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COURSE TITLE : BASIC MATHEMATICS FOR ECONOMICS II

COURSE CODE: ECN 223


MODE OF SUBMISSION :Snap and send PRIVATELY through WhatsApp
SUBMISSION DEADLINE : Thursday, 10th May, 2018 @ 10:00pm

SECTION A : MATHEMATICAL PROBLEMS (Answer any 3 in this section)

1. Solve for x and y if


420 = 4x + 5y and 600 = 2x + 9y (10 marks)

2. Solve for x and y when


160 = 8x – 2y and 295 = 11x + y (10 marks)

3. Find the values of x, y and z when


5x + 7y + 3z = 128.5
6x + 18.2y + 12z = 270.8
3x + 8y + 7z = 139 (10 marks)

4. Solve for A, B, C and D when


A + 6B + 25C + 17D = 843
3A + 14B + 60C + 21D = 1,286.5
10A + 3B + 4C + 28D = 1,206
6A + 2B + 12C + 51D = 1,096 (10 marks)

SECTION B: ECONOMIC APPLICATIONS

INSTRUCTION : Answer any 4 in this section. Question 1 is compulsory

1. A publisher of educational books has found that the demand function for its
books is given by:
QD + 40.5P = 3000

Because of the range of books the publisher deals with, its supply function for
this type of book is given by
1220P = 1129 + 4QS

where P denotes price in # and QD and QS are the number of books demanded
and supplied respectively.
(a) What is the equilibrium price and quantity in the market for the publisher?
Determine the publisher's revenue.
(b) The government are considering imposing either a tax of #2 per unit
quantity sold or a tax of 15% of the selling price. If the publisher adjusts
the supply function to include the relevant tax, determine the effect on the
market equilibrium. What is the tax revenue and the publisher's revenue in
both situations?
(c) If instead of a tax, the government pays a subsidy of #1.50 to the publisher
for each book sold, determine the new equilibrium conditions and the total
amount of the subsidy that has to be paid by the government. What is the
publisher's revenue now? (25 marks)

2. A firm produces the two goods A and B using inputs K and L. Each unit of A
requires 2 units of K plus 6 units of L. Each unit of B requires 3 units of K plus 4
units of L. The amounts of K and L available are 120 and 180, respectively. What
output levels of A and B will use up all the available K and L? (15 marks)

3. Let the following set of simultaneous equations represent the two related
markets for apples (a) and pears (p).
Apples: Demand curve: QDA = 200- 4PA + 2PP
Supply curve: QSA= -7 + 14PA
Pears: Demand curve: QDP = 104 + 3PA - 8PP
Supply curve: QSP = -4 + 24PP
where PA and PP are the respective prices of the apples and pears, and QD and
QS are the quantity demanded and supplied of the two fruits. Determine the
equilibrium price and quantity for the two related markets. (15 marks)

4. In a competitive market, the supply schedules is p = 4 + 0.25q


and the demand schedule is p = 16 − 0.5q
What would happen to the price paid by consumers and the quantity sold if
(a) a per-unit tax of #3 was imposed, and
(b) a proportional sales tax of 20% was imposed? (15 marks)

5. A firm buys the three inputs K, L and R at prices per unit of #10,#5 and #3

respectively. The marginal product functions of these three inputs are

MPK = 150 – 4K
MPL = 72 – 2L
MPR = 34 − R
What input combination will maximize output if the firm’s budget is fixed at
#285? (15 marks)

6. Market Research suggests that for a given commodity QD = 2 when P = 38,


QD = 4 when P = 42 and QD = 6 when P = 62. Find the firm's demand function
where P = f( Q) (assume it is quadratic). (15 marks)