hw1 - 1 = 3 − 1 − 2 1 ¸ c = 4 2 ¸ d = 1 2 ¸[3...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
ECONOMICS 331 Mathematical Economics Kevin Wainwright Homework Assignment #1 [1] Two markets for two commodities interact with each other in the sense that the demand for each product depends not only on its own price, but also on the prices of other products. Suppose that the demand functions are as follows: q d 1 = 20 2 p 1 + p 2 q d 2 = 25 + p 1 3 p 2 Suppliers are assumed willing to produce these two products according to the following supply functions q s 1 = 2 p 1 q s 2 = 2 p 2 a) What relationship in consumption do these two product have? b) Find an expression for their inverse demand functions. ( i.e. write as p i = f ( q i , q j ) ) c) Find the market clearing prices and quantities for both goods. Graph your results [2] Find the vector x satisfying the matrix equation A ( x + c ) = d where A = · 1 1 2 3 ¸ A 1 = ·
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 = · 3 − 1 − 2 1 ¸ c = · 4 2 ¸ d = · 1 2 ¸ [3] Consider the following macroeconomic model: goods market money market 1 Y = C + I + G 1 M d = kY − β r 2 C = C + b ( Y − T ) 2 M d = M s 3 I = I − α r 4 T = tY a) Use equations 1 through 4 to f nd an expression for the IS curve ( Y as a function of r ) . Use equations 5 and 6 to f nd an expression for the LM curve ( Y as a function of r ) . b) Graph the IS and the LM with r on the vertical axis and Y on the horizontal axis.(Hint: invert the two equations you derived in a ) c) Write the two equations in matrix form (i.e. Ax = d ) ; where the x vector contains two elements, Y and r. (Hint: A is 2 × 2 ) 1...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern