Econ 106 Mathematical Economics1

1st Semester, AY 2013-2014

First Long Exam [100 points]
8:30-10 a.m., January 28, 2014
Instructions
1. On every sheet of yellow paper, write your name and student ID.
2. The use of mobile phones or any other electronic devices during the exam is not allowed.
3. You have an hour and a half to complete this two-page, closed-book exam
4. Refrain from talking to your seatmate.
A reminder: Cheating, of any form, does not pay.
All the best.
1. [18 points] Given the technology matrix for a three-sector economy:
2

a11
A = 4 a21
a31

(a) [5 points ] State the conditions for (I

conditions in terms of aij ; i; j = 1; 2:

a12
a22
a32

3
a13
a23 5 ;
a33

A) to satisfy the Brauer-Solow condition. Write these

2

3
x1
(b) [7 points] Show in detail how you would solve for the required output vector x = 4 x2 5 given
x3
3
2
d1
1
1
(I A)
so that (I A)
L =
the nal demand vector d = 4 d2 5 : Note: let L
d3
2
3
L11 L12 L13
4 L21 L22 L23 5 :
L31 L32 L33
(c) [6 points] Given

(I

A)

and

L11
L = 4 L21
L31
2

what will be

x1 and

d=4

L12
L22
L32

3
0
d2 5 ;
0

x3 in terms of Lij ; i; j = 1; 2; 3?

2. [12 points] Consider the matrix below:

2

1 S.

Daway

1
B=4 0
0

0
0
0

3
0
0 5:
1

3
L13
L23 5 ;
L33

(a) [4 points] What conditions should be met in order for you to use either the eigenvalues or principal
minors method to determine the deniteness of B?
(b) [8 points] Determine the deniteness of B: Show your work.
3. [15 points] Prove the following for any n
(a) [8 points] If A is nonsingular, then
(b) [7 points] If

n matrix A:
= 0 cannot be an eigenvalue of A:

is an eigenvalue of A, then

is an eigenvalue of A2 :

4. [30 points] Consider the utility function:

U (x1 ; x2 ) = x1 x2 ;

; > 0;

where U ( ) is twice continuously dierentiable; and x1 and x2 are consumption goods.

(a) [5 points] Determine the degree of homogeneity of U ( ) : Show your work.
(b) [5 points] Derive @U (x1 ; x2 ) =@x1 and @U (x1 ; x2 ) =@x2 : What is the economic interpretation of
these?
2

(x1 ;x2 )
(x1 ;x2 )
and @ U@x
): What
(c) [5 points] Derive the second partial derivatives of U (x1 ; x2 ) (i.e., @ U@x
2
2
1
2
restrictions should be placed on and for U (x1 ; x2 ) to exhibit diminishing marginal utility?
e (e
(d) [5 points] Log-linearize U (x1 ; x2 ) : Let U
x1 ; x
e2 )
ln U (x1 ; x2 ) : What restrictions should be
placed on x1 and x2 ?
e (x1 ; x2 ) change if dx1 = dx2 = 2?
(e) [5 points] By how much will U

e (x1 ; x2 ) that passes through the

(f) [5 points] What will be the slope of an indierence curve of U
e
point (2; 1)? Hint: solve for dx2 =dx1 holding U constant.
2

5. [25 points] Given y = f (x) = ex ;

(a) [5 points] Find dy=dx:
(b) [5 points] Find

d2 y
dx2 :

(c) [15 points] Take a quadratic or second-order Taylors approximation of f (x) at x0 = 1: Write it
in the form ax2 + bx + c:
BONUS
[5 points] Free for all:
Given q (x1 ; x2 ) = 4x21

6x1 x2

x22 ; nd a symmetric matrix that yields q (x1 ; x2 ) :

[2 points] For those who helped in making the lantern:

x

Given y = f (x) = ln ee ; nd dy=dx:

[2 points] For those who joined the Lantern Parade:
Given y = f (x) = eln x ; nd dy=dx:
[2 points] Only for those who attended the latest Kapekonomiya:
2

Given y = f (x) = 3x ; nd dy=dx: