ECN3123 (APPLIED MATHEMATICAL ECONOMICS)

SEMESTER 2 2016/17
TUTORIAL 2
EQUILIBRIUM ANALYSIS

1. Given the following set of simultaneous equation for two related markets, Toyota (T) and
Honda (H), find the equilibrium conditions for each market.
QdT =823 PT + P H QdH =92+2 PT 4 P H
a. b.
QsT =5+15 PT QsH =6+32 PH
 Qs=Q d
Equilibrium requires that in each market.

2. Consider the following national income model:

C=C0 + bY

Y =C + I 0+G 0

I 0 =30 G0=20
It is given that C=50+0.9 Y , , and . Find equilibrium national
income and consumption.

3. Consider the following Keynesian macroeconomic model and solve for equilibrium Y and
C (the two endogenous variables):
Y =C + I

C=3000+ ( 23 )Y
I =1000

4. The demand and supply functions for two interdependent commodities are given by

QD 1=102 P1 + P2 QS 1=3+2 P1

QD 2=5+2 P 12 P 2 QS 2=2+3 P2

QDi , QSi
Where and Pi denote the quantity demanded, quantity supplied and price of
good I respectively. Determine the equilibrium price and quantity for this two commodity
model

G=20, I =35,C=0.9Y d +70,T =0.2Y +25

5. Given that . Calculate the equilibrium level
of national income.