1.
The demand function of a good is given by
2 3
Q=1000−5 P−P A + 0.005Y
Where P=15 , P A =20 and Y =100 .
a. Find the price elasticity of demand.
b. Find the cross-price elasticity of demand. (5 points)
c. Find the income elasticity of demand.
d. Estimate the percentage change in demand if P A rises by 5%. Is the alternative good
substitutable good or complementary good?
2. An individual’s utility function is given by
2 2
U =260 x 1 +310 x 2+ 5 x 1 x 2−10 x 1−x 2
Where x 1 is the amount of leisure measured in hours per week and x 2 is earned income
measured in dollars per week. Find the value of x 1 and x 2 which maximizes U . What is
the corresponding hourly rate of pay? Use the second-order derivatives to confirm the
maximum point.
3. A box with a square base and no top is to hold a volume of 100. Find the box dimensions
that require the least material for the five sides.
4. Under a pure competition market, the demand and supply for a certain good are,
respectively:
QS =500(P−2)
Q D=11000−1000 P
a. Find the equilibrium Price and Quantity.
b. Find the consumer’s surplus.
c. Find the producer’s surplus.
5. Given the investment flow I (t)=2400 √ t .
a. Calculate the capital formation from the end of the second year to halfway through the fifth
year.
b. Find the first year in which the capital formation exceeds $4000.
c. Find the first year in which the annual capital formation exceeds $4000.
6. In a competitive examination, one mark is awarded for every correct answer, while ¼
mark is deducted for every wrong answer. A student answered 100 questions and got 80
marks. Find the number of questions he answered correctly using:
a. Inverse matrix.
b. Cramer’s rule.
d. A production company manufactures three products: Product A, Product B, and
Product C. The production process for each product requires three types of resources:
labor, materials, and energy. The amount of each resource needed for one unit of each
product is given in the following table:
Labor Materials Energy
Product A 2 1 3
Product B 1 2 2
Product C 3 2 1
The company has the following total amounts of resources available:
100 units of labor
80 units of materials
90 units of energy
a. Express the Problem as a Matrix Equation: Represent the resource requirements and
available resources as a matrix equation.
b. Solve the Problem Using the Inverse Matrix: Determine how many units of each
product the company should produce to exactly use up all the available resources.
c. Solve the Problem Using the Cramer’s rule.
e. A firm manufactures wood screws and metal screws. The screws must pass through a
threading machine and slotting machine. A box of wood screws requires 3 minutes on
the slotting machine and 2 minutes on the threading machine. A box of metal screws
requires 2 minutes on the slotting machine and 8 minutes on the threading machine.
In a week, each machine is available for 60 hours.
There is a profit of $10 per box on wood screws and $17 per box on metal screws.
How should the firm arrange production to maximize profit?
f. An International university has enough places for 18,000 students. Ministry of
Education restrictions mean that at least three-quarters of the places must be given to
Vietnamese students, but the remainder may be given to non-Vietnamese citizens.
There are 10,000 residential places available on campus. All international students and at
least one-quarter of the Vietnamese students must be given places on campus. The
university gets $24,000 in tuition fees for each Vietnamese student and $30,000 for each
international student.
Based on the available information, what should the university do to maximize the fees
received?
