QUIZ 1

TA : Aditya Bagus Saputra ( Je )

1. (15 minutes)
A monopoly company is producing three type of products which had
different quality. The demand for each type follows this function :
50−P1
Q 1=
7
P2
Q 2=30−
5
P3
Q 3=12,5−
6
The total cost to produce all of products is
C = 100 + 15 Q (Q is total product)
a. State the objective function if the company wanna maximize profit !
b. How many product (Q1, Q2, Q3) must be produced by company to
maximize profit ? and Calculate it`s profit !
c. Explain whether the maximum profit is satisfied !

2. (20 Minutes)
An entrepreneur from Indonusa is considering utilizing the tax amnesty
policy, which recently prevailed in his country. To join the program, he must
follow the repatriation program by transfering his corporate money which
was deposited in a Singgaparan bank, back to his home country Indonusa.
You are asked to help him calculate the potential revenue of some alternative
of investment.
a. If he decides to deposit his money in a domestic bank for $200 at 12%
interest rate, calculate his future income when the principal is compunded:
i) annually (per year), or ii) twice in month

b. He is also considering buying a property, which value is expected to

appreciate over time according to the formula:
 2
t3
V =200(1,2)

i) Write the equation which shows the present value of this property !

ii) If he decide to buy the property, how long should the building be kept
to maximize its present value under continuous compounding at r =
6%? (ln 1,2 = 0,18)

iii) Show that the optimal time satisfy second order condition to maximize
the present value of the property.

3. (20 Minutes)
Suppose a foreign student studying in Indonesia, together with his
classmates, is planning a low-budget holiday to the Western part of Indonesia.
He has USD 680 for a year in total for sharing a room that costs USD 8 per
night/pax and meals which is estimated to cost USD 4 per day on average. He
would like to maximize his utility function below:
U =x0,5 y 0,75
where:
u = utility level
x = number of nights of room rental
y = number of days of meals
Questions:
a. Write the Lagrangian Function for the foreign student !
b. How many nights of room rental and days of meals that are affordable by
the total budget?
c. What is value of λ ? and interpret it !

4. (25 Minutes)
Demand for a product is determined by the function is given by 𝑄 = 40- 0.02𝑃
and its supply function is 𝑄 = 0.1𝑃 − 50. Quantity is measured in thousand
units, while price is in rupiahs. If demand and supply interaction lead to
market equilibrium:
a. Find consumer surplus at market equilibrium!
b. Find producer surplus at market equilibrium!
c. Suppose the government imposes a ceiling price of Rp 600. Calculate the
new consumer and producer surplus!
d. Sketch the graph to indicate how government policy affect market surplus
(consumer and producer). Who is benefited by the government policy?
Explain by your answer in part c.