Exercises

13 July 2015

01:53 PM

Exercise 1.1

Solution 1.1
+ =3
( 2 = 3)
3 =6
=2

Eliminate x

+ (2) = 3
=1

=1

Substitute and solve for x

=2

Exercise 1.2

Solution 1.2
2( 3 = 1)
2 6 =2

Solve by eliminationmultiply function by 2

2 6 =2
(2 + = 9)
7 = 7
=1
3(1) = 1
= 1+3
=4

=4

Substitute back and solve

=1

Exercise 1.3

Solution 1.3
6 = 12

Supply

= 6 12
( ) = 6 12

Supply Function

6 = + 12
1
= + 2
6
1
( ) = + 2
6

Inverse Supply Function

Functions Page 1

+ 2 = 40

Demand

= 40 2
( ) = 40 2

Demand Function

2 = 40
1
= 20
2
1
( ) = 20
2
:6

Inverse Demand Function

12 = 40 2
8 = 52
52
=
8
13
=
2

Equilibrium Set

=6

12
Back sub and solve

13
= 6 12
2
= 39 12
= 27
13
27,
2
Sketch

Exercise 1.4

Solution 1.4
( ) = 6 12
(

) = 6(

) = 40 2

Supply Function

) 12

Taxed Supply Function

Demand Function - Remains Unchanged

6( ) 12 = 40 2
6 6 12 = 40 2
6 + 2 = 40 + 12 + 6
8 = 52 + 6

Functions Page 2

Solve for

to find new consumer price

13 3
= +
2 4
Exercise 1.5

Solution 1.5
Finish Exercise 1.5

Exercise 1.6

Solution 1.6
( ) = 12( ) 4
( ) = 84
12
12
16

12 4 = 8 4
+ 4 = 8 + 4 + 12
= 12 + 12
12 12
= +
16 16
3 3
= +
4 4

Taxed Supply Function

Taxed Demand Function
=

= 84
3 3
= 8 4 +
4 4
= 833
= 53

Back sub and solve

Functions Page 3