EC205 Intermediate Mathematics for Economics To be handed in by 5pm Fri Sep 11, 2009

SMU Term I 2009/10 Anthony Tay

Problem Set 1

Instructions for handing in problem sets: As you exit the glass elevators on the 5
th
floor of SOE/SOSS, turn left.
You will see a set of grey assignment boxes on your right, directly across the window of the general office. Place
your assignment in my assignment box by 5pm Friday September 11, 09. Make sure you have the correct slot. Do
not place the assignments into my mailbox, which requires you to go past the glass doors.

It is important that you write your full names and group numbers on the top of the first page. Make sure that there
are no more than three names on each assignment. Mondays class is Group 1, Tuesdays class is Group 5, and
Fridays class is Group 2.

Functions.
Please read section 5 of my notes, and chapters 4 and 5 of the main text carefully.

1. Restricting both the domain and range to real numbers, what is the largest possible domain for the function

2
2 4
( ) log
x
y f x
x x
+ | |
= =
|

\ .

If this function is to be used in an application where y is a variable that must always be non-negative (for
instance, if y is the volume of water in some container), then what is the largest appropriate domain for x ?

2. Find all ( , ) x y values that solve the following (nonlinear) system of equations
eq1:
1 1
x
y
x
=
+
and eq2: 5 3 1 y x = + .
This is, find all values of x and y (if any) that satisfy both eq1 and eq2 simultaneously.

3. (a) If
2
( ) f x x x = + and
2
( ) log( 1) g x x = + , find
(i) ( ) ( ( )) ( ) h x f f x g x = ,
(ii) ( ) ( ( )) k x f g x = .

(b) Write
8
( ) g x x = in the form ( ( ( ))) f f f x , i.e., find ( ) f x such that
8
( ( ( ))) f f f x x = .

(c) Let
1
( )
1
1
1
1
1
g x
x
=
+
+
+


Find ( ) f x such that ( ) ( ( ( ))) g x f f f x = . Evaluate (1) g .

Summation notation

4. (a) Express the following in closed form (i.e., reduce to a simplified expression that does not use the
summation notation). In the case of part (b), also find the limit as n +
(i)
2 1
1
n
k
k
n

=
| |
|
\ .

(ii)
2
1
5 2
n
k
k
n n
=
| |

|
\ .

(b) Express the following in the form
1 2 3 4
ax bx cx dx + + +
(i)
4 2
1 1
j
i j
i x
= =

(ii)
4 4
1
j
i j i
i x
= =


(i.e., you have to tell me what a , b , c , and d are in each case.)


Limits and Continuity

5. (2 points)

(a) Find (without using LHopitals rule, even where it applies)
(i)
2
2
4
lim
2
x
x
x

(ii)
2
2
4
lim
2
x
x
x

+
(iii)
2
4
lim
2
x
x
x

+
(iv)
2
lim / 3
x
x x x

+
(Hint for part iv: multiply and divide the expression by
2
/ 3 x x x + + .)

(b) Find the asymptote to the function
2
( ) / 3 f x x x = + as x .

(c) Show that
2
lim 2 / 3
x
x x x

+ = . Write down the asymptote of

2
( ) 2 / 3 f x x x x = + (not
required to show working for this asymptote.)

6. (2 points) For functions (i) to (iv) below, determine if there are points of discontinuity. If it is continuous
everywhere, prove that it so (you may use any result given in the notes). If it has a point of discontinuity,
state why it is discontinuous there (e.g., because not defined at that point, or perhaps the limit disagrees
with the function value at that point.)
(i)
2
3
4
( )
8
x
f x
x

=

(ii)
4 2
( ) 1/ 7 1 g x x x = + +
(iii)
2
2 3, 2
( )
, 2
x x
f x
x x
s
=

>

(iv) ( ) | | / f x x x =


Geometric Series / Present Value

7. (Use a calculator) Suppose you receive $100 now ( 0 t = ), $200 at 1 t = and $100 at 2 t = , and nothing
thereafter. Suppose you can invest these amounts at interest rate 10% per period, i.e., 0.1 r = . (Assume per
period compounding)

(a) What is the Total Future Value of this cash flow at period 2 t = ?
(b) What is the Total Present Value of this cash flow?
(c) Suppose you were given the amount in part (b) at time 0 t = , and this was invested for two
periods at 0.1 r = . What value would you obtain from this investment at 2 t = ? Compare this
value with the value in obtained in part (a).

. Suppose that starting today you receive $10 per period in perpetuity (i.e., you receive $10 now ( 0 t = ), $10
at 1 t = , $10 at 2 t = , and so on)

(d) What is the present value of this cash flow? Assume per period compounding at interest rate 10%
per period, i.e., 0.1 r = . Which cash flow is preferable, this one or the cash flow in part b?
(e) How would your answer in part (a) change if 0.01 r = in both cases?


Linear Systems of Equations

8. On page 2-3 of the class notes, you are given three sets (vi), (vii), and (viii) of three equations each. For
each set of equations, draw the three equations in an
1
x -
2
x plane (put
1
x on the horizontal axis, and
2
x on
the vertical axis and explain geometrically why equation set (vi) has no solution, equation set (vii) has
exactly one, and equation set (viii) has infinitely many solutions.

[Note that the last set of equations on page 2-3 of the notes should have been labeled (viii).]