The shortest distance between a curve and a line occurs along a common normal. This means the tangent to the curve at the point of shortest distance must be parallel to the given line.
The given line is $x - y = 1$, which can be written as $y = x - 1$. The slope of this line is $m_{line} = 1$.
The given curve is the parabola $x^2 = 2y$, or $y = \frac{1}{2}x^2$.
To find the slope of the tangent to the parabola, we differentiate with respect to x:
$\frac{dy}{dx} = \frac{1}{2}(2x) = x$.
We set the slope of the tangent equal to the slope of the line:
$m_{tangent} = \frac{dy}{dx} = x = 1$.
So, the point on the parabola closest to the line has an x-coordinate of 1.
The corresponding y-coordinate is $y = \frac{1}{2}(1)^2 = \frac{1}{2}$.
The point on the parabola is P(1, 1/2).
Now, we calculate the perpendicular distance from the point P(1, 1/2) to the line $x - y - 1 = 0$.
The formula for the distance from a point $(x_0, y_0)$ to a line $Ax + By + C = 0$ is $d = \frac{|Ax_0 + By_0 + C|}{\sqrt{A^2 + B^2}}$.
Here, $(x_0, y_0) = (1, 1/2)$ and the line is $1x - 1y - 1 = 0$.
$d = \frac{|1(1) - 1(1/2) - 1|}{\sqrt{1^2 + (-1)^2}} = \frac{|1 - 1/2 - 1|}{\sqrt{1 + 1}} = \frac{|-1/2|}{\sqrt{2}}$.
$d = \frac{1/2}{\sqrt{2}} = \frac{1}{2\sqrt{2}}$.