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Mathematical Economics Assignment 1 Due Date: 6th March 2019

The document outlines 6 problems for a mathematical economics assignment. Students must submit hard copies of assignments stapled, with their name and ID, by the due date at the beginning of lecture. The problems cover verifying identities of determinants, studying matrix ranks, solving systems of equations, finding market clearing prices, and equilibrium income and interest rates in an IS-LM model.

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39 views

Mathematical Economics Assignment 1 Due Date: 6th March 2019

The document outlines 6 problems for a mathematical economics assignment. Students must submit hard copies of assignments stapled, with their name and ID, by the due date at the beginning of lecture. The problems cover verifying identities of determinants, studying matrix ranks, solving systems of equations, finding market clearing prices, and equilibrium income and interest rates in an IS-LM model.

Uploaded by

fdsfsdfsd
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Mathematical Economics

Assignment 1
Due Date: 6th March 2019

Submission Procedure for Assignments


1. You must submit a hard copy of the assignment;
2. The hard copy is to be submitted at the beginning of the lecture;
3. Do not use plastic sheets or binders. Simply staple the pages together;
4. Your name and ID should be on the cover page.

Problem 1
Verify the following identities without expanding the determinants:
1.1    
1 a2 a3 bc a a2
det 1 b2 b3  = det ca b b2 
1 c2 c3 ab c c2
1.2  
1 a b+c
det 1 b a + c = 0
1 c a+b

Problem 2
Study the rank of the following matrices, depending on the possible values of x.
2.1  
x 0 x2 1
 1 x2 x3 x
 
0 0 1 0
0 1 x 0
2.2  
1 x x2
1 2 4 
1 3 9
2.3  
x −1 0 1
 0 x −1 1
1 0 −1 2

1
Problem 3
3.1 Let A be a square matrix of order n x n such that aij = i + j. Compute |A|.

3.2 Let A be a square matrix of order n x n such that At A = I. Show that |A| = ±1.

Problem 4
For each of the following system, characterize the solutions of the system depending on values
of the parameters m, a, b, w, t:

4.1 
mx − y =1
x − my = 2m − 1

4.2 
 x + ay = 1
ax + z = 1
ay + z = 2

4.3 
x + 2y + z =3
ax + (a + 3)y + 3z = 1

Problem 5
Consider the markets for banana and banana juice. The demand and supply functions of
the two markets are as follows

QdJ = 20 + 3PJ QdB = 10 + 3PJ − PB


QsJ = −12 + 8PJ + 2PB QsB = −6 + PB

where J denotes banana juice and B denotes bananas.

5.1 What happens to the demand for banana when the price of banana juice goes up?

5.2 What happens to the supply of banana juice when the price of banana rises?

5.3 Find an expression for the banana’s inverse demand function (i.e. write as PB =
f (QdJ , QdB ) ).

5.4 Find the market clearing prices and quantities for bananas and banana juice.

2
Problem 6
Consider the following elaborated linear IS-LM system

Y =C +I +G
C = c0 + c1 (Y − T ) − c2 r
T = t0 + t1 Y
I = I 0 + a0 Y − ar
Ms = mY + M 0 − hr

where Ms = money supply, and m = money balances needed per dollar of transactions,
c0 > 0, t0 > 0, I 0 , 0 < c1 < 1, 0 < t1 < 1, 0 < a0 < 1,.

6.1 Identify the endogenous variables.

6.2 Give the economic meaning of the parameters c1 , t1 , and a.

6.3 Find the equilibrium national income Y ∗ and interest rate r∗ .

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