Scribd
Upload
13 views

Tutorial Two

Uploaded by

pikininichikukwacollen
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
13 views

Tutorial Two

Uploaded by

pikininichikukwacollen
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

TUTORIAL TWO

Question One

a) Find the equilibrium level of income if the consumption function is


C = 0.8Y + 25
and planned investment is I = 17
Calculate the new equilibrium income if planned investment rises by 1 unit. (10)

b) The demand and supply functions of a good are given by


P = −1/2QD + 20
P = 1/3(QS + 10)
The government imposes a fixed tax, $α, on each good. Determine the equilibrium price and
quantity in each case when
(a) α = 5 (5)
(b) α = 10 (5)
(c) α = 2.50 (5)

Question Two

Solve the system of equations

4X1 -3X2 + 3 X3 = 8
-2X3 + 5X2 + X3 = 4
3X1 + 2X2 + 4X3 = 2
using Cramer’s rule to find X1 X2 and X3 (10)

Question Three
An investment project requires an initial outlay of $8000 and will produce a return of $17 000
at the end of 5 years. Use the
(a) net present value (3)
(b) internal rate of return (3)
methods to decide whether this is worthwhile if the capital could be invested elsewhere at
15% compounded annually. (4)

Question Four

[ ]
1 2 3
Find all the co-factors and inverse of the matrix A = 4 5 7
7 8 9
Question Five

a) Solve the system of equations

2 x 1 + 4 x 2 =16
3 x 1 - 5 x 2 = -9
using Cramer’s Rule to find x 1 and x 2

Question Six

a) Solve the system of equations

[ ][ ] [ ]
1 2 3 x1 9
−4 1 6 x 2 = −9 using Cramer’s Rule to find x 1 , x 2 and x 3
2 7 5 x3 13

b) Mrs Moyo sells dresses at $38, $25, $15, and $10 each respectively. If she sells a total of 30,
50, 100, and 17 respectively. In a matrix form, calculate the total revenue she received from the
sale of these dresses (Hint: row vector x column vector)

Question Seven

a) Given the demand function


P = 1000 − Q
i) Express TR as a function of Q and hence sketch a graph of TR against Q.
ii) What value of Q maximizes total revenue and what is the corresponding price?

b) If fixed costs are 25, variable costs per unit are 2 and the demand function is
P = 20 − Q
obtain an expression for π in terms of Q and hence sketch its graph.
i) Find the levels of output which give a profit of 31.
ii) Find the maximum profit and the value of Q at which it is achieved.

Question Eight

Find the value of x which satisfies

(a) 2(1.1)x = 200 (b) 5x = 2(3)x

(c) 3x = 7 (d) 5(2)x = 10x


Question Nine

Define the following terms

i) Co-factor
ii) Determinant
iii) Identity Matrix
iv) Inverse Matrix
v) Non-singular Matrix
vi) Singular Matrix
vii) Square Matrix

Question Ten

a) At the beginning of a year, the population of a small village is 8400. If the annual rise in
population is 12%, find the population at the end of the year.
b) Determine the rate of interest required for a principal of $500 to produce a future value of $2000
after 5 years compounded continuously.

c) Find the present value of an annuity that yields an income of $2000 at the end of each month
for 10 years, assuming that the interest rate is 6% compounded annually

d) What is the future value of an annuity of $300 payable at the end of each month for 20 years if
the money is worth 12% per annum compounded annually.

e) A principal of $10 000 is invested at one of the following banks:


(i) Bank A offers 4.75% interest, compounded annually.
(ii) Bank B offers 4.70% interest, compounded semi-annually.
For each bank, calculate the value of the investment at the end of 10 years. Which of these banks
would you recommend.

Question 11

Simplify the following expressions

√[
5 2

]
3
1 x3 y6 x6 y 7
i) (x3 y )2
6 ii) 2 4 iii) 2 3
x3 y 6 x y

You might also like