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Assignment of Mathematical Economics

The document outlines an assignment for a Mathematical Economics course, covering topics such as national income determination, matrix operations, marginal cost functions, demand functions, and profit maximization. It includes various mathematical problems requiring matrix equations, determinants, elasticity calculations, and production functions. The assignment is authored by Amare Mitiku and is intended for students to apply economic theories and mathematical techniques.

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yodahekahsay19
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28 views4 pages

Assignment of Mathematical Economics

The document outlines an assignment for a Mathematical Economics course, covering topics such as national income determination, matrix operations, marginal cost functions, demand functions, and profit maximization. It includes various mathematical problems requiring matrix equations, determinants, elasticity calculations, and production functions. The assignment is authored by Amare Mitiku and is intended for students to apply economic theories and mathematical techniques.

Uploaded by

yodahekahsay19
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Assignment of Mathematical Economics (Econ 521)

1. Given the simple model of national income determination:


Y=C+I+G

C = 80 + 0.6 (Y-T)

T= 100 + 0.2 Y
G = 400 I= 750
i. Express the system in the form of a matrix equation.
ii. Solve the equilibrium values of the endogenous variables (Y, C, T).

2. Consider the matrix


1 3 0
A= 2 4 3
0 0 1
a) Calculate the determinant using expansion of the cofactors for the second row.
b) Determine the inverse of the matrix
(i) Using the Gauss-Jordan algorithm and
(ii) Using cofactors
3. A firm produces two goods, with output levels of ܳଵ andܳଶ , and faces total cost function
of ܶ‫ = ܥ‬45 + 125ܳଵ + 84ܳଶ − 6ܳଵଶ ܳଶଶ + 0.8ܳଵଷ + 1.2ܳଶଷ
Then, find out the two marginal cost functions?

By: Amare Mitiku, 2009 E.c.


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5. For the production function ܳ = 20‫ ܭ‬଴.ହ ‫ܮ‬଴.ହ
a) Derive the ‫ܲܯ‬௅ function
b) Show that ‫ܲܯ‬௅ decreases as one moves along an isoquant by using more L.
6. The demand function for a good is ‫ = ݍ‬56.6 − 0.25‫ ݌‬− 0.03݉ + 0.45‫݌‬௦ + 0.6݊ where q-
is quantity demanded, p-price of the good, m- income, ps- price of related commodity, n-
population. Then,
a) Calculate the price elasticity of demand?
b) Determine what would happen to a) if n-rose to 26?
c) Explain why this is an inferior good?
7. A firm sells two competing commodities whose demand schedules are
‫ݍ‬ଵ = 120 − 0.8‫݌‬ଵ + 0.5‫݌‬ଶ ܽ݊݀ ‫ݍ‬ଶ = 160 + 0.4‫݌‬ଵ − 12‫݌‬ଶ

Then, Determine how the price of good 2 affect the marginal revenue of good 1?
8. Find the determinant of the matrix

I. Using cofactor expansion


II. Guass Jordan Reduction method

9. Check the validity of the product rule for

10. Find the eigen values and eigen vectors of the following matrices

11. A firm produces two products which are sold in two separate markets with the
demand schedules ‫݌‬ଵ = 600 − 0.3‫ݍ‬ଵ and ‫݌‬ଶ = 500 − 0.2‫ݍ‬ଶ and the firm faces

By: Amare Mitiku, 2009 E.c.


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production cost functions of ܶ‫ = ܥ‬16 + 1.2‫ݍ‬ଵ + 1.5‫ݍ‬ଶ + 0.2‫ݍ‬ଵ ‫ݍ‬ଶ. If the firm wants
to maximize profit, how much of each product type should it sell? What will the
maximum profit will be?
12. What is the total differential of the function ‫ = ݕ‬6‫ ݔ‬ଶ + 8‫ ݖ‬ଶ − 0.3‫ݖݔ‬

By: Amare Mitiku, 2009 E.c.


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By: Amare Mitiku, 2009 E.c.
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