Scribd
Upload
78 views4 pages

Mat 1145 Chapter 1 Tutorial Questions

Uploaded by

madzongaoscar39
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
78 views4 pages

Mat 1145 Chapter 1 Tutorial Questions

Uploaded by

madzongaoscar39
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
You are on page 1/ 4

DEPARTMENT OF MATHEMATICAL AND COMPUTATIONAL SCIENCES

MAT 1145 /1545 TUTORIAL QUESTIONS

ASSIGNMENT 01: GROUP ASSIGNMENT


QUESTIONS: 5, 7, 9 and 11
DUE DATE: 11 MARCH 2024
MARKS: 70
___________________________________________________________________

1. Define the following terms:


(a) substitutable goods.
(b) complementary goods.
(c) inferior goods
(d) superior goods
(e) equilibrium point
(f) break-even pont
(g) transaction-precautionary demand
(h) speculative demand
(i) commodity market
(j) money market.

2. The demand and supply functions for two interdependent commodities are given by
𝑄𝑄𝐷𝐷1 = 10 − 2𝑃𝑃1 + 𝑃𝑃2
𝑄𝑄𝐷𝐷2 = 5 + 2𝑃𝑃1 − 2𝑃𝑃2
𝑄𝑄𝑆𝑆1 = −3 + 2𝑃𝑃1
𝑄𝑄𝑆𝑆2 = −2 + 3𝑃𝑃2

1
3. The demand and supply functions of a good are given by
𝑃𝑃 = −3𝑄𝑄𝐷𝐷 + 48
1
𝑃𝑃 = 𝑄𝑄 + 23
2 𝑆𝑆
Find the equilibrium quantity if the government imposes a fixed tax of R4 on each good.
4. The demand and supply functions of a good are given by
𝑃𝑃 = −5𝑄𝑄𝐷𝐷 + 80
𝑃𝑃 = 2𝑄𝑄𝑆𝑆 + 10
where P, 𝑄𝑄𝐷𝐷 and 𝑄𝑄𝑆𝑆 denote price, quantity demanded and quantity supplied,
respectively.
(a) Find the equilibrium point.
(i) graphically.
(ii) algebraically.
(b) If the government deducts, as tax, 15% of the market price of each good,
determine the new equilibrium price and quantity.

5. The demand and supply functions of a good are given by


𝑃𝑃 = −3𝑄𝑄𝐷𝐷 + 60
𝑃𝑃 = 2𝑄𝑄𝑆𝑆 + 40
respectively. If the government decides to impose a tax of 𝑅𝑅𝑅𝑅 per good,
(a) Show that the equilibrium quantity is given by
1
𝑄𝑄 = 4 − 𝑡𝑡
5
and write down an expression for the equilibrium price in terms of t. (6)
(b) If it is known that the equilibrium quantity is 3, work out the value of 𝑡𝑡. How
much of this tax is paid by the firm? (4)
(c) If, instead of imposing a tax, the government provides a subsidy of R5 per good,
find the new equilibrium point algebraically and graphically. (8)

6. Given that
𝐺𝐺 = 40
𝐼𝐼 = 55
𝐶𝐶 = 0.8𝑌𝑌𝑑𝑑 + 25
𝑇𝑇 = 0.1𝑌𝑌 + 10,

2
calculate the equilibrium level of national income.

7. Determine the equilibrium income, Y, and interest rate, r, given the following
information about the commodity market
𝐶𝐶 = 0.7𝑌𝑌 + 85
𝐼𝐼 = −50𝑟𝑟 + 1200

and the money market


𝑀𝑀𝑆𝑆 = 300
𝐿𝐿1 = 0.2𝑌𝑌
𝐿𝐿2 = −40𝑟𝑟 + 30
(a) Calculate the equilibrium values of Y and r. (8)
(b) Sketch the IS and LM curves on the same diagram. (6)
(c) What effect would an increase in the value of autonomous investment have on the
equilibrium values of Y and r? (2)

8. An open economy is in equilibrium when


𝑌𝑌 = 𝐶𝐶 + 𝐼𝐼 + 𝐺𝐺 + 𝑋𝑋 − 𝑀𝑀,
where
𝑌𝑌 = national income,
𝐶𝐶 = consumption,
𝐼𝐼 = investment,
𝐺𝐺 = government expenditure,
𝑋𝑋 = exports M = imports.
Determine the equilibrium level of income, given that
𝐶𝐶 = 0.8𝑌𝑌 + 80
𝐼𝐼 = 70
𝐺𝐺 = 130
𝑋𝑋 = 100
𝑀𝑀 = 0.2𝑌𝑌 + 50

9. Consider the national income model


𝑌𝑌 = 𝐶𝐶 + 𝐼𝐼 ∗ + 𝐺𝐺 ∗ , ( 𝐼𝐼 ∗ , 𝐺𝐺 ∗ > 0)
𝐶𝐶 = 𝑎𝑎(𝑌𝑌 − 𝑇𝑇) + 𝑏𝑏, (0 < 𝑎𝑎 < 1, 𝑏𝑏 > 0)

3
𝑇𝑇 = 𝑡𝑡𝑡𝑡, (𝑇𝑇 > 0, 0 < 𝑡𝑡 < 1)
(a) Show that
( 𝑏𝑏+𝐼𝐼∗ + 𝐺𝐺 ∗ )
𝑌𝑌 = (6)
[1 + 𝑎𝑎(𝑡𝑡 − 1)]

(b) Hence state what happens to 𝑌𝑌 when

(i) 𝐺𝐺 ∗ increases. (2)


(ii) 𝑡𝑡 increases. (2)

10. A bicycle manufacturer experiences fixed monthly costs of 𝑅𝑅124,992 and variable
costs of 𝑅𝑅52 per standard model bicycle produced. The bicycles sell for 𝑅𝑅100 each.

(a) How many bicycles must be produced and sold each month to break even?

(b) What is the total revenue at the point where the firm breaks even.

11. A manufacturer has a monthly fixed cost of 𝑅𝑅150,000 and a production cost of 𝑅𝑅18 for
each unit produced. The product sells for 𝑅𝑅24 per unit.

(a) What is the cost function? (3)

(b) What is the revenue function? (2)

(c) What is the profit function? (3)

(d) Compute the profit or loss corresponding to production levels of 22000 and
28000 units. (4)

(e) How many units should the company produce and sell if they wish to make a
profit of 𝑅𝑅40 000? (4)

(f) Find the value of Q at which the firm break-even

(i) algebraically. (6)

(ii) graphically. (4)

12. Auto Time, a manufacturer of 24 −hour variable timers, has a fixed monthly cost of
𝑅𝑅56 000 and a production cost of 𝑅𝑅10 per unit manufactured. The timers sell for 𝑅𝑅17
each.

(a) What is the cost function?

(b) What is the revenue function?

(c) What is the profit function?

(d) Compute the profit (loss) corresponding to the production and sale of 4 000,
8 000 and 10 000 timers and comment on each solution.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy