Past exam of the mathematics course of the University of Cambridge 2010 iii Paper 30 4 b Solution Created 2026-10-03 Updated 2026-10-14
Let maximize SYSTEM. Under the usual positive-capacity, nonempty-route assumptions, the feasible set is compact, contains a positive point, and has a Slater condition point. Strict concavity makes the optimum unique. The condition forces : moving from any optimum with a zero component slightly toward a positive feasible point gives an infinite positive directional derivative in that component and only finite losses in the positive components.
By the Karush-Kuhn-Tucker conditions, there are link Lagrange multipliers withSet the route congestion price and chooseThen , as required. For USER with fixed , the substitution is a bijection of the nonnegative half-line, and its objective becomes . This is a strictly concave function whose derivative vanishes at , so its unique maximizer is and the corresponding USER optimizer is .
For NETWORK at , its objective derivative at isThus obey its Karush-Kuhn-Tucker conditions, with the same feasibility and complementary slackness. The NETWORK objective is a strictly concave function, so is also its unique maximizer. The triple solves all three problems simultaneously. This is a user-network decomposition of concave utility maximization.