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TutorialSet1AUGUST21st2024

The document is a tutorial set for an Economics course (ECO 231) that includes various exercises related to exponents, solving equations, equilibrium price and quantity calculations, consumption functions, and differentiation. It covers topics such as behavioral and definitional equations, simultaneous equations, total cost functions, utility functions, and price elasticity of supply. Each section contains specific problems for students to solve, demonstrating their understanding of economic concepts and mathematical applications.

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Keolebogile Chitutu
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6 views3 pages

TutorialSet1AUGUST21st2024

The document is a tutorial set for an Economics course (ECO 231) that includes various exercises related to exponents, solving equations, equilibrium price and quantity calculations, consumption functions, and differentiation. It covers topics such as behavioral and definitional equations, simultaneous equations, total cost functions, utility functions, and price elasticity of supply. Each section contains specific problems for students to solve, demonstrating their understanding of economic concepts and mathematical applications.

Uploaded by

Keolebogile Chitutu
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
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DEPARTMENT OF ECONOMICS

ECO 231 TUTORIAL SET 1

1. Use the properties of exponents to simplify the following exponential expressions


i.

ii.
√
iii. 𝑒
2. Using both elimination and substitution methods, solve for Q and P in the following
equations.
i. 𝑃 = 1+𝑄
P=2+Q

ii. 6𝑄 + 3𝑃 = 54
2Q + P = 18

3. With the aid of appropriate examples, distinguish between a behavioural equation and
a definitional equation.

4. Discuss three conditions that must hold to solve a system of simultaneous equations.

5. Calculate the equilibrium price and quantity for a good with the following market
information.

𝑃 = −𝑄 − 100𝑄 + 150 Demand equation


𝑃 = 𝑄 + 14𝑄 + 22 Supply equation

6. Two commodities, N and O have the following functions:

𝑄 = 4 − 2𝑃 + 2𝑃
𝑄 = −3 + 𝑃
𝑄 = 6 + 2𝑃 − 2𝑃
𝑄 = −2 + 2𝑃

i) Determine the equilibrium prices and quantities for the two commodities
ii) Are the two goods above complements or substitutes? Explain your answer

7. A consumption function is defined as 𝐶 = 𝑎 + 𝑏𝑌𝑑 , where 𝑌𝑑 = 𝑌 − 𝑇 𝑎𝑛𝑑 𝑇 =


𝑡 +𝑡 𝑌
i) Define and interpret 𝑎 and 𝑏
ii) Find the equilibrium level of consumption

8. The economy of a country is defined by the following model:

𝑌 =𝐶+𝐼+𝐺+𝑋−𝑀
𝐶 = 𝑐 + 𝑐 𝑌𝑑

𝐼=𝐼
𝐺=𝐺

𝑌𝑑 = 𝑌 − 𝑇
𝑇 =𝑡 +𝑡 𝑌
Where: Y = National income or output
C = Consumption
I= Investment
G=Government expenditures
i. Find the expression for the equilibrium income, consumption and tax.

ii. If 𝐶 =100 million; 𝐶 = =0.75; 𝑡 = 0.2; 𝑡 =240 million; 𝐼 = 90


million and 𝐺 = 330 million . Calculate the equilibrium level of income
and savings.
iii. Calculate and interpret the government multiplier, autonomous tax
multiplier and the income tax multiplier.

9. Given the following total cost function 𝑇𝐶 = 15 + 3𝑞 +14𝑞

i. What is the relationship between ATC, AFC and AVC


ii. Find the corresponding ATC, AFC and AVC

10. Given a principal P of P1000.00 at 6% interest for 3 years, find the future value S
when the principal is compounded
i. Annually
ii. Quarterly
iii. Continuously

11. A consumer has the following utility function


𝑈 = 𝐴𝑙𝑛𝑥
Where U= utility index
X= units of the good consumed by the consumer
i. How much utility will the consumer enjoy by consuming 20 units of x,
given that A=0.5
ii. How much utility will he enjoy if he consumes 40 units?
iii. If A=0.4 how much utility will the consumer derive by consuming 20
units. if this consumer wishes to double his utility how much of x will
have to consume.

12. Differentiate each of the following:


i. 𝑓(𝑥) = 9𝑥 − 6
ii. 𝑓(𝑥) = −6𝑥
iii. 𝑓(𝑥) = 18√𝑥
iv. 𝑅 = 8𝑡 + 5𝑡 − 6
v. 𝑌 = (4𝑥 − 3)(2𝑋 )
vi. 𝑌 = (2𝑥 + 5)(3𝑥 −8)

vii. 𝑌=
viii. 𝑌 = (6𝑥 + 9) , use the power rule
ix. 𝑌 = (𝑥 + 3𝑥 − 1) , use chain rule
x. 𝑌 = −3(𝑥 − 8𝑥 + 7) , use chain rule

13. Find the TR and MR functions for the following demand functions and evaluate them
at Q=4 and Q=10
i. 𝑄 = 36 − 2𝑃
ii. 𝑃 = 12 − 𝑄
14. Find the marginal functions for the following total functions
i. 𝑈 = 𝑓(𝑥, 𝑦) = (2𝑥 + 7)(𝑦 + 5)
ii. 𝑇𝐶 = 𝑓(𝑄) = 32 + 4𝑄 − 8𝑄
iii. 𝑇𝑅 = 𝑓(𝑄) = 30 + 3𝑄 − 𝑄

15. Find the price elasticity of supply for the following functions:
i. 𝑄 = 2√𝑃
ii. 𝑄 = 3 + 1/5𝑃

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