Mathematics for Economic Analysis, 4ECON007C Semester 1, 2017-2018

Tutorial 4 Multivariable Functions

Key terms Notes Key terms Notes

The space Inferior good
Quadrant Circular flow of income
Octant Closed (open) economy
Cobb-Douglas National income
Homogeneity Disposable income
Returns to scale Marginal propensity to
(constant, and ) consume (save)
Substitute goods Trade balance
Complementary Trade deficit
Superior (normal) Trade surplus

Section Mathematics

1) a) If f (x, y) = 3x2y3, evaluate: a) f (2, 3); f (5, 1); f (0, 7)

b) The production of computer chips is given by

2
3 2
(, ) = 100(5 5 + 5 2/5)-5
where x is the amount of labour in work-hours and y is the amount of capital.
1) what is the production when 32 work hours and 1 unit of capital are provided?
2) Find the production when 1 work-hour and 32 units of capital are provided.
3) If 32 work hours and 243 units of capital are used, what is the production output?

2H) A box with an open top is to be constructed by cutting out squares of size 64 cm2 from the four
corners of a rectangular cardboard whose dimensions are a and b cm.
a) Write the volume function of the box in terms of a and b.
b) Suppose that the volume of the box is 1,600 cm3 and its width is twice the length. What size
cardboard must be used to produce such a box?

3) Write the rule of a function that gives the future value of an ordinary annuity of n payments, with
payment R per period and interest rate i per period.

4H) A box with rectangular base and rectangular sides is to be constructed. The bottom of the box is
made of a material that costs a soums per 1 cm2. The top of the box is made of a material that costs b
soums per 1 cm2. The side surface is made of a material that costs c soums per 1 cm2. The dimensions
of the box are x cm, y cm and h cm.
a) Define the total surface and cost functions of the box.
b) Find the cost function domain and range.
c) If the volume of the box is 1,000 cm3 and each dimension must be at least 1 cm, find the total
surface function domain and range. (Hint: Among rectangles of the same perimeter, a square has the largest area)

5H) A long-distance truck driver is paid a soums per kilometer that he drives up to a distance of p
kilometers and b soums per kilometer for any additional distance beyond that. How much would the
driver be paid for a journey of q kilometers (where q > p)?

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Mathematics for Economic Analysis, 4ECON007C Semester 1, 2017-2018

6H) Alisher and Botir are waiting in a queue. There are x people behind Alisher, who is y places in front
of Botir. If there are z people in front of Botir, express the length of the queue as a function of x, y and
z.

7H) In a mathematics examination, the average mark of the students passing was x%, while the average
mark of those failing was y%. The average mark of all students taking the examination was z%. Find
the percentage who failed in terms of x, y and z.

8h) A factory manufactures circular chips of radius 1cm. It uses rectangular strips of size 2cm by 100cm
to cut the circular chips from as shown in the figure.
Find: a) the function of the waste W(x, y) if x strips are
used and y chips were defective.
b) how much material is wasted if 10 strips were used
and 23 chips were defective.

9H) If Lola drives to work at x km/h, she will be five minutes late. If she drives at y km/h, she will be five
minutes early. How far does she drive to work (in kilometers)?

10) Find the domain and range of the following functions:

3x + 4y
a) u x y b) u 1 x 2 y 2 1 cH) u = exz 2 - y dH) u = x - y eH) u =
ln z

11H) Calculate the limits:

x y x2 4y2
a) lim(14 2 x y 2 ) b) lim c) lim 3 3 x 2 y 2 d) lim
x 5
y 3
x2
y ( 4 )
2x y x 0
y 2
x 2
y 1
x 2y

12) Verify whether the following functions are homogeneous:

a) f (x, y) = 3xy + y2 b) f (x, y) = 2lnx + lny c) f (x, y) = x + 5x2y3

13H) Consider f (u, v) = u3/2v3/2 + 6u3 and g(u, v) = 3uv.

a) What is the degree of homogeneity of z(u, v) = f (u, v)/g(u, v)?
b) Let r = g(u, v) = 3uv where u, v > 0. Show that h(u, v) = ln(r) is not homogeneous.

Section Economics

14) Determine the degree of homogeneity and the type of returns to scale:
a) Q = 7KL2 bH) Q = 9K0.35L0.65 cH) Q = 2K0.5L0.5R0.1

15H) Given the Cobb-Douglas production functions Q = 50K0.3L0.5, Q = 50K0.4L0.6 and Q = 50K0.5L0.6,
a) Calculate the level of output when L = 10 and K = 15.
b) Calculate the level of output when both inputs are doubled, L = 20 and K = 30. Compare your
results with those you obtained in part (a) and hence, draw conclusions about the level of returns to
scale.

16) The demand function of a good is Q = 100 P + 2Y + 0.5A, where Q, P, Y and A denote quantity
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Mathematics for Economic Analysis, 4ECON007C Semester 1, 2017-2018

demanded, price, income and advertising expenditure respectively.

a) Find the demand when P = 10, Y = 40 and A = 6.
b) Is this good inferior or superior?
c) Assuming that price and income are fixed, find the additional advertising expenditure needed to
raise demand to 179 units.

17H) A firm produces two goods with the following demand functions: Q1 = 3,600 8P1 and Q2 = 4,200
10P2. If the firm has the total cost function TC = 0.05Q12 + 0.2Q1Q2 + 0.1Q22 + 120, find the profit
function.

18h) The demand and supply functions for two interdependent commodity are given by
QD1 = 40 5P1 P2 QS1 = 3 + 4P1
QD2 = 50 2P1 4P2 QS2 = 7 + 3P2
Determine the equilibrium price and quantity for this two-commodity model.

19) For a closed economy with no government intervention, the consumption function is C = 0.6Y + 30
and investment is 100. Calculate the equilibrium level of:
a) national income b) consumption c) savings

20) Given the following simple model of national income determination Y = C + I + G, C = 0.6YD + 40,
YD = Y T and T = 0.2Y,
a) Find the equilibrium national income, consumption, saving and tax if I = 80 and G = 120.
b) Comment on the marginal propensity to consume and to save.
c) How will the equilibrium income, consumption, saving and tax change if investment stays
unchanged and government expenditure falls from 120 to 100?

21H) An open economy is in equilibrium when Y = C + I + G + X M, where Y, C, I, X, and M are

income, consumption, investment, exports and imports respectively.
a) Determine the equilibrium level of income, consumption, saving and import if C = 0.75YD + 100,
I = 80, T = 0.25Y, G = 120, X = 70 and M = 0.2Y + 30.
b) What is the balance of trade? Is there a deficit or surplus in the balance of trade?

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