Business I / Unconstrained Multivariable Extrema
Practice question · Fill in the blanks

Complete the Hessian test.

If D>0D > 0 and fxx<0f_{xx} < 0, the critical point is a local ______. If D<0D < 0, it is a ______ point.

Word bank: maximum · saddle · minimum · zero

Hints
  1. A positive determinant separates extrema from saddles.
  2. The sign of one second derivative then picks between max and min.
Show the answer

If D>0D > 0 and fxx<0f_{xx} < 0, the critical point is a local maximum. If D<0D < 0, it is a saddle point.

Why

Positive DD with negative curvature = max; negative DD = saddle. The test is mechanical once you compute the three second derivatives.

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