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Assignment-1

# Assignment-1 - Assignment 1 1 The demand and supply...

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Assignment 1 1. The demand and supply functions of a two commodity market model are as follows: Q d1 = 18 – 3P 1 +P 2 Q d2 = 12 + P 1 - 2P 2 Q s1 = - 2 + 4P 1 Q s2 = - 2 + 3P 2 Find P i * and Q i * ( i = 1, 2). (Use fractions rather than decimals.) 2. Solve the following national income model: Y = C + I 0 + G 0 C = a + b (Y – T) (a > 0, 0 < b < 1) [T: taxes] T = d + t Y (d > 0, 0 < t < 1) [t: income tax rate] a) By matrix inversion b) By Cramer’s rule (List the variables in the order Y, C, T .) 3. Find the marginal and average functions for the following total cost function and graph the result. C = 3Q 2 + 7Q +12 4. Is the following function strictly monotonic? y = - x 6 + 5 (x > 0) If it is strictly monotonic, find dx/dy by the inverse-function rule. 5. Given the production function Q = 96K 0.3 L 0.7 , find the MPP K and MPP L functions. Is MPP K a function of K alone, or of both K and L? What about MPP L ? 6. Examine the comparative static properties of the equilibrium quantity, d b bc ad Q + = * and check your results by graphic analysis.

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