Suppose the firm faces the following revenue and the cost functions R 160 Q2 and CQ2 + 4Q+2 and = 9 - = i) Specify the Kuhn-Tucker conditions for the problem. [2 Marks] ii) Suppose now Q=0 what will happen to the second marginal condition? What should be done to correct this scenario? [2 Marks] iii) Suppose now the value of y = 0 what is the value of Q? Does it suffice the condition? If not explain. [3 Marks] iv) Suppose now 0 by complementary slackness. Solve the az ay optimal values of Q to characterise the sales maximization argument for Tajiriba Investments. [4 marks]
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