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ECON 103 Tutorial 2

ECON 103 Tutorial 2. Rob Pryce www.robpryce.co.uk/teaching. Question 1a. Solve the following equation for. 2x = 12 x = 6. Question 1b. Solve the following equation for. 4x = 6 x = 1.5. Question 1c. Solve the following equation for. 6x = 10 x = 10/6 = 5/3. Question 1d.

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ECON 103 Tutorial 2

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  1. ECON 103Tutorial 2 Rob Pryce www.robpryce.co.uk/teaching

  2. Question 1a • Solve the following equation for • 2x = 12 • x = 6

  3. Question 1b • Solve the following equation for • 4x = 6 • x = 1.5

  4. Question 1c • Solve the following equation for • 6x = 10 • x = 10/6 = 5/3

  5. Question 1d • Solve the following equation for • 0.5x = 9 • x = 18

  6. Question 2a Find in terms of the other parameters or variables • x = (c-b)/a

  7. Question 2b Find in terms of the other parameters or variables • x = (kc – a – b)/(kd)

  8. Question 2c Find in terms of the other parameters or variables

  9. Question 2d Find in terms of the other parameters or variables • x = (dc – bc – a)/(1-c)

  10. Question 2e Find in terms of the other parameters or variables

  11. Question 2f Find in terms of the other parameters or variables

  12. Question 2g Find in terms of the other parameters or variables • x = (c – b)/a

  13. Question 3a A consumer’s income or budget is 120. She buys two goods, in quantities and with prices 3 and 4 euros respectively. Derive the equation of the budget line (budget constraint): (i) as an implicit function (ii) with the quantity purchased as an explicit function of the quantity purchased (iii) with the quantity purchased as an explicit function of the quantity purchased

  14. ai) xPx + yPy = m 3x + 4y = 120 aii) y = 30 – 0.75x aiii) x = 40 – (4y/3)

  15. Question 3b Provide a graphical representation for the budget line in each of the case (ii) y 30 slope = 40 x

  16. Question 3c What is the opportunity cost of in terms of ? If you buy 1 more x, you spend £3. That is ¾ of y that you can’t buy any more. The opportunity cost is ¾y

  17. Question 3d If the consumer buys 20 units of and 12 units of , is the budget constraint binding? no

  18. Question 3e If the consumer spends 40% of her income on and 60% on how much of each good does she buy? 16x and 18y

  19. Question 3f Show what happens to the budget line if both prices double, while income stays constant. y 30 15 x 20 40

  20. Question 4a Solve for P and Q

  21. Question 4b Write the inverse of the functions (P=…) 5p = 100 – Qd15P = Qs + 100 P = 20 – 0.2Qd P =

  22. Question 4d Add a tax of T=1 P = 20 – 0.2Qd P = PT = (multiply by 15) get Q on its own solve

  23. Question 5a Solve for P and Q

  24. Question 5b • Suppose the government imposes an ad valorem tax of 50% of the supply price. Find the new equilibrium price and quantity. PST = 1.5 (PS)

  25. Question 5b Solve for P and Q

  26. Question 5c P Q

  27. Question 6 CB 100 80 IC 10 170

  28. Question 7 Add a tax of $T Show that Q* = 4 – 0.2T

  29. Question 7 Add a tax of $T Show that Q* = 4 – 0.2T

  30. Any Questions? Email: r.pryce@lancaster.ac.uk Web: www.robpryce.co.uk/teaching.html Office Hour: Thursday, 3pm Charles Carter C floor, near C07

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