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STUDY UNIT II: SIMULTANEOUS LINEAR FUNCTIONS

Simultaneous equations
• Solving simultaneous equations
❖ Two equations in two variables
❖ Three equations in three variables
• Equilibrium and break-even
❖ Equilibrium in the goods and labour market
❖ Taxes, subsidies, and their distribution
❖ Break-even analysis
• Consumer and producer surplus
❖ Consumer surplus
❖ Producer surplus
• Linear algebra and applications
❖ Linear programming
➢ Non graphical LP models
➢ Graphical LP models

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Solving Simultaneous Linear Functions

Two equations in two variables

Assignment 1. Semester 1: 2017

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Oct 2017: Q7

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Three equations in three variables

Oct 2015: Q15

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May 2015: Q13 and Oct 2016: Q15

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May 2017: Q15

May 2016: Q15

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Oct 2018: Q18

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Equilibrium and Break – even

Equilibrium
May 2015: Q14

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Assignment 1, Semester 1: 2022

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Oct 2016: Q6

Oct 2016: Q7

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Oct 2015: Q5

May 2016: Q5

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Taxes, subsidies and their distribution

Tax

𝑻𝒉𝒆 𝒕𝒂𝒙 𝒘𝒊𝒍𝒍 𝒂𝒇𝒇𝒆𝒄𝒕 𝒕𝒉𝒆 𝒔𝒖𝒑𝒑𝒍𝒚 𝒇𝒖𝒏𝒄𝒕𝒊𝒐𝒏 𝒂𝒏𝒅 𝒊𝒕 𝒃𝒆𝒄𝒐𝒎𝒆𝒔:

𝑷 − 𝒕𝒂𝒙 = 𝒂 + 𝒃𝑸

𝑷 − 𝟏𝟏, 𝟓𝟎 = 𝟐𝟓 + 𝟕, 𝟓𝑸

𝑷 = 𝟐𝟓 + 𝟕, 𝟓𝑸 + 𝟏𝟏, 𝟓𝟎

𝑷𝒔 = 𝟑𝟔, 𝟓𝟎 + 𝟕, 𝟓𝑸 𝒏𝒆𝒘 𝒔𝒖𝒑𝒑𝒍𝒚 𝒇𝒖𝒏𝒄𝒕𝒊𝒐𝒏

𝑷𝒅 = 𝟐𝟓𝟓 − 𝟒𝑸

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𝑭𝒊𝒏𝒅 𝒕𝒉𝒆 𝒏𝒆𝒘 𝒆𝒒𝒍𝒃𝒎 𝑷 𝒂𝒏𝒅 𝑸

𝑺𝒖𝒑𝒑𝒍𝒚 = 𝑫𝒆𝒎𝒂𝒏𝒅

𝟑𝟔, 𝟓𝟎 + 𝟕, 𝟓𝑸 = 𝟐𝟓𝟓 − 𝟒𝑸

𝟕, 𝟓𝑸 + 𝟒𝑸 = 𝟐𝟓𝟓 − 𝟑𝟔, 𝟓𝟎

𝟏𝟏, 𝟓𝑸 = 𝟐𝟏𝟖, 𝟓

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Subsidy

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Break-Even
Apply the condition for break-even:

𝑻𝒐𝒕𝒂𝒍 𝑹𝒆𝒗𝒆𝒏𝒖𝒆 = 𝑻𝒐𝒕𝒂𝒍 𝒄𝒐𝒔𝒕 and solve

May 2015: Q21

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Consumer and Producer Surplus

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Consumer Surplus

Assignment 1, Semester 1: 2017

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May 2020: Q7

May 2022: Question 9

The demand function of a product is

𝑃 = 𝟕𝟏 − 3𝑄 → 𝑙𝑖𝑛𝑒𝑎𝑟 𝑑𝑒𝑚𝑎𝑛𝑑 𝑓𝑢𝑛𝑐𝑡𝑖𝑜𝑛

Where 𝑃 and 𝑄 are the price and quantity, respectively. The consumer surplus for the
demand function when the market price 𝑃 = 20

A) 1 224

B) 51

C) 433, 5

D) 867

E) 17

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Producer Surplus
May 2016

Jan 2022 Supp: Question 18

The supply function of a certain product is 𝑷 = 𝟑𝟎 + 𝟏, 𝟐𝑸, where P is the price

and Q is the number of units produced. Find the producer surplus if the market
price is 𝑷 = 𝟕𝟖.

A. 1 333,32

B. 33,333

C. 1 299,99

D. 666,66

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Oct 2016

Oct 2017: Q15

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Nongraphical Linear programming Problems

Oct 2016

𝑈𝑠𝑒 ≤ 𝑓𝑜𝑟 ”𝑎𝑡 𝑚𝑜𝑠𝑡" or "𝑛𝑜𝑡 𝑚𝑜𝑟𝑒 𝑡ℎ𝑎𝑛"

𝑈𝑠𝑒 ≥ 𝑓𝑜𝑟 "at least" or "𝑛𝑜𝑡 𝑙𝑒𝑠𝑠 𝑡ℎ𝑎𝑛"

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Jan 2022 Supp

Question 2

Suppose your company manufactures two types of product A and B using three
inputs, labour, material U and material V. To make a unit of product A requires 9kg
of material U, 10kg of material V and 9 person-hours of labour. To make a unit of
product B requires 15kg of material U, 6kg of V and 6 person-hours of labour. The
company can only stock at most 900kg of material U and 800kg of V. Assume that
the company operates 20 hours per week. You want to manufacture as many
products as you can per week. Formulate the company’s problem as a linear
program.

A. 9𝐴 + 15𝐵 ≥ 900; 10𝐴 + 6𝐵 ≥ 800; 9𝐴 + 6𝐵 ≥ 20

B. 9𝐴 + 15𝐵 ≤ 900; 10𝐴 + 6𝐵 ≥ 800; 9𝐴 + 6𝐵 ≤ 20

C. 9𝐴 + 15𝐵 ≤ 900; 10𝐴 + 6𝐵 ≤ 800; 9𝐴 + 6𝐵 ≥ 20

D. 9𝐴 + 15𝐵 ≤ 900; 10𝐴 + 6𝐵 ≤ 800; 9𝐴 + 6𝐵 ≤ 20

E. 9𝐴 + 15𝐵 ≥ 900; 10𝐴 + 6𝐵 ≥ 800; 9𝐴 + 6𝐵 ≤ 20

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May 2022
Question 8

The plumbing inspector requires 4 hours to inspect a school and 2 hours to inspect a
hospital. The electrical inspector requires at least 2 hours school and 6 hours hospital.
The building inspector requires 4 hours to inspect a school and 6 hours to inspect a
hospital. Considering the time required for other duties, the plumbing inspector has at
most 28 hours a week available for inspections, the electrical inspector must spend at
least 30 hours on inspections, and the building inspector must spend at most 36 hours
on inspections. You want to inspect as many commercial buildings as possible each
week. Set up this problem as a linear programming problem using 𝑥 to represent the
schools and 𝑦 to represent hospitals.

A) 4𝑥 + 2𝑦 ≤ 28; 6𝑥 + 2𝑦 ≤ 30; 4𝑥 + 6𝑦 ≤ 36

B)4𝑥 + 2𝑦 ≤ 28; 2𝑥 + 6𝑦 ≤ 30; 4𝑥 + 6𝑦 ≤ 36

C)4𝑥 + 2𝑦 ≤ 28; 2𝑥 + 6𝑦 ≥ 30; 4𝑥 + 6𝑦 ≤ 36, 𝑥, 𝑦 > 0

D)4𝑥 + 2𝑦 ≥ 28; 2𝑥 + 6𝑦 ≥ 30, 4𝑥 + 6𝑦 ≥ 36, 𝑥, 𝑦 > 0

E)2𝑥 + 4𝑦 ≤ 28; 2𝑥 + 6𝑦 ≤ 30; 4𝑥 + 6𝑦 ≤ 36, 𝑥, 𝑦 > 0

'at most' 𝑜𝑟 𝑛𝑜𝑡 𝑚𝑜𝑟𝑒 𝑡ℎ𝑎𝑛 𝑖𝑠 ≤

′𝑎𝑡 𝑙𝑒𝑎𝑠𝑡′ 𝑜𝑟 ′𝑛𝑜𝑡 𝑙𝑒𝑠𝑠 𝑡ℎ𝑎𝑛′ 𝑖𝑠 ≥

Type equation here.

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Jan 2022 Supp: Question 9

The plumbing inspector requires 4 hours to inspect a school and 2 hours to inspect a
hospital. The electrical inspector requires at least 2 hours to inspect a school and 6
hours to inspect a hospital. The building inspector requires 4 hours to inspect a
school and 6 hours to inspect a hospital. Considering the time required for other
duties, the plumbing inspector has 28 hours a week available for inspections; the
electrical inspector has 30 hours available ; and the building inspector has 36 hours
available. You want to inspect as many commercial buildings as possible each week.
Set up this problem as a linear programming problem using x to represent the schools
and y to represent hospitals.

A. 4𝑥 + 2𝑦 ≤ 28, 6𝑥 + 2𝑦 ≤ 30, 4𝑥 + 6𝑦 ≤ 36

B. 4𝑥 + 2𝑦 ≤ 28, 2𝑥 + 6𝑦 ≤ 30, 4𝑥 + 6𝑦 ≤ 36

C. 4𝑥 + 2𝑦 ≤ 28, 2𝑥 + 6𝑦 ≤ 30, 4𝑥 + 6𝑦 ≤ 36, 𝑥, 𝑦 > 0

D. 4𝑥 + 2𝑦 ≥ 28, 2𝑥 + 6𝑦 ≥ 30, 4𝑥 + 6𝑦 ≥ 36, 𝑥, 𝑦 > 0

E. 2𝑥 + 4𝑦 ≤ 28, 2𝑥 + 6𝑦 ≤ 30, 4𝑥 + 6𝑦 ≤ 36, 𝑥, 𝑦 > 0

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Graphical Linear Programming Problems

Identifying the feasible region
May 2020: Q6

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Graphical Linear Programming Problems

Optimal Solution

Oct 2018: Q29

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