Answers

Chapter 1 8 (a) 16
Presented with the calculation, −42, your
(b)
Section 1.1
calculator uses BIDMAS, so squares first to get
Practice Problems 16 and then subtracts from zero to give a final
1 (a) −30 (b) −5
2 (c) answer, −16. To obtain the correct answer you
5 (e)
(d) −1
36 (f) need to use brackets:
2 (a) −1 (b)
−7 (c)
5 ( 2 4 ) x2 5
(d) −91 (f)
0 (e) −5 9 (a) 9 (b)
21; no
3 (a) 19 (b)
1500 (c)
32 (d)
35 10 (a) 43.96 (b)
1.13 (c)
10.34 (d)
0.17
2y + 4z (c) not possible
4 (a) x + 9y (b) 27.38 (f)
(e) 3.72 (g)
62.70 (h)
2.39
8r2 + s + rs − 3s2 (e)
(d) −4f 11 (a) 7x − 7y (b)
15x − 6y (c)
4x + 12
(f) not possible (g) 0 21x − 7 (e)
(d) 3x + 3y + 3z (f)
3x2 − 4x
5 (a) 5z − 2z (b) −3y (c)
2
z−x 2
−2x − 5y + 4z
(g)
6 (a) 7(d + 3) (b) 4(4w − 5q)
12 (a) 5(5c + 6) (b)
9(x − 2) (c)
x(x + 2)
3(2x − y + 3z) (d)
(c) 5Q(1 − 2Q)
4(4x − 3y) (e)
(d) 2x(2x − 3y) (f)
5(2d − 3e + 10)
7 (a) x2 + x − 6 (b) x2 − y2
13 (a) x2 + 7x + 10 (b) a2 + 3a − 4 (c)
d 2 − 5d − 24
x2 + 2xy + y2
(c)
6s2 + 23s + 21 (e)  2y2 + 5y + 3 (f)
(d) 10t 2 − 31t − 14
5x2 − 3xy + 5x − 2y2 + 2y
(d)
9n2 − 4 (h)
(g) a2 − 2ab + b2
8 (a) (x + 8) (x − 8)
14 (a) 6x + 2y (b)
11x2 − 3x − 3 (c) 14xy + 2x
(2x + 9) (2x − 9)
(b)
6xyz + 2xy (e)
(d) 10a − 2b (f)
17x + 22y
Exercise 1.1 11 − 3p (h)
(g) x2 + 10x
1 (a) −20 (b) −4 (d)
3 (c) 1
15 (a) (x + 2)(x − 2) (b) (Q + 7)(Q − 7)
−12 (f)
(e) −5 (h)
50 (g) 3
(x + y)(x − y) (d) (3x + 10y)(3x − 10y)
(c)
(i) 30 ( j)
4
16 (a) 4x2 + 8x − 2 (b) −13x
2 (a) −1 (b)
−3 (c)
−11 (d)
16
17 S = 1.2N + 3000E + 1000(A − 21);  $204  000
−1 (f)
(e) −13 (g)
11 (h)
0
18 (a) C = 80 + 60L + K (b) C = 10 + 1.25x
(i) −31 ( j)
−2
(c) H = 5a + 10b (d) X = Cd + cm
3 (a) −3 (b)
2 (c) −15
18 (d)
−41 (f)
(e) −3 (g) −6
18 (h) Exercise 1.1*
(i) −25 ( j)
−6 1 (a) 3 (b) −7
5 (c)
4 (a) 2PQ (b)
8I (c)
3xy 2 (a) 2 − 7 − (9 + 3) = −17
b2 (f)
4qwz (e)
(d) 3k2 8 − (2 + 3) − 4 = −1
(b)
4x − 7y (c) 9a + 2b − 2c
5 (a) 19w (b) 7 − (2 − 6 + 10) = 1
(c)
x + 2x (e)
(d) 2
4c − 3cd (f) 2st + s + t + 9
2 2
3 (a) −6 (b) −5 (d)
6 (c) −96
6 (a) 10 (b)
18 (c)
2000 5
−1 (f)
(e) 6 (g) 63
(h)
96 (e)
(d) 70 4
7 (a) 1 (b) −6 (d)
5 (c) −6 4 (a) 6 (b)
2 (c)
5
−30 (f)
(e) 44 5 −y2 + xy − 5x + 2y − 6
 ANSWERS  665

6 (a) 2x − 2y (b) 2x (c)

−2x + 3y p 1 b
4 (a) (b) (c)
7 (a) x − 2x − 24
2
(b) 6x − 29x + 35
2 2q 1 3r x24 2a 1 1
6x + 2xy − 4x
(c) 2
(d) 12 − 2g + 3h − 2g2 + gh 2 1
(d) (e)
32e x22
2x − 2x2 − 3xy + y − y2 (f) a2 − b2 − c2 − 2bc
(e)
x 21 x 21 1
8 (a) 3(3x − 4y) (b) x(x − 6) 5 5 5 ; other two have no common
2x 2 2 2(x 2 1) 2
5x(2y + 3x) (d)
(c) 3xy(y − 2x + 4) factors on top and bottom.
x2(x − 2)
(e) 5xy3(12x3y3 − 3xy + 4)
(f) 3 1 5 7
6 (a) (b)
2 (c) (d)
9 (a) ( p + 5)(p − 5) (b) (3c + 8)(3c − 8) 7 3 6 20
2(4v + 5d)(4v − 5d) (d)
(c) (4x2 + y2)(2x + y)(2x − y) 7 5 5 2
(e) (f)
(g)
(h)
10 (a) 112  600  000 (b)
1.7999 18 6 8 5
283  400
(c) 246  913  577
(d) 7 1 2 21 1
(i) ( j) (k) (l) 5 10
12 30 27 2 2
11 (a) π = 12y − 3x − 800 (b) $5800
7 38
(c) 0 ≤ y ≤ x (d) π = 9x − 800
1 2 3x 2 2
12 (a) 2KL(L + 2) (b) (L − 0.2K)(L + 0.2K) 8 (a) (b) (c)
x 5 x2
(c) (K + L)2
7y 1 2x 15c 1 10d
(d) (e) 3 (f)
Section 1.2 xy 36
x12 18h 2 t
Practice Problems (g) 1
(h) (i) ( j)
x 13 7 20
3 4 1 1 1
1 (a) (b) (c) (d) (e) 9 (a) 5 (b)
6 (c)
18 (d)
2
5 5 2y 2 1 3x x24
2
3 7 3 1 (e) −1 (g)
10 (f) 60 (h)
1
2 (a) (b)
(c)
(d) 3
8 4 4 18
2
2 11 5 (i) −5 ( j)
−3 (k)
−2 (l)
23
3 (a) (b) (c) 3
7 15 36
1 1
5 x(x 1 1) (m) 3 (o)
3 (n)
4 (a) (b) 4 4
x12 x 1 10
10 (a), (d), (e), (f)
5 x 13
(c) (d) 11 (a) x > 1 (b)
x ≤ 3 (c)
x < −3 (d)
x>2
x 11 (x 1 1)(x 1 2)
3 9 3 2
12
5 (a) 6 (b)
12 (c)
2 (d) (e)
2 x3
4 5 2
7
6 (a) 12 > 9 (true) (b) 12 > 6 (true) 13 (a) 2 x ≤ 10
(b)
26
3 > 0 (true)
(c) (d) same as (c)
2 > 1 (true)
(e) (f) −24 > −12 (false) Exercise 1.2*
−6 > −3 (false) (h)
(g) −2 > −1 (false) x23 3
1 (a) (b) 4
(c)
(i) −4 > −7 (true) 2 2x 2 1
7 (a) x > −7 x≥2
(b) 1 x13
−1 (e) (f)
(d)
x 26 x14
Exercise 1.2
1 2x 1 5y
1 3 3 1 4 1 (g) (h)
1 (a) (b) (c) (d) (e) 51 2x2 2 5x 1 3 3
2 4 5 3 3 3
5 1 3 5
7 14 3 2 (a) (b) (c) (d)
2 (a) ; (b) 1 7 10 2 48
20 25 5
22 11 141 34
2x 1 1 2 3a (e) (f) (g) (h)
3 (a) (b) (c) (d) (e) 13 9 35 5
3 2x ac 3xy 4b 17 7
(i) 6 ( j)
(k) 4
(l)
10 9
666 ANSWERS

x 11 1 2
3 (a) x + 6 (b) or equivalently 1 1 Point Check
x x
(−1, 2) 2(−1) + 3(2) = −2 + 6 = 4 ✓
5 5x 1 2 7x 1 3 3x 1 5 ✓
(c) (d) (e) (f) 2 (−4, 4) 2(−4) + 3(4) = −8 + 12 = 4
xy 6 x(x 1 1) x ✓
(5, −2) 2(5) + 3(−2) = 10 − 6 = 4
x2 1 x 2 2 x13 (2, 0) 2(2) + 3(0) = 4 + 0 = 4 ✓
(g) (h)
x11 x(x 1 1)
11 35
4 (a) 2 (b) 1 (c) 2 (d) 8 The graph is sketched in Figure S1.2.
7 9
The graph shows that (3, −1) does not lie on the line.
4 1 11
(e) (f)
(g) 8
2 (h)
5 4 7
71 y
(i) 9 ( j) −9
7 (l)
(k)
21 5

(m) −5 (o)
1 (n) 3 (p)
5 4
(24, 4)
3
5x
5 1.6 1 5 6.75; $7.21 2
7 (21, 2)
1
6 (a) $3221.02 (b) $60  000 (c) 10 (2, 0)

3 12 25 24 23 22 21 1 2 3 4 5 x
7 (a) x , 28 (b) x . 2 (c) x ≤ 13 21 (3, 21)
5 13 (5, 22)
22
x > −3 (e)
(d) −1 < x ≤ 3 this point does
23
not lie on line
8 (a) 9000 + 50x 24
10  800 ≤ 9000 + 50x ≤ 12  500;  36 ≤ x ≤ 70
(b) 25
9 −3, −2, −1, 0
3 11
10 (a) −1 (c)
(b) x$ Figure S1.2
2x 2 1 5
x(x 2 1) 3 (2, 1) and (−2, −5) lie on the line.
11
2 The line is sketched in Figure S1.3.

Section 1.3
y
Practice Problems
5
1 From Figure S1.1, note that all five points lie on a
4
straight line.
3
2
y 1 (2, 1)
5 (2, 5)
25 24 23 22 21 1 2 3 4 5 x
4 21
3 22 3x 2 2y 5 4
(1, 3)
2 23
1 (0, 1) 24
(22, 25) 25
25 24 23 22 21 1 2 3 4 5 x
21
22
(22, 23)
Figure S1.3
23
24 4 (0, −1) and (2, 0) lie on the line.
(23, 25) 25
The graph is sketched in Figure S1.4.

Figure S1.1
 ANSWERS  667

y y
1
5 12

4
1
3
x 2 2y 5 2 intercept 1
2 2

1
(2, 0) 1 1 1 x
21 22 1 12
2
1
25 24 23 22 21 1 2 3 4 5 x 2 2
21 1 unit
(0, 21)
22 21
23 1 2 units
212
24
25 22
1
22 2
y 5 12 2 2x
Figure S1.4 23

5 From Figure S1.5, the point of intersection is (1, −1/2).

Figure S1.7

y
5 3x 2 2y 5 4 Exercise 1.3
4 1 From Figure S1.8, the point of intersection is (2, 3).
3 x 2 2y 5 2

2
y
1
1
9
Q
25 24 23 22 21 2 3 4 5 x 8 R
21
point of 7
22
intersection 6
23 (1, 21 )
2
5
24
4
25
3 (2, 3)
2
Figure S1.5 1
P
6 (a) a = 1, b = 2. The graph is sketched in Figure S1.6. 25 24 23 22 21 1 2 3 4 5 x
21
a = −2, b = 1/2. The graph is sketched in Figure S1.7.
(b) S 22

y
Figure S1.8
3 1 unit

intercept 2 1 unit

y5x1 2 1

23 22 21 1 2 3 x
21

22

Figure S1.6
668 ANSWERS

2 (a) The graph is sketched in Figure S1.9.

y
3
Cost in $
1 unit
2
1 unit
1000 1
900
800
700 23 22 21 1 2 3 x
600 21
500
400
22
300
y 5 2x
200
100 23

1000 2000 3000 4000 5000 Distance in km

Figure S1.11
Figure S1.9 
y
(b) (i) $540 (ii) 2500 km
5
3 A, C, D, E
4
−1;  (6, 2), (1, −1)
4 (a) 6 (b) 3
5 x y 2
1
0 8
6 0 25 24 23 22 21
21
1 2 3 4 5 6 7 x
1 unit
3 4 22
2 units
The graph is sketched in Figure S1.10. y 5 12 x 2 3 23
24
25
y
26

8
Figure S1.12
7 9 (a) C = 4 + 2.5x
6 (b) The graph is sketched in Figure S1.13.
5
Cost in $
4

3 50
4x 1 3y 5 24
2
40
1

30
1 2 3 4 5 6 7 x

20

Figure S1.10 10

6 (a) (−2, −2) (b) (2, 11/2) (c)

(11/2, 1) (d)
(10, −9)
5 10 15 20
3, −1 (c)
7 (a) 5, 9 (b) −1, 13 (d)
1, 4
Distance in miles
5
(e)
22, (f) 5, −6
2
8 (a) The graph is sketched in Figure S1.11.
Figure S1.13 
The graph is sketched in Figure S1.12.
(b) (c) 8 miles
 ANSWERS  669

10 (a) The graph is sketched in Figure S1.14. 2 (a) There are no solutions.
There are infinitely many solutions.
(b)
N 3 x = 1, y = −1, z = 1
350
Exercise 1.4
300 1 (a) x = −2, y = −2 (b) x = 2, y = 3/2
260
250
x = 3/2, y = 1
(c) (d) x = 10, y = −9
2 (a) x + y = 3500
200
190 30x + 25y = 97  500
150 (b) 1500
100 3 The lines are sketched in Figure S1.15.
Infinitely many
(a)
50
No solution
(b)
5 7 10 14 15 20 n

y
Figure S1.14  3 4x 2 6y 5 18

(b) (i) N = 260 (ii) n = 7 2

2x 2 3y 5 6
(c) Slope = 10; this is the number of staff employed 1
in each café. Intercept = 120; number of staff
employed managing the company. 24 23 22 21 1 2 3 4 5 6 x
21
11 (a) $9000 (b) $18  600 (c) $500 (d) $12
x 2 32 y 5 3 22
Exercise 1.3*
23
1 (5, −2), (10, 1), (0, −5)
24
2 (a) (2, 5) (b)
(1, 4) (c)
(−2, 3) (d)
(−8, 3)
25
3 5
3 (a) 7, −34 (b)
−1, 1 (c) , 23 (d)
2,
2 2
1
0, 2
(e) , 0 (f) Figure S1.15
5
The vertical line, x = 4, has no gradient and does
(g) 4 (a) Infinitely many
not intercept the y-axis. (b) No solution
4 (b) and (d) 5 k = −1
5 (a) x + 100 (b) 3.5x + 35 (c)
26
Exercise 1.4*
6 (a) −12 (b) 408 (c) 300 (d) $20
1 (a) x = 2, y = 5 (b)
x = 1, y = 4
a d
7 (1) Gradients are 2 and 2 , respectively, so the x = −2, y = 3
(c) (d) x = −8, y = 3
b e
a d 1
lines are parallel when 5 which gives ae = bd. 2 (a) a = 4, b = 8 (b)
a = −3, b Þ
b e 2
Parallel lines so no solution.
(2) 3 Multiply the first equation by d, the second by a and
subtract to eliminate x.
c c
8 0, ,  ,  0 4 (a) x = 3, y = −2, z = −1
b a
x = −1, y = 3, z = 4
(b)

Section 1.4 5 (a) No solution.

Infinitely many solutions.
(b)
Practice Problems
1 6 k = 6; no solutions otherwise.
x = 3, y = 2
1 (a) x 5 1, y 5 2 (b)
2 7 $98.85
670 ANSWERS

Section 1.5
P
Practice Problems
11
1 (a) 0 (b)
48 (c) 16 (d)
25 (e)
1 (f) 17 10
The function g reverses the effect of f and takes you
back to where you started. For example, when 25 is
7
put into the function f, the outgoing number is 0; and P 5 13 Q 1 7
when 0 is put into g, the original number, 25, is
produced. We describe this by saying that g is the
inverse of f (and vice versa).
2 The demand curve that passes through (0, 75) and
(25, 0) is sketched in Figure S1.16. From this diagram 9 12 Q
we see that
P = 6 when Q = 23
(a)
Figure S1.17
Q = 19 when P = 18
(b)
3 (a) Demand is 173. Additional advertising
expenditure is 12.
P Normal
(b)

75
4 (a) 23
Substitutable; a rise in PA leads to an increase in Q.
(b)
P 5 23Q 1 75
6
(c)
5 a = −6, b = 720
6 (a) 20, 10, 45; line passes through these three points.
Line passing through (50, 0) and (0, 50)
(b)
Q = 20, P = 30

18 Price increases; quantity increases.

(c)
7 6
6
8 P1 = 40, P2 = 10; Q1 = 30, Q2 = 55
19 23 25 Q 9 (a) Q = 30
Substitutable; e.g. since coefficient of Pr is positive.
(b)
Figure S1.16 P = 14
(c)
(d) (i) slope = −20, intercept = 135
3 (a) Q = 21 and P = 36 1
(ii) slope = 2 , intercept = 6.75
Q = 18 and P = 48. The consumer pays an
(b) 20
additional $12. The remaining $1 of the tax is
Exercise 1.5*
paid by the firm.
1 (a) As PS rises, consumers are likely to switch to
4 P1 = 4, P2 = 7, Q1 = 13, Q2 = 14.
the good under consideration, so demand
The goods are complementary. for this good also rises: that is, the graph shifts
Exercise 1.5 to the right.
1 (a) 21 (b)
45 As PC rises, demand for the bundle of goods
(b)
15 (d)
(c) 2 as a whole is likely to fall, so the graph shifts
to the left.
0; inverse
10 (f)
(e)
Assuming that advertising promotes the good
(c)
2 The supply curve is sketched in Figure S1.17.
and is successful, demand rises and the graph
11 (b)
(a) 9 shifts to the right. For some goods, such as drugs,
0; once the price falls below 7, the firm does not
(c) advertising campaigns are intended to discourage
plan to produce any goods. consumption, so the graph shifts to the left.
 ANSWERS  671

3 1
2 m 5 2 , c 5 9 4 (a) x 5 (y 1 6) (b)
x = 3y – 4
2 9
3 0 and 30 x = 2y (d)
(c) x = 5(y − 8)
4 (1) P = 30, Q = 10
1 1 4
New supply equation is 0.85P = 2QS + 10;
(2) x5
(e) 2 2 x5
(f) 17
y 3 y
P = 33.6, Q = 9.28.
Q b b1I
5 (a) 53, 9 (b)
$324 5 (a) P 5 2 (b)
Y5
a a 12a
6 P1 = 20, P2 = 5, P3 = 8; Q1 = 13, Q2 = 16, Q3 = 11
1 b
7 Change supply equation to P = 2QS + 40 + t. P5
(c) 2
aQ a
In equilibrium 3
6 x 5
−3Q + 60 = 2Q + 40 + t y12
−5Q = −20 + t HQ2 2DR
7 (a) D 5 (b) H 5
t 2R Q2
Q542
5
Exercise 1.6*
3
Substitute to get P 5 48 1 t. 1 (1) (a) multiply by 9  add 1
5
t = 5; firm pays $2 (b)
(a) P = 45, Q = 5 multiply by −1  add 3
(b)

8 (a) a > 0, b > 0, c < 0, d > 0 square  multiply by 5  subtract 8

(c)

d2b ad 2 bc multiply by 3  add 5  square root

(d)
(b) Q 5  and P 5
a2c a2c square  add 8  reciprocate
(e) multiply by 4
y21
Section 1.6 (2) (a) x 5 (b) x = 3 − y
9
Practice Problems
y18 y2 2 5
1 (a) Q = 8 (c)
x 56 x5
(d)
5 3
Q = 2P − 26  (multiply out brackets)
(b)
4
Q = 2 × 17 − 26 = 8
(c) x 56
(e) 28
y
y 1 1 1 1y c2a a2 1 b
2 (a) x 5 (b) x 5 11 5 2 (a) x 5 (b)
x5
6 7 y 7y b a11
11 a 22 2 4y ma2
3 (a) x 5 y (b)
x5 x = (g − e)2 − f (d)
(c) x5 2 1n
12 c y 21 b
2
n2 a2 1 b2
Exercise 1.6 (e)
x5 1 m (f) x 5
m2 b2a
1
1 Q 5 P 2 4; 22
2 V11
3 t 5 ; 11
2 (a) y = 2x + 5 (b) y = 2(x + 5)
V25

5 S
y5
(c) y = 2(x + 4)2 − 3
(d) 4 r 5 100 n 21
x2 P
3 (a) multiply by 5  add 3
5 (a) G = Y(1 − a + at) + aT − b − I
add 3  multiply by 5
(b)
G 1 b 1 I 2 Y(1 2 a 1 at)
multiply by 6  subtract 9
(c) T5
(b)
a
square  multiply by 4  subtract 6
(d) G 1 b 1 I 2 Y 1 aY 2 aT
t5
(c)
divide by 2  add 7
(e) aY
(f) reciprocate  multiply by 2 G1b1I2Y
(d)
a5
add 3  reciprocate
(g) T 2 Y 1 tY
672 ANSWERS

Section 1.7 Exercise 1.7*

Practice Problems 10Y 2 500
1 (a) S = 0.3Y − 30 (b)
S5
Y 1 10
1 S = 0.2Y − 25
aI* 1 b
2 Y = 210; Y = 215 2 C 5
12 a
3 Y = 400
Y 2 b 2 I*
4 Y = 2950; r = 8 3 a 5
Y
The IS and LM curves shown in Figure S1.18
4 825
confirm this, since the point of intersection has
coordinates (8, 2950). A change in I does not affect 5 Y = 2500, r = 10
the LM schedule. However, if the autonomous level Y 2 74
6 a 5 ; a = 0.6, C = 131
of investment increases from its current level of Y 2 20
1200, the IS curve moves upwards, causing both r 7 (a) increases (b) decreases
and Y to increase.
Multiple Choice Questions
1  E 2  B 3  C
Y
4  D 5  A 6  A
7  E 8  B 9  D
4283 1 10  A 11  D 12  D
3
LM curve
13  C 14  E 15  A
16  A 17  D 18  C
2950
Examination Questions
The graphs are sketched in Figure S1.19.
1 (a) 

1350

IS curve y
25

8 7 Deliver 4U
25 10 r
20

EatMeNow
Figure S1.18
15

Exercise 1.7
1 MPC = 0.75; MPS = 0.25 10

2 (a) MPC = 0.7; MPS = 0.3

(b) C = 0.7Y + 100 5

3 (a) 40
10 5 10 15 20 25 x
(b)
0.7; Y 5 (C 2 40); 100
7
4 (a) S = 0.1Y − 72 (b) S = 0.2Y − 100
Figure S1.19
5 (a) 325 (b)
225 (c)
100
6 10a + b = 28
30a + b = 44
a = 0.8, b = 20; Y = 165
7 187.5
 ANSWERS  673

12 miles
(b) 
EatMeNow: y = 0.5x + 9, Deliver4U: y = 1.25x
(c) 
2 (a) P 5 10 15 20 25 45 degree line
200
C 1 I line
QD 325 250 175 100 25
QS 0 50 100 150 200
150

The graphs are sketched in Figure S1.20.

100

25 50

20
50 100 150 200 Y

15
Figure S1.21
10
Y = 160
If MPC decreases, the slope decreases as
indicated by the dashed line. The point of
5
intersection shifts down the 45° line, showing
that the equilibrium value of Y decreases.
50 100 150 200 250 300 350 Q The coefficient of P2 in the demand equation for
7 (a) 
good 1 is positive, indicating that demand for
good 1 rises as the price of good 2 goes up.
Figure S1.20 Similarly, for the second equation. Hence the
goods are substitutable.
P1 = 15, P2 = 8; Q1 = 98, Q2 = 157
(b) 
P = 18, Q = 130
(b)  The price of good 1 reduces by $3.15 and the
(c) 
P < 18
(c)  price of good 2 reduces by $0.35.
(d) The demand curve is unchanged and the supply 8 (a)  3f + 4s ≤ 3000; 640 kg
curve shifts upwards by 5 units. (b)  (i)  
3
P = 20, Q = 100 (ii)  5
(1) is demand and (2) is supply.
3 (a)  36 2 5P
(iii) 
Q5
slope = −1/3, vertical intercept = 16
(b)  2P
P = 3.6, Q = 37.2
(c)  2Y 2 100
S5
(c) 
1850
4 (a)  Y12
5
(b)  6n 2 m 3 2 2n
9 (a) x 5 , y5 ;m=9
12
5 (a)  2 92m 2(9 2 m)
20
(b)  (i)  Infinitely many solutions
2QL (ii) No solutions
K5
(c) 
L2Q
P1 = 12, P2 = 7, P3 = 8
(b) 
6 Y 0 100 200 10 Y = 3160, r = 2.4
C+I 40 115 190 Figure S1.22 (not to scale) shows the IS and LM curves
intersecting at the equilibrium point (2.4, 3160). The
The lines are sketched in Figure S1.21. dashed line shows the new IS curve after a reduction
in MPC. The point of intersection has moved down
674 ANSWERS

and to the left indicating a decrease in the equilibrium (b) x 0 1 2 3 4 5 6
values of both Y and r. f(x) −9 −4 −1 0 −1 −4 −9
The graph is sketched in Figure S2.2.
Y
LM
y
1 2 3 4 5 6
3400
x
22

(2.4,3160)
24

26
2800
28
IS
210
f(x) 5 2x2 1 6x 2 9
212

34 r

Figure S2.2

Figure S1.22
(c) x −2 −1 0 1 2 3 4

Chapter 2 f(x) −22 −12 −6 −4 −6 −12 −22

The graph is sketched in Figure S2.3.
Section 2.1
Practice Problems y
1 (a) x = ±10 (b) x = ±2
22 21 1 2 3 4
x = ±1.73
(c) (d) x = ±2.39 x
25
No solution (f)
(e) No solution
x=0
(g) 210

1 3 215
2 (a) x = 10 and 2 (b)
x52
2 2
220
No solution (d)
(c) x = 2 and 3
225
3 (a) x −1 0 1 2 3 4 f(x) 5 22x2 1 4x 2 6
f(x) 21 5 5 21 230
−3 −3
The graph is sketched in Figure S2.1.
Figure S2.3

y
4 (a) The graph is sketched in Figure S2.4.
f(x) 5 4x2 2 12x 1 5 y
20
f(x) 5 2x2 2 11x 2 6

15
1 6 x
22
10
26
5

21 1 2 3 4 x
11
25 ( 4 , 2169
8
)

Figure S2.1 Figure S2.4

 ANSWERS  675

The graph is sketched in Figure S2.5.

(b) 5 The graphs are sketched in Figure S2.6.

y y y
(50, 2500)

f(x) 5 x2 2 6x 1 9

24 4 x 0 100 x

(a) 216 (b)

9
y
y
(11, 36)

81
5 17 x
(3, 0) x
285
9 x
(c) (d)
Figure S2.5
y

1
5 (a) 2 # x # 6
2
The solution consists of all values of x except
(b)
3
for x = 3.
x
6 (a) 1 ≤ x ≤ 4 (e)

x < −2, x ≥ 1
(b)
Figure S2.6
7 Q = 2 and P = 38

Exercise 2.1 6 (a) x ≤ −4, x ≥ 4 (b) 0 < x < 100

1 (a) ±9 5 ≤ x ≤ 17 (d)
(c) x=9
(b) ±6 all values of x
(e)
(c) ±2 7 (a) 56.166, 56.304, 56.35, 56.304, 56.166, 55.936,
−2, 4
(d) 55.614, 55.2
−9, −1
(e) The graph is sketched in Figure S2.7.
2 (a) 1, −3
1
(b) /2, −10
Q
0, −5
(c) 57

−5/3, 9/4
(d)
5
(e) /4, 5 56.5

3 (a) 0.44, 4.56

−2.28, −0.22
(b) 56

−0.26, 2.59
(c)
−0.30, 3.30
(d) 55.5

−2
(e)
(f) No solutions 55

4 (a) −4, 4 23 24 25 26 27 28 29 30 T
0, 100
(b)
5, 17
(c) Figure S2.7 
9
(d)
(b) The production level is a maximum at 25°C, so
No solution
(e)
as temperature increases, output will fall.
676 ANSWERS

8 (a) x < 0, x > 3 (b) x ≤ −1, x ≥ 1 2 TC = 100 + 2Q

−4 < x < 2
(c) 100
AC 5 12
9 Q = 4, P = 36 Q
The graph of the total cost function is sketched in
10 P = 22, Q = 3
Figure S2.9.
11 (a) $277 (b) 85

Exercise 2.1* TC

1 (a) ±13 (b)

−3, 13 (c)
−2, 9
slope 5 2
2 −7d, d
2 9 3 1
3 (a) 3, −8 (b) 0, (d)
, 2 (c) (twice)
3 2 4 6
2, −1, 4
(e) intercept 5 100

4 (a) 7, 8 0.22, 2.28

(b)
Q
±3
(c) 7 (twice)
(d)
No solutions (f)
(e) 10, 19
Figure S2.9
5 (a) x ≤ −8, x ≥ 8 (b) 1 ≤ x ≤ 9
The graph of the average cost function is sketched in
1 5
27 , x , 2
(c) (d) 21 # x # Figure S2.10.
2 3
x = −1
(e)
AC
6 c = 12; 6
12
7 k = 27
10 AC 5 100 1 2
Q
8 (a) x ≤ −3, x ≥ 4 (b) −1 < x < 2
8
x ≤ 1, 2 ≤ x ≤ 3 (d)
(c) 2 ≤ x < 3, x > 5
9 $2250 6

10 120.76 4
11 (a) P = 18 (b) B = 15 2
12 (b) between $18 and $40 (c) $29
50 100 150 200 Q
13 P = 5, Q = 65

Section 2.2 Figure S2.10

Practice Problems 3 π = −Q 2 + 18Q − 25
1 TR = 1000Q − Q 2 The graph of the profit function is sketched in
The graph is sketched in Figure S2.8. Figure S2.11.

Q = 500 and P = 500

p (9, 56) p 5 2Q2 1 18Q 2 25

TR (500, 250 000)

31

4 14 Q
TR 5 1000Q 2 Q2 1.52 16.48

225
0 1000 Q

Figure S2.11
Figure S2.8
 ANSWERS  677

Q = 4 and 14
(a) (b) Q = 9; π = 56 3 (a) P = 50 − 4Q

Exercise 2.2 10
P5
(b)
Q
1 (a) P = 50; TR = 500
500
TC = 150
(b) 4 TC = 500 + 10Q; AC 5 1 10
Q
π = 350
(c) The graphs are sketched in Figures S2.15 and S2.16.
2 (a) 4Q
7
(b)
TC
10Q − 4Q2
(c)
The graphs are sketched in Figures S2.12, S2.13 and slope 5 10
S2.14.

intercept 5 500
TR

TR 5 4Q

Figure S2.15

Q
AC

Figure S2.12
AC 5 500 1 10
Q

TR

TR 5 7
10
7

Q
Figure S2.16

Figure S2.13 1
5 TC = Q2 + Q + 1; AC 5 Q 1 1 1
Q

TR (1.25, 6.25)
The graphs are sketched in Figures S2.17 and S2.18.
TR 5 10Q 2 4Q2

TC

1 TC 5 Q2 1 Q 1 1
0 2.5 Q

Q
Figure S2.14

Figure S2.17
678 ANSWERS

π = TR − TC = 60Q − Q2 − (Q2 + 6Q + 100)

(c)
AC = −2Q2 + 54Q − 100
  
AC 5 Q 1 1 1 Q1
e.g. multiply out brackets
Q = 2, 25
When Q = 13.5, π = 264.5.
Exercise 2.2*
the Q 1 1
line 2 1 5
1 15 and ; max profit is 154 which occurs at Q 5 7 .
1 3 12 6
Q 2 a + b + c = 9
4a + 2b + c = 34
Figure S2.18 9a + 3b + c = 19
a = −20, b = 85, c = −56; π = −36
6 TC = 5Q + 100 3 (a) 20
7 (a) VC = $76 (b) $47  600 800
(b)
8 (a) $5.50 (b) x > 40 cQ 2 bQ2
4 (a) TR 5
9 π = −2Q + 20Q − 32
2
a
2, 8 (b)
(a) 20 (c)
5 TC = eQ + d
(b)
10 The graphs of TR and TC are sketched in d
AC 5 e 1
(c)
Figure S2.19. Q
(a) 1, 5 (b) 3 2bQ2 1 (c 2 ae)Q 2 ad
(d)
p5
a
5 (a) Ennerdale: 0.5aN + 0.25(1 − a)N
TR 5 22Q2 1 14Q North Borsetshire: 15 + 0.3N
(3.5, 24.5)
Equate two expressions to get result.
maximum B
profit L-shaped curve, tending to 1/5.
TC 5 2Q 1 10
a < 0.4 leads to N > 300, so choose Ennerdale if
(b)
A
number of withdrawals exceeds 300.

Section 2.3
Practice Problems
1 (a) 100 (b)
10 (c)
1 (d)
1/10
1 3 5 7 Q 1/100 (f)
(e) −1 (h)
1 (g) 1/343
(i) 81 ( j) 1
72 101 (k)
1
Figure S2.19 2 (a) 4 (b)
3 (c)
32 (d) 1
(e)
4
3 (a) x6 (b)
x1/2 (c)
x6y12 (d)
x3 + x1/2y 3
11 (a) TR = PQ = 60Q − Q 2
4 (a) f(K, L) = 7KL2
The graph is an inverted parabola passing
f(lK, lL) = 7(lK)(lL)2
through (0, 0), (60, 0).
= 7lK l2L2 (rule 4)
TC = 100 + (Q + 6)Q = Q2 + 6Q + 100
(b)
= (ll )(7KL )
2 2
Divide by Q to find AC.
= l3f(K, L) (rule 1)
2
31, 26, 27 , 31; Q 5 10 Increasing returns to scale because 3 > 1.
3
 ANSWERS  679

f(K, L) = 50K1/4L3/4
(b) 13 (a) 98, 115, 125, 134, 140, 146
f(lK, lL) = 50(lK) (lL) 1/4 3/4
(b) The graph is sketched in Figure S2.20.
= 50l K l L 
1/4 1/4 3/4 3/4
(rule 4)
= (l l )(50K L )
1/4 3/4 1/4 3/4
N

= l1f(K, L) (rule 1)

140
Constant returns to scale.
5 (1) (a) 3 (b)
2 (c)
1 (d)
0 120

−1 (f)
(e) −2
100
Same as part (1).
(2)
xz 80
6 (a) logb
y
60
log b(x4y 2)
(b)
7 (a) x = 1.77 (b) x = 1 40

Exercise 2.3
20
1 (a) 64 (b) 2 (c) 1/3 (d) 1
(e) 1 (f) 6 (g) 4 (h) 1/343
1 2 3 4 5 6 t
2 (a) a11 (b) b5 (c) c6 (d) x 2y 2
(e) x 3y6 (f) y−4 (g) x4 (h) f 7
Figure S2.20 
(i) y 3 ( j) x5
1 1 The number of complaints increases but at a
3 (a) x 2 (b) x−2 (c) x 3 (d) x−1
1 3 decreasing rate.
2
(e) x (f) x
2 2
14 9
4 (a) 3600 (b) 200  000
Exercise 2.3*
5 The functions in parts (a) and (b) are homogeneous
of degree 7/12 and 2, respectively, so (a) displays 1
1 (a) 8 (b) 1/32 (c) 625 (d) 2 (e) 2/3
decreasing returns to scale and (b) displays increasing 4
returns to scale. The function in part (c) is not 2 (a) y2 (b) xy2 (c) x4y2 (d) 1
homogeneous.
(e) 2 (f) 5pq2
6 (a) 2  (b) −1  (c) −3  (d) 6 (e) 1/2  (f) 0
3 (a) x−7 (b) x1/4 (c) x−3/2 (d) 2x11/2 (e) 8x−4/3
7 (a) 2  (b) 1 (c) 0 (d) /2 (e) −1 1
4 3x3y7
3
x y 5 A[b(lK)a + (1 − b)(lL)a]1/a
8 (a) log b(xz)  (b) logb 2
  (c) logb 3
y z = A[blaK a + (1 − b)laLa]1/a  (rule 4)
9 (a) 2  logb  x + logb  y  (b) logb  x − 2  logb  y = A[(la)(bK a + (1 − b)La)]1/a  (factorise)
2  logb  x + 7  logb  y
(c) = A(la)1/a [bK a + (1 − b)La]1/a  (rule 4)
10 (a) 1.29  (b) 1.70  (c) 6.03  (d) 8.31 = lA[bK + (1 − b)L ]
a a 1/a
 (rule 3)
1 so f(lK, lL) = l f (K, L) as required.
1
11 (1) (a) 5  (b) 2
2
6 (a) 2/3 (b) 3 (c) 1/4
x2
(2) logb x3 x 5y
y4 7 (a) logb(1) (b) logb 2
(c) logb
y z2
(3) 69.7
(d) logb(b2x3)
12 (1) (a) 4 (b) −2 (c) 2
8 (a) 2 logb x + 3 logb y + 4 logb z
(a) x 3y (b) x15y5 (c) x 2 y 2
(2)
4 logb x − 2 logb y − 5 logb z
(b)
1 1
logb x 2
(c) logb y 2 logb z
2 2
680 ANSWERS

9 (a) −q (b) 2p + q (c) q − 4r (d) p + q + 2r

10 (a) 78.31  (b) 1.48 (c) 3 (d) 0.23 y

11 (a) x ≤ 0.386 (3 dp) 27

24
(b) x > 14.425
y 5 32x 21
12 x = 3
18
2 15
13 (2) ; constant returns to scale.
3 12
2 1 9
14 (1) (a)   (b) 2
3 2 6
1 2 3
(2)
y5 x
7
23 22 21 1 2 3 x
15 log10 x2 2 log10 y 2 log10 10

x2 Figure S2.22
5 log10 21
y
2 (a) 2.718  145  927, 2.718  268  237, 2.718  280  469
x4 2.718  281  828; values in part (a) are getting closer
(b)
5 log10 21
y to that of part (b).
1/b 1/a 3 (1) (a) 0.07%  (b) 1.35%  (c) 18.44%  (d) 50.06%
Q (Q / A ) a 2 bK a
16 (a) L 5   (b)  L 5 (2) 55%
AK a 12b
(3) A graph of y against t, based on the information
17 (a) 1   (b) 2   (c) n   (d) 3 obtained in parts (1) and (2), is sketched in
Figure S2.23. This shows that, after a slow start,
Section 2.4 microwave ownership grows rapidly between
Practice Problems t = 10 and 30. However, the rate of growth then
decreases as the market approaches its saturation
1 x −3 −2 −1 0 1 2 3 level of 55%.
x
3 0.04 0.11 0.33 1 3 9 27
3−x 27 9 3 1 0.33 0.11 0.04
y
55
The graphs of 3x and 3−x are sketched in Figures S2.21 50
and S2.22, respectively. 45
40
35 55
y5
y 1 1 800e20.3t
30
27 25
24 20
21 y 5 3x
15
18 10
15 5
12
5 10 15 20 25 30 35 40 45 50 t
9
6
3 Figure S2.23

23 22 21 1 2 3 x x1/2
4 (a) 2 ln a + 3 ln b (b) ln
y3
Figure S2.21 5 (a) $5 million and $3.7 million
4 years
(b)
 ANSWERS  681

6 (1) Missing numbers are 0.99 and 2.80. 2 (a) ln x + ln y  (b) ln x + 4 ln y  (c) 2 ln x + 2 ln y
The graph is sketched in Figure S2.24.
(2) 5 ln x − 7 ln y  (e) 1/2 ln x − 1/2 ln y
(d)
Intercept, 0.41; slope, 0.20. (f) 1
/2 ln x + 3/2 ln y − 1/2 ln z
A = 0.2, B = e
(3) 0.41
= 1.5 x 4z5
(4) (a) 9100 3 (a) ln x3  (b) ln
y3
(b) 2.4 × 108; answer to part (b) is unreliable since
4 (a) 1.77 (b) −0.80 (c) no solution
t = 60 is well outside the range of given data.
(d) 0.87 (e) 0.22 (f) 0.35
5 A = 50  000, a = 0.137  (a) $25  205  (b) $0
In s
6 (a)  e5  (b)  1
3.0
7 91.6
2.5
8 Increasing returns to scale.
2.0
Exercise 2.4*
1.5 1 $162.19

1.0 2 (a) 1.13 (b)

1.79 (c)
8.77
3 The equation
0.5
N = c(1 − e−kt ) = c − ce−kt
1 2 3 4 5 6 7 8 9 10 11 12 13 t rearranges as
c2N
e2kt 5
c
Figure S2.24
Taking logarithms gives
Exercise 2.4
c2N
1 (1) (a) 33 (b)
55 (c)
98 2kt 5 ln
c
100
(2)
1 c2N
The graph of N against t is sketched in
(3) t 5 2 ln
k c
Figure S2.25.
The graph sketched in Figure S2.25 is called a 1 c2N
21
1 c
learning curve. It shows that immediately after 5 ln 5 ln
k c k c2N
training the worker can produce only a small
number of items. However, with practice, output 350  000
(a)
quickly increases and finally settles down at a 60 days
(b)
daily rate of 100 items. Market saturation level is 700  000, which is
(c)
less than the three-quarters of a million copies
needed to make a profit, so the proprietor
N
should sell.
100
1 1
90 4 ln Q 5 ln 3 1 ln L 1 ln K
80
2 3
70 Putting y = ln Q, x = ln K gives
N 5 100 2 100e20.4t
60 y = 1/3x + (ln 3 + 1/2 ln L)
50
which is of the form ‘y = ax + b’.
40
30 Slope = 1/3, intercept = ln 3 + 1/2 ln L.
20 5 (a) ln Q = ln(ALn) = ln A + ln Ln = ln A + n ln L
10
(b) ln L 0 0.69 1.10 1.39 1.61
1 2 3 4 5 6 7 8 9 10 11 12 t ln Q −0.69 −0.46 −0.33 −0.22 −0.16
(c) n = 0.34, A = 0.50
Figure S2.25
682 ANSWERS

6 (a) 3y2 + 13y − 10 

x6
(b) Put y = ex in part (a) to deduce −0.405. 5 (a)  (i)   loga
y
1 x 1 (ii) 
−2
7 (a) y 5 ln  (b) x 5 ln(e y 2 3)
b a 2
Each year the price is multiplied by the same
(b) 
8 (a)  6  (b)  −1 or 2  (c)  25  (d)  0.26  (e)  ±1.655 factor, 1.1; A = 1000; b = 1.1
ln(A/B) (i)  $2594
9 P 5
k1 1 k2 (ii) At the beginning of Year 22

Multiple Choice Questions 14

TC = 14 + 2Q; AC =
6 (a)  1 2. The graphs are
1  B 2  D 3  C Q
sketched in Figures S2.27 and S2.28.
4  B 5  C 6  D
7  C 8  A 9  A
10  B 11  D 12  E TC
y
13  D 14  B 15  A

Examination Questions
2000
1 (a) 
14
100
(b) 
64
(c) 
Show f(lK, lL) = l7/6 f(K, L); increasing returns
(d) 
to scale
π = −Q2 + 6Q − 8. A graph of the profit function is
2 
Q
sketched in Figure S2.26

Figure S2.27
y
2
1

1 2 3 4 5 6 x AC
21
22
23
24
25
26
27
28
29
210

Figure S2.26 2

Q
Q = 2, 4
(a) 
1
(b)  Figure S2.28
Shifts vertically upwards
(c) 
3 (a)  P = 100, Q = 6 When Q = 0, there is no revenue and the only
(b) 
P = 101.79, Q = 5.88; consumer pays $1.79 and
(b)  costs are the fixed ones which are given to be 14,
producer pays $3.21 so the profit is 0 − 14 = −14. Substituting Q = 0
TR = 10Q − Q2
4 (a)  into π = aQ2 + bQ + c gives π = c, so c must
equal −14.
5 ≤ P ≤ 7
(b) 
a + b = 8, 6a + b = 3; a = −1, b = 9
(c) 
 ANSWERS  683

Q = 2, 7; max profit is 6.25

(d)  7 (a) 5.7% increase (b)
18.4% increase
TR = −Q + 11Q; P + Q = 11
(e)  2
12.0% increase
(c)
ab 5 3
8 The complete set of ‘constant Year 2 prices’ is listed
7 (a)  (i)   
2 in Table S3.1.
(ii)   4x2y4 During Year 1/2 salaries remain unchanged in real
(iii) 6 terms. However, since Year 2 salaries have outpaced
(iv)  logb(xy2z2) inflation with steady increases in real terms.

−1.36
(b)  Table S3.1
(c)  (i)   659,360 Year
(ii)  3.5 1 2 3 4 5
(iii) The sales graph is sketched in Figure S2.29. Real salaries 18.1 18.1 19.0 21.7 23.2

S Exercise 3.1
7 22 1 7 1
1 (a) 2   (d)    (e) 
  (b)    (c) 
2 million 20 25 2 40 500
2 (a) 1.2 (b)
7.04 (c)
2190.24 (d)
62.72
3 (a) 60% (b) 22
4 (a) 1.19 (b)
3.5 (c)
0.98 (d)
0.57
5 (a) 4% increase (b)
42% increase
14% decrease (d)
(c) 245% increase
0.25% increase (f)
(e) 96% decrease
t
6 (a) $18.20 (b)
119  244 (c)
$101.09

Figure 2.29 $1610 (e)

(d) $15  640
7 35%

A = 50,000; b = 0.95; A is the initial price

8 (a)  8 (a) $15.50 (b)
$10.54 (c)
32%

r = −0.0513
(b)  9 $862.50

Use rules to logs to obtain ln V = −0.0513t + ln 50000

(c)  31% (nearest percentage)
10 (a) $26  100 (b)
so it is a line with gradient −0.0513 and vertical 11 (a) 37.5% increase (b)
8.9% increase
intercept 10.8. 6.25% decrease
(c)
1 5 12 $11.6 million
9 (a)  1 0.5 1 0.04Q; 1 0.5; 1
Q Q 13 50  60  72  86  100
(b) A = IT; B = Printing; C = Retail
Prices rise consistently over the past five years at an
2.5 < Q < 10
(c)  steadily increasing rate.
14 (a) Jan (b) 4800 (c) 133
Chapter 3 15 (1) 1995
Section 3.1 (a) 30% (b)
(2) 52.3% (c) 13.1% (d) 9.4%
Practice Problems (3) (a) 25% (b) 44% (c)
10.6% (d) 11.1%
1 (a) $0.29 (b)
$937.50 (c)
$139.20 Public transport costs have risen at a faster rate
(4)
2 (a) 10% (b)
$1564 (c)
$8835 than private transport throughout the period
1995–2010. However, for the final five years there
3 (a) $7.345 million (b)
$76 billion (c)
7%
are signs that the trend has stopped and has
4 (a) 8750 (b)
750 (c)
80% possibly reversed.
5 (a) 82% increase (b)
58% decrease 16 964, 100, 179, 750; e.g. seasonal variations.
45% decrease
(c) 17 (a) 83.3, 100, 91.7, 116.7, 125, 147.9
6 100, 101.5, 105.4, 104.3, 106.9 64.8 (c)
(b) Year 5
684 ANSWERS

Exercise 3.1* 4 13.86%

1 $140 5 12.55%
2 $5875 6 Nine years
3 (a) $90 Exercise 3.2
40%; the 20% discount is applied to the price
(b) 1 $6753.29; 50%
after the first reduction not the original.
2 $23 433.19
4 (a) $720
3 (a) $619 173.64 (b) 13
40% of the new price is less than 40% of the
(b)
4 15 years
original.
5 $42 868.75
Divide by 0.6.
(c)
6 (a) $13  947.94 $14  156.59
(b)
19% decrease (c)
5 (a) $850 (b) 23.5% increase
$14  342.45
(c) $14  381.03
(d)
6 (a) 100, 101.7, 113.1, 116.9
7 Account B has the greater return.
Real output: 236, 229.2, 244.7, 244.7
(b)
Index: 100, 97.1, 103.7, 103.7 8 $205.44

In real terms, spending on education fell by 2.9%

(c) 9 36.6 years
in Year 2, increased by 6.8% in Year 3 and 10 17.0 years
remained unchanged in Year 4. 11 We are charged interest on the interest; 26.82%.
7 (a) 1 and 6, respectively 12 7.25%
142, 150
(b) 13 (a) Six years (b) 5.19%
94, 87, 83, 75, 79
(c) 14 $4410; $5143.82; 28.60%
1.1 million and 1.6 million
(d) 15 21.70%
2n
8 (a) 239.2, 242, 243.69, 243.43, 250.73, 258.56 r
16 P 5 S 1 1
98.8, 100, 100.7, 100.6, 103.6, 106.8 100
297 (c)
(b) 3.5% 17 5.75%
9 (a) 100, 97, 112 18 (a) $28  000 (b) $25  920 (c) Year 5
(b) Although the price changes to goods A and C in Exercise 3.2*
Year 2 appear to cancel each other out, the firm
1 13 years
buys more of C, so this has the greater impact
on the index. In Year 3, there is a slight fall in the 2 $158.45
price of good B. However, the firm buys relatively 3 (a) Midwest (b) BFB
few items of good B and the prices of the other 4 (a) $35  000 (b) Seven years
two goods have increased significantly.
5 7.67%
10 (a) 100, 107, 146
6 Store B
(b) No change in Year 1 since this is the base year.
7 (a) Interest is (r/k)% per period and there are kt
In Year 2 the firm has bought more of each good kt
so the index has increased. r
periods in t years, so S 5 P 1 1 .
100k
In Year 3 the firm has nearly doubled its order for
good A which has also increased markedly in price. 100k r 1
(b) If m 5 then 5 and
This is reflected in a much higher index than before. r 100k m

Section 3.2 mrt

kt 5 so
100k
Practice Problems rt/100
rtm/100 m
1 S = 1000(1.08)10 = $2158.92 1 1
S 5 P 11 5P 11
2 Four years m m
3 (1) (a) $33.71 (b)
$33.77 (c)
$33.79 by rule 3 of indices.
$33.81 (e)
(d) $33.82 (f)
$33.82
$33.82
(2)
 ANSWERS  685

Now, since m = 100k/r, we see that if the frequency

(c) have the extra term, arn. Consequently, when Sn is
increases (i.e. if k S ∞), then m S ∞, causing subtracted from rSn, the rest of the terms cancel,
1
m leaving
11
m rSn − Sn = arn − a
to approach e. Substituting this into the result of (r − 1)Sn = a(rn − 1)
part (b) gives (factorise both sides)
S = Pert/100 rn 2 1
8 22 years
Sn 5 a
r 21
9 (a) 1.5% (b)
17.87% (divide through by r − 1)
10 100(g1/n − 1) The expression for Sn denotes the sum of the first n
11 (b) 100er/100 − 100 terms of a geometric series because the powers of r
run from 0 to n − 1, making n terms in total. Notice
Section 3.3 that we are not allowed to divide by zero, so the last
Practice Problems step is not valid for r = 1.
1 The geometric ratios of (a), (c), (d) and (e) are 2, −3, 8 (a) $480
1
/2 and 1.07, respectively. $3024.52
(b)
Sequence (b) is not a geometric progression. After n payments, debt is
(c)
2 (a) 16; 31 4386.52
(b) ((((8480 − A)R − A)R − A)R  .  .  .  − A)
3 (a) $15  645.49 12 years
(b) = 8480Rn−1 − A(1 + R + R2 +  .  .  .  + Rn−1)
4 $177.69 Rn 2 1
5 8480Rn21 2 A
5 36 years R21
Exercise 3.3 Finally, setting this expression equal to zero gives
1 11  463.88 the desired formula for A.
2 (a) $78 227.44 $78 941.10
(b) $637.43
(d)

3 $983.26
Section 3.4
4 17 years
Practice Problems
5 200 million tonnes
1 (a) $55  839.48
6 $19 053.06
$54  881.16
(b)
7 (a) $13  586.80
2 (a) NPV = $452; worthwhile since this is positive.
(b) $35  868;  $18  698.20
r = 16%; worthwhile since the IRR exceeds the
(b)
8 $966.43
market rate.
Exercise 3.3* 3 NPV of Project A is $2221.90; NPV of Project B is
1 −16  777  215 $2354.70, so Project B is to be preferred.
2 (a) $9280.71 (b) $9028.14 4 $180 146.91
3 140  040 5 The results are given in Table S3.2.
4 $424.19 There is very little to choose between these two
$459.03
(a) (b) $456.44 projects. Both present values are considerably
less than the original expenditure of $10  000.
5 $313  238
Consequently, neither project is to be recommended,
6 $31  876.08 since the net present values are negative. The firm
7 rSn = r(a + ar + ar 2 +  .  .  .  + ar n −1) would be better off just investing the $10  000 at 15%
= ar + ar 2 + ar 3 +  .  .  .  + ar n interest!
which is very similar to the given expression for Sn
except that the first term, a, is missing and we
686 ANSWERS

Table S3.2 Exercise 3.4*

Discounted revenue 1 $257.85
($) 2 $5000
End of year Project 1 Project 2 3 $31  250
1 1739.13 869.57 4 $61 672.67
2 1512.29 756.14
3 1972.55 1315.03 5 $38 887.69
4 1715.26 3430.52 6 27%
5 1491.53 1988.71
Total 8430.76 8359.97 7 $349.15
8 (a) $400  000
6 9%; this exceeds the market rate, so the project is
$92  550.98
(b)
worthwhile.
$307  449.02
(c)
7 The present values of the income stream are listed
in Table S3.3. 9 (a) $333 million
1 2 (1.06)12n
Table S3.3 (b) 5
1.062 2 1.06
Cash flow Present value
Same expression as (b) but with 5 replaced
(c)
End of year ($) ($) by 50.
1 70 64.81 12
(d)
2 70 60.01
10 $49  280
3 1070 849.40
Total present vlaue 974.22 11 R(1 + r/100)−1 + R(1 + r/100)−2 +  .  .  .  + R(1 + r/100)−n

R 1 2 (1 1 r/100)2n
5
Exercise 3.4 1 1 r/100 1 2 (1 1 r/100)21
1 (a) $5974.43
1 2 (1 1 r/100)2n
$5965.01
(b) 5R
1 1 r/100 2 1
2 (a) 7%
1 2 (1 1 r/100)2n
Yes, provided there are no risks.
(b) 5 100 R
r
3 Project 2
100R
4 $4  567  138.81 $1488.94
(a) (b)
r
5 Option 2 12 (b) 1%
6 6.27%
Multiple Choice Questions
7 (a) The discount rate is certainly between 4% and
5%. An estimate of about 4.1% or 4.2% is 1  A 2  D 3  E
sensible. 4  D 5  B 6  C
(b) No 7  E 8  D 9  C
8 Project B is best. 10  C 11  E 12  D
9 (a) $379.08 13  C 14  E 15  E
$1000
(b) 16  D
10 Project A PV = 626.38
Project B PV = 1248.28
Examination Questions

Choose B $4880.76
1 (a) 
11 20.3% $4885.61
(b) 
4.06%, 4.08%
(c) 
2.94
(d) 
 ANSWERS  687

2.62% decrease
2 (a)  The graph of the cube function is sketched in
(b) $607.15 Figure S4.1.
(c) $230,000 f ′(−1) = 3.0; f ′(0) = 0; f ′(1) = 3.0

3 (a)  (i)  3950

(ii) 3905 y
3
(c) Decreases but settles down to 3500
y 5 x3
122.54
4 (a) 
(b) 135.21 2
(c) Paasche has the advantage of reflecting changes
in actual purchases made. However, the amounts
bought in Year 2 may be unavailable, and you are 1
Dy 5 1.5
not really comparing like with like in the Paasche
index.
21 Dx 5 0.5
5 4.77% and 4.88%. Very little to choose between
22 Dx 5 0.5 1 2 x
these two projects which are both close to the
prevailing rate. Other considerations such as project
viability and access arrangements need to be Dy 5 1.5 21 horizontal
considered in order to make an informed decision. tangent at
the origin
24
6 (a) 
(b)  (i)   44 22
(ii)  $324.06
(iii) Remains at $4000

7 (a) (i)   $4776.21 23

(ii)  $2500
Figure S4.1
(iii) 2.8%
(iv) 5 3 f ′(x) = 3x2
(i) $40,554.48
(b)  Hence f ′(−1) = 3; f ′(0) = 0; f ′(1) = 3.
(ii) $125,000 4 (a) 5x4 (b)
6x5 (c)
100x99
$24 464.35
8 (a)  −x−2 (e)
(d) −2x−3
(b) $11 876.26 Exercise 4.1
−1 (c)
1 (a) 2 (b) 0
Chapter 4
2 −2/3; downhill.
Section 4.1 3 The graph of f(x) = 5 is sketched in Figure S4.2. The
Practice Problems graph is horizontal, so it has zero slope at all values
of x.
−1 (c)
1 (a) 2 (b) 0
2 Using a calculator, the values of the cube function,
correct to two decimal places, are y

6 y55
x −1.50 −1.25 −1.00 −0.75
5
f(x) −3.38 −1.95 −1.00 −0.42 4
3
x −0.50 −0.25 0.00 0.25 0.50 2
1
f(x) −0.13 −0.02 0.00 0.02 0.13
25 24 23 22 21 1 2 3 4 5 x
x 0.75 1.00 1.25 1.50
f(x) 0.42 1.00 1.95 3.38
Figure S4.2
688 ANSWERS

4 7x6; 448 6/x4   (c) 0

4 (a) 14   (b) 
5 (a) 8x7 (b)
50x49 (c)
19x18 (d)
999x998 5 4.
3 1 1 3 x 6 0; horizontal tangent, i.e. vertex of parabola must be
6 (a) 2 (b) (c) 2 (d)
x 4
2 x 2x x 2 at x = 3.
7 3, 1.25, 0, −0.75, −1, −0.75, 0, 1.25 1 5 3 5
7 (a) (b) x−2/3 (c) x21/4 (d) 2 x23/2
x 2 x 2 2
−3 (b)
(a) 0 (c)
1
8 (a) 2P + 1 (b)
50 − 6Q (c) −30/Q2
Exercise 4.1*
3 (e)
(d) −6Q2 + 30Q − 24
5/ L (f)
1 When x = 0, y = a(0) + b = b.  ✓
When x = 1, y = a(1) + b = a + b.  ✓ Exercise 4.2*
3
(a 1 b) 2 b 1
Slope 5 5a 2
120 9 20
2 (a) 4P + 1 (b)
40 2 Q (c) 2 2 17
9x3 x 3
x 1 2 Q
2 (a) 15x14 (b) (c) (d)
2 4
2 3x 4 xx 1
4Y + 3 (e)
(d) 200 2 (f) −3Q2 + 40Q − 7
4
13 x L L
(e)
2
2x8 3 −40; concave
3 (a) (i) 2, 2.0248... (ii) 0.24845... (iii) 0.25 4 (a) uphill; f ′(−1) = 1 > 0
(i) 8, 8.3018...
(b) (ii) 3.01867... (iii) 3 concave; f ″(−1) = −72 < 0
(b)
(i) 0.5, 0.4938... (ii) −0.06135... (iii) −0.0625
(c) 5 f ″(x) = 6ax + 2b > 0 gives x > −b/3a
In all three cases the gradient of the chord gives a f ″(x) = 6ax + 2b < 0 gives x < −b/3a
good approximation to that of the tangent. 6 y = x − 3
(±3, ±243)
4 (a) (8, 4) (b) aA
7 (a) f9(x) 5 2 , 0 so the function is decreasing.
1 1 xa11
(c) 2 ,  4 (d)
4, 
2 8 a(a 1 1)A
(b) f 0(x) 5 . 0 so the function is convex.
x a12
Section 4.2 (c) The graph is sketched in Figure S4.3.
Practice Problems
−2/x2
1 (a) 12x2 (b)
2 (a) 5x 4 + 1 (b)
2x
3
3 (a) 2x − 3x2 (b)
x4
4 (a) 45x4 + 4x (b) 40x7 + 3/x2
2x + 6 (d)
(c) 8x3 + 36x2 − 8x + 7
5 134

Exercise 4.2
−3/x2 (c)
1 (a) 10x (b) 2x + 1
2 (d)
2x − 3 (f)
(e) 3 + 7/x2 (g) 6x2 − 12x + 49
2ax + b ( j) 4 1 3/x 2 2 14/x 3
a (i)
(h)
2 (a) 27 (b)
4 (c) −36
2 (d) Figure S4.3 
3/8
(e)
(d) For salaries over $100  000, the proportion of
3 4x3 + 6x2 people who earn a fixed range of salaries
9x2 − 8x (b) 12x3 − 6x2 + 12x − 7 (c) 2x − 5
(a) decreases as income rises so, for example, there
3 2 4 3 10 are fewer people earning between $150  000 and
(d)
11 2
(e)
2 3 1 2 (f) 2 2 $200  000 than between $100  000 and $150  000.
x x x x x3
8 r = γ which is a constant
 ANSWERS  689

Section 4.3
MR
Practice Problems
100
MR 5 100 2 2Q
1 TR = 60Q − Q2
MR = 60 − 2Q; −40
(1)
(a) 500
(2) (b) 459
so TR changes by − 41, which is approximately 50 100 Q
the same as the exact value obtained in part (1).
2 MR = 1000 − 8Q
2100
Total revenue rises by about 2280.
(a)
Total revenue falls by about 1520.
(b)
3 MC = 2, so a 1-unit increase in Q always leads to Figure S4.5
a 2-unit increase in TC irrespective of the level of
output. 4 TC = 15 + 2Q2 + 9Q; 15; 4Q + 9
4 Q = 50L1/2 5 (a) 49.98

25 49.8
(b)
25 (b)
(a) 0.25
(c)
3 48
(c)
The fact that these values decrease as L increases 30. Yes, because d2Q/dL2 = −0.02 < 0.
(d)
suggests that the law of diminishing marginal 6 MPC = 1/6 and MPS = 5/6. If national income rises
productivity holds for this function. by 1 unit, the approximate increase in consumption
5 MPS = 0.6; MPC = 0.4 and savings is 1/6 and 5/6, respectively.
This indicates that, at the current level of income, 7 13
a 1-unit increase in national income causes a rise 8 At midday on 6 January, the company’s share price is
of about 0.6 units in savings and 0.4 units in increasing at a rate of 25 cents a day.
consumption.
By 7 January shares will have risen by 25 cents
Exercise 4.3 (approximately).
1 TR = 100Q − 4Q2, MR = 100 − 8Q; 1.2 9 TR = 3000Q − 2Q3/2;  MR 5 3000 2 3 Q
2 TR = 80Q − 3Q2, so MR = 2P − 80 MR = 2991; if Q rises from 9 to 10 the approximate
3 TR = 100Q − Q ; MR = 100 − 2Q. Graphs of TR
2 change in TR is 2991.
and MR are sketched in Figures S4.4 and S4.5, Exercise 4.3*
respectively. MR = 0 when Q = 50. This is the value
1 (a) TR = 100Q − 4Q3/2 − 3Q2
of Q at which TR is a maximum.
MR = 100 − 6Q1/2 − 6Q; MR = 28
(b)
7 compared to 6.78
(c)
TR 2 2 (a) MPC = 0.96, MPS = 0.04
TR 5 100Q 2 Q
2500
S = 0.2Y − 100 − 0.01Y2
(b)
3 (a) TC = 100 + 2Q + Q2/10 MC = 2 + Q/5
MC = 8; Δ(TC) ≅ 16
(b)
100
(c)
d 2Q
4 = 12 − 1.2L < 0 for all L > 10
dL2
0 50 100 Q 5 21/2
5 (a) MPL 5 L 2 0.1
2
L = 625; output is maximised when L = 625.
(b)
Figure S4.4
d 2Q 5
(c) 5 2 L23/2 , 0
dL 2 4
6 36
690 ANSWERS

7 MC = 20, so if Q increases by 1 unit, TC increases by Exercise 4.4*

20 units. 1 (a) 20(2x + 1)9
MR = 18 at Q = 219, so if Q increases to 220 units, 3(x2 + 3x − 5)2(2x + 3)
(b)
TR rises by 18 approximately.
−7/(7x − 3)2
(c)
The overall change in profit is approximately
−2x/(x2 + 1)2
(d)
18 − 20 = −2, so profit decreases.
4/√(8x − 1)
(e)
8 25; when Q increases from 25 to 26, the approximate
4
increase in profit is 25. 2 22
(f) 22(6x 2 5) 3
5
d(AC) c MC 2 AC (6x 2 5) 3 (6x 2 5)
9 5a2 2 5 2 (a) 5x(x + 2)(x + 5)2
dQ Q Q
x4(4x + 5)(28x + 25)
(b)
Section 4.4 x3(9x 1 8)
(c)
Practice Problems 2 (x 1 1)
1 (a) 15(3x − 4)4 3(x2 + 3x + 5)2(2x + 3)
(b) x(x 1 8) 3 x 2(5x 2 6)
3 (a)     (b)      (c) 
22 2 (x 1 4)2 (x 1 1) 2
2(x 2 1)3/2
(c) (d) 3(x 2 1) 3x 2(x 1 5)
(2x 2 3)2 (4x 2 3) 4 (a) (x − 3)3(5x − 3) (b)   (c) 
2 (a) (3x − 1)5(21x − 1) 2x 2 3 (3x 1 5)3

x 3
x2(7x 1 9) 1 2 x2 ad 2 bc
(d) 2 (e)
(b) 1 3x2 (2x 1 3) 5 (x 1 1)2 (cx 1 d)2
(2x 1 3) (2x 1 3)
(f) [ac(m + n)x + mad + ncb](ax + b)m−1(cx + d)n−1
22
(c) (6x2 + 17x + 6)(x + 2)(x + 3)2
(g)
(x 2 2)2
22 2 5 24
3 (a) (b)
(x 2 2)2 (x 1 1)2 (2x 1 1)3
100 2 3Q 200 1 50Q
Exercise 4.4 6 (a) (b)
(100 2 2Q) (2 1 Q)3/2
1 (a) 15(5x + 1)2 (b)
16(2x − 7)7 (c)
5(x + 9)4 7 1.098; −0.098; if income rises by 1 unit, consumption
24x(4x2 − 7)2 (e)
(d) 8(x + 2)(x2 + 4x − 3) goes up by more than this, with the excess taken out
1 23 28 of savings.
(f) (g) (h)
2x 1 1 (3x 1 1)2
(4x 2 3)3 8 Use the quotient rule. As Q increases, MC decreases
21 and converges to 2.
(i)
(2x 1 3) (2x 1 3) 9 Use the product rule to differentiate
2 (a) (9x + 4)(3x + 4) (b)
x(5x − 4)(x − 2) 2 TR = aQ − Q(bQ + c)1/2.

3x 1 4
(c) (d) (4x + 3)(x + 6)2 Section 4.5
2 x12
Practice Problems
(e) (8x + 13)(x + 5)2 (f) x2(14x − 15)(2x − 5)3
25 7 25 1 − 0.26
3 (a) (b) (c)
(x 2 5)2 (x 1 7)2 (x 2 2)2 2 (a) If P = 10 then |E| = 1/9 < 1, so inelastic.
225 6 219 If P = 50 then |E| = 1, so unit elastic.
(b)
(d) (e) (f)
(3x 1 1)2 (5x 1 6)2 (3x 2 7)2 If P = 90 then |E| = 9, so elastic.
(c)
4 10(5x + 7) = 50x + 70 47
3 2 ; 7.7%
5 7x6 + 24x5 + 20x4 36
4000 1
6 (a) (100 − 4Q)(100 − Q)2 (b) 4 (a) 0.333175 (b)
(Q 1 4)2 3
7 MPC = 1.78, MPS = −0.78. If national income rises Exercise 4.5
by 1 unit, consumption rises by 1.78 units, whereas 1 −43/162 = −0.27
savings actually fall by 0.78 units.
2 −22/81 = −0.27; agree to two decimal places.
3 (a) −1/4 (b)
−1/4 (c)
−9/8
 ANSWERS  691

4 (a) −0.3125, so inelastic. P2b dQ 1

7 (a) Q 5 5
(b) Would expect demand for economy class flights a dP a
to be more sensitive to price rises, so the a 1 P
magnitude of E would be larger. E5P3 3 5
P2b a P2b
5 (a) −2, so when price rises by 2%, demand falls by 4%.
2
(b) −3.88% (b)
a5 , b 5 9 
5
400 5 P
6 (a) 1 2 (b) 200 (c) MR = 20 − 0.1Q 8 (b)  (i)  3 (ii)  1.5 (iii) 
Q 10 P 2 4
7 (a) 0.2P
0.1P 2 = Q − 4
(b) Section 4.6
(subtract 4 from both sides) Practice Problems
P = 10(Q − 4) = 10Q − 40
2 1 (a) There is one minimum point at (−2, −47).

(multiply both sides by 10) A graph is sketched in Figure S4.6.

P = √(10Q − 40) Minimum at (2, −1) and maximum at (3, 0).
(b)

(square root both sides) A graph is sketched in Figure S4.7 based on the
following table of function values:
dP 5
5 x −10 0 2 3 10
dQ (10Q 2 40)
f(x) 3887 27 −1 0 −833
1 (10Q 2 40)
(c) 5
dP/dQ 5
P dQ y
5 5 0.2P 5
5 dP y 5 3x 2 1 12x 2 35
E = 10/7
(d)
8 1.46; (a)
elastic (b)
7.3%
x
Exercise 4.5*
1 −1.54
2 3.75% 235

3 4P/(4P − 60); 7.5

(22, 247)
1
4 E 5 2 which is a constant.
n
Figure S4.6
aP
5
aP 1 b
Pa y
(a) If b = 0, then E 5 5 1.
Pa
aP
(b) If b < 0, then aP + b < aP, so E 5 . 1.
aP 1 b 27 y 5 22x 3 1 15x 2 2 36x 1 27

Assuming that the line is sketched with quantity

on the horizontal axis and price on the vertical
(3, 0)
axis, supply is unit elastic when the graph passes
through the origin, and elastic when the vertical x

intercept is negative.
(2, 21)
6 (1) 0.528
0.2P 2
(2)   (a)  4.2%  (b) 20
40 1 0.1P 2 Figure S4.7
692 ANSWERS

2 L = 10; MPL = APL = 2000 Minimum at (10, 5); graph is sketched in

(c)
Figure S4.10.
3 (a) Q = 5
Q = 4 gives the maximum profit, π = 30;
(b)
MR = MC = 4 y
4 Q = 6; AC = MC5 t = 12.5 105

Exercise 4.6
1 (a) Maximum at (1/2, 5/4); graph is sketched in
Figure S4.8.

y 5 x 2 2 20x 1 105
y 1
( , ) 5
2 4

y 5 2x 2 1 x 1 1
1
(10, 5)
x

x Figure S4.10

Maximum at (1, 2), minimum at (−1, −2); graph

(d)
is sketched in Figure S4.11.
Figure S4.8

y
Minimum at (2, 0); graph is sketched in
(b)
Figure S4.9. y 5 2x 3 1 3x

(1, 2)
y

2 3 3 x

4
(21, 22)

y 5 x2 2 4x 1 4

(2, 0) x
Figure S4.11
Figure S4.9 2 10
3 30; MPL = 450 = APL
4 (a) TC = 13 + (Q + 2)Q
= 13 + Q2 + 2Q
TC 13
AC 5 5 1Q12
Q Q

Q 1 2 3 4 5 6
AC 16 10.5 9.3 9.3 9.6 10.2
The graph of AC is sketched in Figure S4.12.
From Figure S4.12 minimum average cost is 9.2.
(b)
Minimum at Q = √13, which gives AC = 9.21.
(c)
 ANSWERS  693

AC (a) y
16

15

14
13
13 AC 5 Q
1Q12

12 x
3
11 y5x

10

8
(b) y
7

1 2 3 4 5 6 Q

y 5 x4

Figure S4.12
Q2
5 (a) TR 5 4Q 2
4 x
3 2
2Q Q
p5 1 1 2Q 2 4
20 20
(c) y
Q
MR 5 4 2
2
x
3Q 3Q 2
MC 5 2 2 1
5 20
(b) 4   (c) MR = 2 = MC y 5 2x 6

6 $3

7 (a) TC = 2Q2 − 36Q + 200

TC 200 Figure S4.13
AC 5 5 2Q 2 36 1
Q Q
Q = 10  1 AC = 4
(b) 15
3 TC 5 2Q 2 1 15, AC 5 2Q 1 ,
2 Q
d (AC)
At Q 5 10, 5 0.4 . 0 min. MC = 4Q; √7.5; AC = 11 = MC
dQ2
Q = 10  1  MC = 4 = AC
(c) 4 (a) (6, 492) is a maximum and (10, 460) is a
minimum.
8 56.25
(b) The graph is sketched in Figure S4.14.
9 $440
10 37  037

Exercise 4.6*
1 531.5
2 Graphs of the three functions are sketched in
Figure S4.13, which shows that the stationary points
in (a), (b) and (c) are a point of inflection, minimum
and maximum, respectively.
694 ANSWERS

Section 4.7
S
600 Practice Problems
1 (a) TR = (25 − 0.5Q)Q = 25Q − 0.5Q2
500
TC = 7 + (Q + 1)Q = Q2 + Q + 7

400 MR = 25 − Q
MC = 2Q + 1
300 From Figure S4.16, the point of intersection of
(b)
the MR and MC curves occurs at Q = 8. The
200 MC curve cuts the MR curve from below, so this
must be a maximum point.
100

2 4 6 8 10 12 t 25 MC

Figure S4.14  (8, 17)

(c) 492 and 465 MR

5 167
6 (a) 15 1

t 2t 25 Q
Q 5 15 2
(b)  gives P 5 140 1
10 5
2t 2 Figure S4.16
P rises from 140 to 140 1 , so the increase is  t.
5 5
2 MC = 100
7 a = −7, b = 16, c = −7
P1 = $200 and P2 = $150
(a)
8 (a) The graph is sketched in Figure S4.15.
P = $500/3
(b)
With discrimination, profit is $10  000.
Without discrimination, profit is $8333.
40
3 Domestic market: |E| = 2
35
Foreign market: |E| = 3
30
We see that the firm charges the higher price in the
25 domestic market, which has the lower value of |E|.
20 Exercise 4.7*
15
1 (a) TR = aQ2 + bQ, TC = dQ + c
10
MR = 2aQ + b, MC = d
(b)
5 The equation 2aQ + b = d has solution
(c)
d2b
1 2 3 4 5 6 7 8 9 10 Q5
2a
2 (a) At the point of maximum total revenue
Figure S4.15 
d(TR)
MR 5 50
(b) TR = 39.0625, Q = 6.875 dQ
(c) 5 so E = −1
Maximum occurs when Q = 10.
(b)
 ANSWERS  695

3 (a) P1 = $30, P2 = $20 (b)

P = $24.44 The graph of the natural logarithm function is
The profits in parts (a) and (b) are $95 and sketched in Figure S4.17.
$83.89, respectively. f 9(1) 5 1
4 Argument is similar to that given in text but with 1
< replaced by >. f 9(2) 5
2
d2C 1
5 (a) 5 2DRQ23 . 0 (b) 2DRH f 9(3) 5
dQ2 3
6 (a) EOQ = 40 with C = $4000 These results suggest that f′(x) = 1/x.
(b) EOQ = 50 with C = $3200
(c) EOQ = 80 with C = $8000
y
Dx 5 0.5
(d) Reducing (increasing) the order costs by a factor Dy 5 0.15
1
of k reduces (increases) the minimum total cost Dx 5 0.5
by a factor of k . The same applies to changes Dy 5 0.25

in the holding costs. Dx 5 0.5

Dy 5 0.5
c 0 1 2 3 4 x
7 AC 5 aQ 1 b 1 ; 2 ac 1 b
Q
8 The argument is similar to that given in the text y 5 ln x
21
for APL.
9 The new supply equation is
P = aQS + b + t Figure S4.17
In equilibrium
−e−x (c)
2 (a) 3e3x (b) 1/x (d)
1/x
aQ + b + t = −cQ + d
x 1 2 2 x ln x
which has solution 3 (a) x3(1 + 4 ln x)  (b) 
2
2xex   (c) 
x(x12)2
d2b2t
Q5 7x 1 6 2x 1 6
a1c 4 (a)      
(b) 
x(x 1 2) x(2x 1 3)
Hence
5 In terms of P the total revenue function is given by
(d 2 b)t 2 t 2
tQ 5 TR = PQ = 1000Pe−0.2P
a1c
which differentiates to give and the total cost function is
d 2 b 2 2t TC = 100 + 2Q = 100 + 2000e−0.2P
a1c Hence
This is zero when π = TR − TC
d2b
t5 = 1000Pe−0.2P − 2000e−0.2P − 100
2
For maximum profit, P = 7.
Also the second derivative is
6 E = −2.05
22
, 0 (since a and c are both positive)
a1c Exercise 4.8
which confirms that the stationary point is a 1 (a) 6e6x −342e−342x
(b)
maximum. −2e
(c) −x
+ 4e x
(d) 40e4x − 4x
2 (1) (a) $4885.61 (b) $4887.57; 196
Section 4.8
0.04t
160e
(2) ; 195.42
Practice Problems
1 1
1 x 0.50 1.00 1.50 2.00 3 (a) (b)
x x
f(x) −0.69 0.00 0.41 0.69
3 4x3 1 6x
4 (a) 3x2ex (b)
x 2.50 3.00 3.50 4.00 4
x 1 3x2
f(x) 0.92 1.10 1.25 1.39
696 ANSWERS

5 (a) (4x3 + 2x4)e2x Exercise 4.8*

1 + ln x
(b) 2(x 1 2)e]x
1 (a) 2e2x + 12e−4x (b) 
(4x + 1)e4x (c) 
x3
2e4x(2 x2 2 x 1 4)
6 (a) (n ln x 2 1)x n21
(x2 1 2)2 (m  ln x + 1)x m−1 (e) ln  x (f) 
(d)
(ln x)2
ex(x ln x 2 1)
(b) (amx 1 bm 2 an)emx (ax ln bx 2 n)eax
x(ln x)2 (g)  (h) 
(ax 1 b)n11 x(ln bx)n11
7 (a) Maximum at (1, e−1); the graph is sketched in 2e x

Figure S4.18. (i) x

(e 1 1)2
Maximum at (1, −1); the graph is sketched in
(b)
1 9x 2 2 1
Figure S4.19. 2 (a)   (b)    (c) 
x(1 1 x) 2x(3x 2 1) 1 2 x2
dy
3 (a) 4 y 5 Akekt 4 Aekt 5 k
y dx
(b) (i)  a and b
e21 GDP A
(ii) 5 e(a 2 b)t which is exponential with a
N B
x growth rate of (a − b).
1
2 12 x
4 (a) 4x 3(1 2 x 2)e22x   (b) 
x(x 1 1)
y 5 xe2x 1 2e2 1
5 (a) Maximum at   2 , .
a a

b b2
Maximum at   2
(b) , ln   2 .
2a 4a
Figure S4.18
4(x 1 1)
6 (b)
(2x 1 1)(4x 1 3)
7 100
y
1 (2Q 1 1)(3 ln(2Q 1 1) 2 20)
8
x 6Q
2
(2Q2 2 1)eQ 1 2Q
9 (a) (b) 1 ln
21 Q2 3Q 1 1 3Q 1 1
2P
10 (a) E 5 so demand is inelastic when 0 ≤ P < 100.
100
y 5 lnx 2 x (b) 100
11 2
dy abke2at
12 (a) 5 . 0 so the gradient is positive.
dt (1 1 be2at )2
Figure S4.19 d2y a2bke2at (21 1 be2at )
(b) 5
dt 2 (1 1 be2at)3
8 (a) 2359.88, 2313.15 so the decrease is 46.7. All of the factors are positive for all values of t
dS except for the factor −1 + be−at which is positive
(b) 5 247.2 so is a good approximation.
dt ln b ln b
when t , and negative when t . .
9 49 a a
10 50 k
(c) The curve crosses the y axis at 0,  and
11b
10
11 E 5 2 , which is −1 when Q = 10. approaches k as t S ∞ because e−at S 0.
Q
 ANSWERS  697

(d) The graph is sketched in Figure S4.20.

y

40
y
k
20

24 22 2 4 x

220

240

k
11 b Figure S4.21
t
3 (a)  (i)  90
Figure S4.20  (ii) −1/3
(iii) 1
13 (a) PV 5 Ve20.1t 5 2e t
3 e20.1t (b) 25 (b)  (i) 25/41 = 0.610
(ii) 
30/49 = 0.612
Multiple Choice Questions 4 (a)  (i) 31, 34.222; 32.22
1  E 2 A 3 B (ii) 31
4 A 5 A 6 E (iii) Gradients of chord and tangent very similar
7 C 8 A 9 E
with the chord slightly steeper

10 D 11 A 12 A (b)  (i)  MC = 6Q + 8

13 B 14 C 15 B
(ii) 94 versus 94.75 so the % error in the estimate
is 0.79%
16 D 17 E 18 B
19 B 20 E 21 C
7
5 (a) 

22 D 23 A 24 C

(b) 7/3
(c) 6/7%, elastic
Examination Questions
6 (a)  (i)  12e2x
35 Q 2x
1 MR = 2 ; (ii) 2
2 2 x 11
(a) An increase of 0.625 (b) 14, 16;
(b) 35 (i)  increasing
4 1225 (ii) convex
2 (b)  −6x + 10x + 24; 3, 36 , 2 , 2
2

3 27
4 7 (i)   48
(c)  −12x + 10; max at x = 3 and min at x = 2
3 (ii)   294
(d) The graph is sketched in Figure S4.21. It crosses (iii) 1/2
the x-axis at −3, 1 and 4.5, and it crosses the (iv) 3/8
y-axis at −27. (v)   0; output maximised at L = 50

π(0) = −16 < 0; π(1) = 1 − 9 + 24 − 16 = 0

8 (a) 
(b) (2,4), (4,0)
(c) Max and min, respectively
698 ANSWERS

The graph of the profit function is sketched in

(d)  Lines intersect only if the vertical intercept on the
Figure S4.22. supply graph is above that on the demand graph.
ad 1 bc d 2c ad 1 bc 1 ct d2b2
(b) P5 , Q5 ; P5 , Q5
a 1c a1c a1c a1c
p
5 ad 1 bc d 2c ad 1 bc 1 ct d2b2t
P5 , Q5 ; P5 , Q5
a 1c a1c a1c a1c
1 2 3 4 5 t (c) c:a
25
d 2 b d2T 22
t5
(d)  ; 2 5 , 0, so max
210 2 dt a1c
0
12 (a) 
215
20; AC minimum at Q = 20
(b) 
220
40; −31/12
(c) 
2P
13 (a) E 5 ; solve E = −1 to get P = a/3
Figure S4.22 P2a
4a d2 (TR) 3b
TR = aQ + bQ3/2; Q 5
(b)  ; 5 , 0,
increasing on 0 ≤ t < 2, t > 4 and decreasing on
(e)  9b2 dQ2 4 Q
2<x<4 so max
t < 3, t > 3
(f)  Bookwork
14 (a) 
After an initial loss of 16, the profit increases so
(g)  3 27
P1 = 60, P2 = 135; E1 5 2 , E2 5 2
(b)  ;
that it breaks even after one year and reaches a 2 23
local maximum of 4 after two years. The profit Bookwork
then declines so that the firm breaks even again 15 Bookwork
after four years. For the next year the profit rises
16 (a)  32/55; 32/11; inelastic
at an increasing rate, reaching 4 at the end of the
five-year period. a = −4, b = 80
(b) 

10 + 12L − 0.3L2; 10 + 6L − 0.1L2

9 (a) 
Chapter 5
30
(b) 
2 Section 5.1
(c) d Q . 0 for L > 20
dL 2 Practice Problems
400 2 9Q 1 (a) −10  (b) −1  (c) 2  (d) 21  (e) 0  (f) 21
10 (a) 
400 2 6Q −f −f
2 (a) 5 20x 3 2 0 5 20x 3; 5 0 2 2y 5 22y
20Y 1 Y 2 2 200 −x −y
(b) 
(10 1 Y )2 −f −f
(b) 5 2xy3 2 10; 5 3x2y2 2 0 5 3x2y2
The supply and demand curves are sketched in
11 (a)  −x −y
Figure S4.23.
3 (a) fxx = 60x2
fyy = −2
P fyx = fxy = 0
P 5 aQ 1 b
d
fxx = 2y3
(b)
fyy = 6x2y
fyx = fxy = 6xy2
P 5 2cQ 1 d
−f
b 4 f1 5 5 x2 1 5x 41
−x1

−2 f
Q f11 5 5 20x 31
−x12

Figure S4.23 −2 f
f21 5 51
−x2−x1
 ANSWERS  699

−z −z Exercise 5.1*
5 5 1, 54
−x −y 1 85 ≠ 91; (0, y) for any y.
z increases by approximately 0.3.
(a) 2 f(kw, kx, ky) = 5(kw)0.34(kx)0.25(ky)0.41
At (2, 6), z = 14, and at (1.9, 6.1), z = 14.29, so
(b) = 5k0.34w0.34k0.25x0.25k0.41y0.41
the exact increase is 0.29. = 5k0.34+0.25+0.41w0.34x0.25y0.41
2
dy 2y dy y = 5kf(w, x, y)
6 (a) 5 (b) 5 4
dx x 2 3y2 1 1 dx 5y 2 2xy
3
fx fy fxx fyy fyx fxy
Exercise 5.1 (a) y x 0 0 1 1
(b) exy ex exy 0 ex ex
1 324; 75; 0
(c) 2x + 2 1 2 0 0 0
2 (a) f (a, a) = 2a2 + aa = 3a2 (d) 4x−3/4y3/4 12x1/4y−1/4 −3x−7/4y3/4 −3x1/4y−5/4 3x−3/4y−1/4 3x−3/4y−1/4
(b) f (b, −b) = 2b2 + b(−b) = b2 22y 1 1 x 6y 2x 22 1 22 1
(e) 1 2 2 4 3 2 2 2
3 f (2x, 2y) = (2x)(2y)2 + 4(2x)3 x3 y x2 y x y x3 y2 x3 y
= 2x × 4y2 + 4 × 8x3
4 78; 94; 6.2
= 8xy2 + 32x3
−z −z
= 8(xy2 + 4x3) 5 (a) 5 24(6u 1 vw3)3, 5 4w3(6u 1 vw3)3,
−u −v
= 8f (x, y) −z
4 (a) fx = 2x, fy = 20y4
5 12vw2(6u 1 vw3)3
−w
fx = 9x2, fy = −2e y
(b) −z −z
(b) 5 we2vw, 5 2uw we2vw,
fx = y, fy = x + 6
(c) −u −v
fx = 6x5y2, fy = 2x6y + 15y2
(d) −z u 2vw
5 e 2 uv we2vw
5 fx = 4x y − 2x
3 5
−w 2 w
fy = 5x y + 2y
4 4 6 fx(e, 1) = 3; fy(e, 1) = −2e; fxx(e, 1) = 6e−1; fyy(e, 1) = 4e;
fx(1, 0) = −2 fxy(e, 1) = −6

fy(1, 1) = 7 7 1/3
x32 x x2 1 2x x 1
6 (a) −0.6 8 f1 5 ; f2 5 2 1 3 3 1 ; f3 5 1 3 1 ;
x2 x2 x2 x2 x3
−2
(b)
2x1x32 1 2x 1
−2.6
(c) f11 5 0; f22 5 2 2 ; f33 5 1 2 2 ;
x23 x2 x2 x3
7 (a) fx = −3x2 + 2, fy = 1
2x32 2x
dy 2(23x2 1 2) f12 5 5 f21; f13 5 3 5 f31;
5 5 3x2 2 2 x22 x2
dx 1
22x1x3
y = x3 − 2x + 1, so
(b) f23 5 5 f32
x22
dy
5 3x2 2 2 ✓ 9 e.g. f(x, y) = x3y2 + 3x2y
dx
10 5
0z 0z 0z
8 (a) 5 1 1 2v, 5 2v 1 2u, 5 215w2 11 2.5
0u 0v 0w
0z 23x2y 2 4y2 24x22/3y1/4 2 1
5 3u21/2v1/3w1/6, −z 5 2u1/2v22/3w1/6, 12 (a) (b)
(b) x3 1 8xy 3x1/3y23/4
0u −v
2y 2 2x 2 2 2xy 1 y 2
−z (c) (d)
5 u1/2v1/3w25/6 1 1 xy 2x 2 1 2xy 1 y 2
−w
9 (a) 21.5 Section 5.2
(b) 24.575; 12.5% Practice Problems
1 (a) −0.14 (b)
−0.14 (c)
0.12
0.6%. A rise in income causes a rise in demand. Normal.
700 ANSWERS

−U −U −U
2 5 2948 and 5 140 5 (a) 5 0.7Ax120.3 x20.5 . 0 since it is the product of
−x1 −x2 −x1
ΔU = −848 four positive numbers.
The law of diminishing marginal utility holds for Utility increases as more units of good 1 are
both x1 and x2. consumed.
3 21.06; $42.12 −2U
(b) 5 0.35 Ax120.3 x220.5 . 0 since it is the
−x1−x2
4 MPK = 2K  and MPL = 4L
product of four positive numbers.
MPL 4L 2L
MRTS 5
(a) 5 5 Consuming more of one good increases the
MPK 2K K
marginal utility of the other good.
−Q −Q −2U
K
(b) 1L 5 K(2K) 1 L(4L)  
−K −L (c) 5 20.21Ax121.3 x20.5 , 0 since it is the product of
−x12
5 2(K 2 1 2L2 ) 5 2Q ✓ three positive numbers and one negative number.
Exercise 5.2 Consuming more of good 1 decreases
1 2.71. This is greater than 1, so the good is superior. the marginal utility of good 1; there is
diminishing marginal utility of good 1.
2 (a) −4/233 (b)
−3/233
6 The graph is sketched in Figure S5.1, which shows
40/233; −0.04%; complementary
(c)
that MRTS = −(−5/7) = 5/7.
3 (a) 2x2 + y2 = 36
(b) 16 and 4 so the gradient is −4.
K 100 5
4 (a) 80 (b) 960 slope 5 2 52
140 7

5 1 120
140
−U 1 −U 5 100
6 5 and 5
−x1 5 −x2 12
80
37/60 (b)
(a) 12/25
60
7 MPK = 8, MPL = 141/4  (a) 125/32  (b) 125/32 100
40
8 K(6K + 3L ) + L(6LK) = 6K + 9L K = 3(2K + 3L K)
2 2 3 2 3 2

9 (a) −0.5; −1.5 so A is inelastic and B is elastic, so B 20

is more sensitive to a change in price.

(b) 0.5; 1.5 20 40 60 80 100 120 140 160 L

A is normal because income elasticity is positive

and is less than one. Figure S5.1
B is superior because income elasticity of 10 21
demand exceeds one. 7 (a) MPK 5 ; MPL 5
3 2
10 (a) 18(lK)1/6(lL)5/6 = 18l1/6K1/6l5/6L5/6 = l(18K1/6L5/6) = lQ ΔQ ≈ −11
(b)
(b) MPK = 3K−5/6L5/6; MPL = 15K1/6L−1/6 3.15; e.g. a 1-unit increase in labour and a 3.15
(c)
(c) (i) decreases   (ii) increases decrease in capital maintains a constant level
of output.
Exercise 5.2* 1
21
1
21
a21 a21
8 (a) MPK 5 AbK [ ] a ; MPL 5 A(1 2 b)L [ ] a
1 (a) 0.4  (b) 3.2%
12a
Since E < 1, the good is income-inelastic. The relative MPL 12b La21 1 2 b K
MRTS 5 5 3 a21 5
market share of the good decreases as the economy MPK b K b L
expands. 1 1
21 21
2 0.5 (b) KAbK a21[ ] a 1 LA(1 2 b)La21[ ] a
1
3 16 21
5 A(bK a 1 (1 2 b)La )[ ] a
4 A(lK) (lL) = Al K l L = l
a b a a b b
Q
a+b
1
5 A[ ] a
5Q
 ANSWERS  701

9 (a) Complementary; coefficient of PA is negative. An increase in X* leads to an increase in Y. An

2b increase in m leads to a decrease in Y.
(b) (i) EP 5
100 100
Y 5 2100; DY 5
(c)
3c 3
(ii) EP 5 2
A
500 3 If d increases by a small amount, then the intercept
d increases and the demand curve shifts upwards
(iii) EY 5 slightly. Figure S5.2 shows that the effect is to
5
increase the equilibrium quantity from Q1 to Q2,
a = 4310, b = 5, c = 2, d = 1
(c)
confirming that ∂Q/∂d > 0.
−Q
10 (a) 5 kbP2a PAb21Y c . 0; as the price of the
−PA
alternative good increases, demand for
P
the good increases. higher
d 1 Dd
demand
(c) The partial derivative of this proportion with curve same
respect to Y is k(c − 1)P1−aPAbYc−2 > 0. d
supply
2 curve
11 (a) MRCS 5 ; constant so the indifference map
3
consists of straight lines.
3x 2
(b) MRCS 5 ; decreases as x1 increases so the
x1
indifference curve is convex. b
1 x2
(c) MRCS 5 ; decreases as x1 increases so the
3 x1
Q1 Q2 Q
indifference curve is convex.

Section 5.3 Figure S5.2

Practice Problems
b 1 I* Exercise 5.3*
1 C 5 a 1b
I2a 1 (a) Substituting equations (3) and (4) into (2) gives
−C a C = a(Y − T*) + b = aY − aT* + b (7)
5 .0
−I* 1 2 a Substituting (5), (6) and (7) into (1) gives
because 0 < a < 1 Y = aY − aT* + b + I* + G*
Hence an increase in I* leads to an increase in C. so that
Change in C is 2. 2aT* 1 b 1 I* 1 G*
Y5
2 (a) Substitute C, I, G, X and M into the Y equation 12a
to get Finally, from (7), we see that
Y = aY + b + I* + G* + X* − (mY + M*) 2aT* 1 b 1 I* 1 G*
Collecting like terms gives C5a 2 aT* 1 b
12a
(1 − a + m)Y = b + I* + G* + X* − M*
a(2aT* 1 b 1 I* 1 G*) 1 (1 2 a)(2aT* 1 b)
so 5
12a
b 1 I* 1 G* 1 X* 2 M* aI* 1 aG* 2 aT* 1 b
Y5 5
12 a 1 m 12a
−Y 1 a
(b) 5 (b) . 0; C increases  (c) 1520; rise of 18
−X* 12 a1 m 12a
−Y b 1 I* 1 G* 1 X* 2 M* 2a(b 1 I* 1 G* 2 aT*
52 2
−m (1 2 a 1 m)2 (1 2 a 2 at)2
702 ANSWERS

3 (1) From the relations 6 (1) Substituting second and third equations into first
C 5 aYd 1 b gives
Yd 5 Y 2 T Y = aY + b + cr + d

T 5 tY 1 T* so that
we see that (1 − a)Y − cr = b + d  (1)
C = a(Y − tY − T *) + b Substituting first and second equations into third
(2)
gives
Similarly,
k1Y 1 k2r 1 k3 5 MS*
M = m(Y − tY − T *) + M*
so that
Substitute these together with I, G and X into the
Y equation to get the desired result. k1Y 1 k2r 5 M*S 2 k3(2)

−Y m2a (3) (a) Working out c × (2) + k2 × (1) eliminates r to

(2) (a) 5 give
−T* 1 2 a 1 at 1 m 2 mt
Numerator is negative because m < a. ck1Y 1 k2 (1 2 a)Y 5 c(M*S 2 k3) 1 k2 (b 1 d )
Denominator can be written as Dividing both sides by ck1 + k2(1 − a) gives
(1 − a) + at + m(1 − t) result.
which represents the sum of three positive c
(b) , which is positive because the top
numbers, so is positive. Hence the autonomous (1 2 a)k2 1 ck1
taxation multiplier is negative. and bottom of this fraction are both negative.
−Y 1 7 (a) Yd 5 Y 2 T 5 Y 2 (tY 5 T*) 5 (1 2 t)Y 2 T*
(b) 5 .0
−G* 1 2 a 1 at 1 m 2 mt C 5 aYd 1 b 5 a[(1 2 t)Y 2 T*] 1 b 5 a(1 2 t)Y 2 aT* 1 b
(3) (a) 1000  Y 5 C 1 I 5 a(1 2 t)Y 2 aT* 1 b 1 cr 1 d
(b) ΔY = 20 
(1 2 a(1 2 t))Y 5 2aT* 1 b 1 cr 1 d 1
(c) ΔT* = 181/3
Y 5 b 1 d 2 aT* 1 cr
4 From text, equilibrium quantity is 1 2 a(1 2 t)
d2b −Y r
(b) 5 ;
a1c −c 1 2 a(1 2 t)
Substituting this into either the supply or demand
−Y 2T* 1 (1 2 t)(b 1 d) 1 cr)
equation gives the desired result. 5
−a (1 2 a(1 2 t))2
−P c(d 2 b) −P c
5 . 0, 5 .0 (c) 0 , t , 1 and 0 , a , 1 1
−a (a 1 c)2 −b a1c
0 , a(1 2 t) , 1 1 1 2 a(12t) . 0
−P a(b 2 d) −P a
5 , 0, 5 .0 −Y
−c (a 1 c)2 −d a1c r.01 . 0 1 Y increases
−c
where the quotient rule is used to obtain ∂P/∂a and
Y = 2800; ΔY = 46.25
(d)
∂P/∂c. An increase in a, b or d leads to an increase in
P, whereas an increase in c leads to a decrease in P. 8 (a) π = (a − bQ)Q − ( f + vQ) = −bQ2 + (a − v)Q − f

5 (a) C 5 aYd 1 b 5 a(Y 2 T ) 1 b 5 a(Y 2 T*) 1 b a2v

At the stationary point, Q 5 .
2b
Y 5 C 1 I 1 G 5 a(Y 2 T*) 1 b 1 I* 1 G*
−p a 2 v −p (a 2 v)2 −p
(1 2 a)Y 5 2aT* 1 b 1 I* 1 G* 1 (b) 5 , 52 , 5 21,
−a 2b −b 4b2 −f
1 −p a2v
Y5 (b 2 aT* 1 I* 1 G*) 52
12a −v 2b
1 a a2v
(b) −Y 5 ; 
−Y
52 ; (c) From (a), Q 5 so a − v > 0.
−G* 1 2 a −T* 12a 2b
12a Hence all of the multipliers in (b) are negative
DY 5 51
12a except for the first one.
(c) 1 An increase in a causes maximum profit to
rise, whereas an increase in b, f or v results
in a decrease in maximum profit.
 ANSWERS  703

Section 5.4 (b) Q1 = 14; Q2 = 9; π = 358

2
Practice Problems −2p −2p −p
2 5 (22) 3 (24) 2 02 . 0
1 One saddle point at (0, 1). −Q12 −Q22 −Q1−Q2
2 Total revenue from the sale of G1 is so the point is not a saddle point.
TR1 = P1Q1 = (50 − Q1)Q1 = 50Q1 − Q 2 −2p −2p
1 Also 2 , 0, , 0 so the point is a maximum.
−Q1 −Q22
Total revenue from the sale of G2 is
TR2 5 P2Q2 5 (95 2 3Q2)Q2 1
8 (a) Add Q1 = 32 − P; Q2 5 20 2 P to get result.
5 95Q2 2 3Q 2 2
2
The demand equation can be transposed as
Total revenue from the sale of both goods is
104 2
TR 5 TR 1 1 TR2 P5 2 Q.
3 3
5 50Q1 2 Q12 1 95Q2 2 3Q 22
104 2 1
Profit is p5 2 Q Q 2 4Q 5 (92Q 2 2Q2)
3 3 3
p 5 TR 2 TC
2
5 (50Q1 2 Q21 1 95Q2 2 3Q22 ) 2 (Q12 1 3Q1Q2 1 Q22 ) (b) Q = 23; new p 5 352 so the reduction in profit
3
1
5 50Q1 2 2Q12 1 95Q2 2 4Q22 2 3Q1Q2 is 5 .
3
Q1 = 5, Q2 = 10; P1 = 45 and P2 = 65
Exercise 5.4*
3 P1 = 200, P2 = 150 and π = 10  000
1 1
Exercise 5.4 1 (a) Minimum at (0, 0) and saddle point at 2 , 2 .
2 4
−z −z
1 (a) 5 4x 2 12, 5 2y 2 8; (3, 4) (b) Saddle point at (0, 0) and minimum at (−2, 2).
−x −y
2 20 10
−2z −2z −z (c) Saddle point at (0, 0) and minimum at 2 , 2 .
(b) 2 5 4 3 2 2 02 . 0 so the 3 3
−x2 −y2
−x−y
point is not a saddle point. 2 Maximum profit is $176 when L = 16 and K = 144.

−2z − 2z 3 $346  500
Also 2 . 0, . 0 so the point is a minimum.
−x −y2 4 Maximum profit is $95 when P1 = 30 and P2 = 20.
2 (a) Minimum at (1, 1), maximum at (−1, −1), and 5 (a) P1 = 55; P2 = 0.5a + 5
saddle points at (1, −1) and (−1, 1). (b) P = 15 + 0.4a
(b) Minimum at (2, 0), maximum at (0, 0), and Profit under (a) is πa = 512.5 + 0.5(a − 10)2.
saddle points at (1, 1) and (1, −1).
Profit under (b) is πb = −437.5 + 10a + 0.4a2.
3 Q1 = 9, Q2 = 6
πa − πb = 0.1(a − 100)2 ≥ 0
2 2 2
−p −p −p 6 (a) At the maximum profit the marginal products
5 22 , 0,  2 5 24 , 0, 5 21
−Q 12 −Q 2 −Q1−Q2 equal their relative prices.
2 (b) K = 4096; L = 512
−2p −2p −2p
2 pi p2 p2
−Q 12 −Q 22 −Q1−Q2 7 Qi 5 ; p5 1 1 2
2ci 4c1 4c2
5 (22)(24) 2 (21)2 5 7 . 0 1 max
2p 2 q 4q 2 p
8 x 5 ; y5
4 Maximum profit is $1300 when Q1 = 30 and Q2 = 10. 14 14
5 x1 = 138, x2 = 500; $16.67 per hour.
6 Q1 = 19, Q2 = 4
Section 5.5
7 (a) π = (32 − Q1)Q1 + (40 − 2Q2)Q2 − 4(Q1 + Q2) Practice Problems
= 32Q1 − Q21 + 40Q2 − 2Q22 − 4Q1 − 4Q2 1 The constrained function has a maximum value of 11
at the point (1, 1).
= 28Q1 + 36Q2 − Q21 − 2Q22
704 ANSWERS

2 x1 = 100, x2 = 20 6 (a) K = 200; L = 150

U1 20 U2 100 (b) The isoquant is sketched in Figure S5.4.
5 5 10 and 5 5 10
P1 2 P2 10
3 x1 = 30, x2 = 10
K
Exercise 5.5 500
2 1
1 (a) y 5 2 3x (b) Maximum value of z is which
3 9 400
1 1 LK2 5 6 000 000
occurs at ,  .
9 3
300
2 Maximum value of z is 13, which occurs at (3, 11).
3 27  000
200
4 K = 6 and L = 4
5 x + y = 20; 6 of product A and 14 of product B.
100
6 8100 2L 1 3K 5 900

7 (a) 1000
(b) 15  985 100 200 300 400 500 L
8 (a) 2K + L = 1000
(b) MPK = AL, MPL = AK Figure S5.4 
MPK AL L L 2
(c) 5 5 5 L 5 2K 7 (a) U 5 x1 1 x2 5 x11/2 1 b 2 ax1 and at a stationary
MPL AK K K 1
1
(d) K = 250; L = 500 point, x1 5 .
4a2
Exercise 5.5* −U* 1
(b) 5 2 2 , 0 so an increase in a causes a
1 (a) Minimum value of 1800 occurs at (10, 30). −a 4a
decrease in optimal utility.
1
Maximum value of 10 occurs at
(b) ,  2 . −U*
2 5 1 so a 1 unit increase in b, increases U* by
−b
2 K = 10 and L = 4
1 unit.
3 Maximum profit is $165, which is achieved when
K = 81 and L = 9. Section 5.6
4 x1 = 3, x2 = 4 Practice Problems
5 (a) 2x1 + 4x2 = 300 1 Optimal point has coordinates (2, 10) and value of
(b) x1 = 100; x2 = 25 the objective function is −12.
(c) The curves are sketched in Figure S5.3. 2 The maximum value of U is 1849; 1892.
P2 M P1M
3 x1 5 ; x2 5
P1(P1 1 P2) P2(P1 1 P2)
400 2
x2 5
x1
x2 Exercise 5.6
100 1 9
500 2
x2 5
80 x1 2 (a) 800; x = 20, y = 10, l = 40
60
2
840.5; x = 20.5, y = 10.25, l = 41
(b)
600
x2 5
40 x1 Change is 40.5 compared to a multiplier of 40.
(c)
2x1 1 4x2 5 300
20 3 4.5
−g −g −g
4 (b) 5 2 2 lL, 5 1 2 lK, 5 50 2 KL
50 100 150 200 x1 −K −L −l
(c) L = 10 and K = 5
Figure S5.3 
 ANSWERS  705

−g −g Complementary
5 (a) 
5 (a) 5 80L 2 3l, 5 80K 2 5l,
−K −L Q1 = 60, Q2 = 65
(c) 
−g P1 = 240, P2 = 195
(d) 
−l 5 1500 2 3K 2 5L
6 K = 15, L = 60
(b) K = 250 and L = 150 (c) 4000 7 K = 20.25, L = 25
6 Maximum profit is $600 at Q1 = 10, Q2 = 5. Lagrange
8 Saddle point at (0,0), minimum at (2,2)
multiplier is 3, so profit rises to $603 when total cost
increases by 1 unit. Show that f(lK, lL) = l2f(K, L)
9 (a) 
KL(K 1 8L) K3
Exercise 5.6* MPK =
(b)  , MPL = ; show
(K 1 4L) 2
(K 1 4L)2
1 (a) z = M + 1
that K(MPK) + L(MPL) = 2Q
(b) If M increases by 1 unit then z goes up by 1 unit,
2/3; if labour decreases by 1 unit, capital would
(c) 
which is the value of l.
need to rise by 2/3 to maintain output.
2 (a) 585  412 (b) 93.2
0.90625
(d) 
3 (a) 375.5 (b) doubles
10 Substituting W = E/20 into W + F = 168 gives the
4 There are two wheels per frame, so the constraint is constraint E + 20F = 3360; 56; stay the same
y = 2x. Maximum profit is $4800 at x = 40, y = 80.
7.5
11 (a) 
5 40; 2.5
−1.5625
(b) 
aM bM
6 x1 5 and x2 5 1.5625; Bookwork
(c) 
(a 1 b)P1 (a 1 b)P2
−8 − 12 + 81 = 61; −9/52;
12 (a) 
7 x = $6715.56; y = $3284.44
Minimum at (1, 0)
(b) 
8 x = 13, y = 17, z = 2
9 x = 6, y = 11 −U x22 −U 2x12
13 (a)  5 , 5 ;
U1 U −x1 (2x1 1 x2)2 −x2 (2x1 1 x2)2
10 5l5 2
P1 P2
−2U 24x 22 −2U 24x 21
a b 2 5 , 0, 2 5 ,0
11 x 5 , y5 −x 1 (2x1 1 x2)3 −x 2 (2x1 1 x2)3
a2 1 b2 a2 1 b2
4.5; 0.09
(b) 
Multiple Choice Questions
x1 = 20, x2 = 10
(c) 
1  E 2  E 3  A
14 K = M/2, L = M/4
4  B 5  C 6  D
Both ratios are 2M; last dollar spent on capital
(a) 
7  A 8  E 9  C
yields the same addition to output as the last
10  E 11  A 12  D dollar spent on labour.
13  A 14  C Check that (M + 1)2 − M2 ≈ l
(b) 
Examination Questions M2
(c) 
K5 ; check that they both have a slope of
1 (a)  fx = 2 + 6xy, fy = 3x − 2y, fxx = 6y,
2
8L
fyy = −2, fxy = 6x −2; Bookwork
fx(1, 2) = 14, fy(1, 2) = −1; 2.9
(b) 
−Y k2
2 + 6 − 4 = 4; 14
(c)  15 (c) 5 . 0 so Y increases as b
−b (1 2 a)k2 1 ck1
2 −1/2, 3/80 increases
Normal
(a) 
4
(b)  Chapter 6
x1 + 2x2 = 50
3 (a) 
Section 6.1
x1 = 26, x2 = 12
(b) 
Practice Problems
1 K 3 1 L 1 1 4 1
MPL 5
4 (a)  1 , MPK 5 1
2 L 4L 2 K 4K 1 (a) x2  (b) x4  (c) x100  (d) x   (e) x19
4 19
(b) 0.3718
706 ANSWERS

1 5 1 3 Exercise 6.1*
2 (a)x 1 c  (b) 2 2 1 c  (c) x 4/3 1 c
5 2x 4 x7 x11
1 (a) 2 x 2 1 c  (b) 2 2x x 2 e2x 1 c
1 3x 7 11
(d) e 1 c  (e) x + c
3 x4 1
(c) 1 5 1 2In x 1 e24 x 1 c
x2 4 x
(f) 1 c  (g) ln x + c
2 2 (a) C = 20(Y + 2Y1/4 + 1) (b) VC = 15 + Q2
5 aQ2 a
3 (a) x2 − x4 + c  (b) 2x 5 2 1c 3 (a) TC 5
x 1 bQ 1 C (b) TC 5 (ebQ 2 1) 1 C
2 b
7 3 3 2
(c) x 2 x 1 2x 1 c 1
3 2 4 (a)  s4x 2 7d6
24
4 (a) TC = 2Q + 500; TC = 580
1
(b) TR = 100Q − 3Q2; P = 100 − 3Q (b)  ln 3x 1 1 1 c
3
(c) S = 0.4Y − 0.2Y1/2 − 38
1 (c)  2x 1 3 1 c
5 (a)  s5x 1 1d4 1 c
20 1 5
1 8
(d)  1 1 x2 1 c
(b)  1 1 x 2 1 c 10
16
21
(c) ln(2 + x4) + c (e) 
4 1 1 x4
1 4
(d)  1 1 e x 1 c
4 1 2
(f) 2 e2x 1 c
2
Exercise 6.1
1 1 3
(g)  1 1 ln x
1 (a) x6 + c (b) x 5 1 c (c) e10x + c (d) ln x + c 3
5
2 1 2 x3 1 5
(e) x 5/2 1 c  (f) x 4 2 3x 2 1 c (h) 
5 2 3
1 3 ax 2 1 2 2 7/2
(g) x 2 4x 2 1 3x 1 c (h) 1 bx 1 c 5 (a) x 1 x 1c
3 2 2 7

7 4 3 1 11 1 3 1 3 1 1
(i) x 2 2e22x 1 1 c (b) x 1 x 1 c;  e5x 1 ex 1 e2x 1 c;  x3 2 x2 1 c
4 x 11 3 5 2 3 2
1
Q2 1 4 1 2
2 (a) TC 5 1 5Q 1 20 (b) TC = 6e0.5Q + 4 6 (a) x 2 x 1 2x 2 1 c
2 4 2
3 380
1 1 2
4 (a) TR = 20Q − Q2; P = 20 − Q (b) ln x 1 1 c; 2e2x 1 e23x 1 c; ln x 2 x 1 x3/2 1 c
x 3 3
12
(b) TR 5 12 Q; P5 7 S 5 0.6Y 2 0.8 Y 2 2
Q
8 f(x) = x3 − 4x + 2
5 C = 0.6Y + 7, S = 0.4Y − 7
9 (a) ln x + 1 (b)  x ln x − x + c
6 (a) 1000L − L3 (b) 12√L − 0.01L −0.1t
10 N = 100(1 − e ); 55; 100
7 6
11 20
8 (1) F′(x) = 10(2x + 1)4, which is 10 times too big, so
12 550
1
the integral is (2x 1 1)5 1 c. 1 n11 1
10 13 (a)  ax 1 b 1 c (b)  e ax1b 1 c
a(n 11) a
1 1
(2) (a) (3x 2 2)8 1 c  (b) 2 (2 2 4x)10 1 c 1
24 40 (c)  ln(ax 1 b) 1 c
a
1 3/2 1
(c) 2x 1 1 1 c  (d)  ln(7x 1 3) 1 c 2 6 2(2x 1 3) 2 6 4x
3 7 14 (a)  2 2 5 2 5 2
2x 1 3 2x 1 3 2x 1 3 2x 1 3
ex(x2 − 2x + 2) + ex(2x − 2) = x2ex
(b) 
 ANSWERS  707

Section 6.2 4 (a) 100 (b)

20

Practice Problems 5 (a) 81 (b)

180

1 320
1 (a)   (b) 24  (c) 16.5  (d) e − 1 6 (a) (b) 129.87
4 3
7 (a) 74⅔ (b)
58⅔
2 341.33
8 $16  703
3 (a) 100 (b)
100 3 3
9 (a) 12  800 (b)
1600 N 2 2 ( N 2 1) 2 ; fourth year 
4 (a) 9000 (b)
27
5 $37  599.03 10 $72  190.14
11 384,000 barrels
Exercise 6.2
104 5 Exercise 6.2*
1 (a) (b) (c) 12 (d) 16
3 36 2
1 (a) 27 (b)
290 1 15
2 (a) (b) (c) 234 (d) e − 1 (e) 1
3 3 2 (a) 128 (b) 10
3 (a) 4 1 1
3 83  and  133   respectively
0. The graph is sketched in Figure S6.1.
(b) 3 3
Integration gives a positive value when the graph 4 P = 80, Q = 30; CS = 1265.2; PS = 450
is above the x axis and a negative value when it
5 P = 58.48, Q = 2.682, CS = 50.7, PS = 60.7
is below the x axis. In this case there are equal
amounts of positive and negative area which 6 (a) $427.32 (b) During the 47th year
cancel out. Actual area is twice that between 0 AT a11 A
7 (a) (b) (e aT 2 1)
and 2, so is 8. a 11 a
8 (a) $2785.84 (b) $7869.39
y (c) $19  865.24 (d) $20  000

y 5 x3 9 6.9 years
10 5x2 − 2x
100S
11 (1 2 e2nr/100)
r
12 26.5
13 (a)  I(5) = 25 = J(5)
The graph is sketched in Figure S6.2

22
2 x

30

equal
areas 20

10

5 10 t

Figure S6.1 Figure S6.2

7.1
(b) 
708 ANSWERS

74
14 (a)  The supply and demand curves are sketched in
5 (a) 
(b) The graph is sketched in Figure S6.3 Figure S6.4.

P
P
140

62 32

Q
56

Figure S6.4
486, 162
(b) 
(c)  (i)  Price increases and quantity decreases
9 16 Q
(ii) Decreases

Figure S6.3 $27 385.10

6 (a) 
15 years
(b) 
Multiple Choice Questions 1
7 (a)  (i)   ln(1 1 6x) 1 c
1  B 2  E 3  B 3
4  D 5  A 6  A 1 3/2
(ii)  1 1 3x 2 1c
7  D 8  B 9  A 9
10  D 11  E 1 1
a5
(b)  , b52
6 6
Examination Questions
Q 2 1 2Q Q 1 8
8 (a) 
1 (a)  π = −3Q3 − 3Q2 + 255Q − 25
4.05
(b) 
d 2π 9 P = 35 − Q2
5;
(b)  5 218Q 2 6 , 0, so max
dQ 2
10 (a) (b) The graphs are sketched in Figure S6.5.
1
8
2 (a) 
3
P
x6 2x 3
(b)  (i)    2 1 9x 1 c 13
6 3
(ii)  ex + 3lnx + c

x2 1
(iii)  2 2 6x x 1 c
2 x2 4
Put both fractions over a common denominator.
(c) 
Use [ln(x − 1) + 2ln(x + 3)]52 substitute limits and
Q
use rules of logs.
4800
3 (a) 
Figure S6.5
5011.15
(b) 
(c) 18; producer’s surplus
600N3/2; 9
(c) 
TR = 140Q − 3Q2; P = 140 − 3Q
4 (a) 
1 3 1 2
TC =
(b)  Q 1 Q 1 20Q 1 10
3 2
1
8; 555
(c) 
3
 ANSWERS  709

The graphs are sketched in Figure S6.6.

11 (a)  1 2 3
CT 5 2 4 5 5 C
3 5 6

3 (a) 1 7   (c) 3   (d) 2   (e) 0 0

3 28 2 2 0 0
45.6
Part (b) is impossible.

2 24 0 22
4 (1) (a) 6 10 (b)
4 14
0 8 2 12
t
1 23 2 26
(c) 5 12 (d)
10 24
Figure S6.6 2 20
1 10
8
(b)  From (a) and (b)
$225 066.67
(c) 
2 26
E = −3
12 (a)  2A 1 2B 5 10 24
The graph of the demand curve is sketched in
(b)  2 20
Figure S6.7. which is the same as (d), so
2(A + B) = 2A + 2B
P
3 26 26 12
(2)
(a) 9 15 (b)
218 230
0 12 0 224
From (a)
26 12
22(3A) 5 218 230
0 224

64 Q
which is the same as (b), so
−2(3A) = −6A
5 (a) [8]
Figure S6.7
[0]
(b)
640
(c)  This is impossible.
(c)
Figure S7.1 shows that it is possible to perform the
6 
Chapter 7 multiplication and that the order of the answer is 3 × 2.
Section 7.1
A B
Practice Problems [3 3 2] [2 3 2]
1 (a) 2 × 2, 1 × 5, 3 × 5, 1 × 1
1, 4, 6, 2, 6, ?, 6; the value of c43 does not exist
(b)
equal so can
1 3 2 2 multiply
4 7 1 25
2 AT 5 0 6 3 1
1 1 5 8 order of C is 3 3 2
2 4 21 0

1 Figure S7.1
B 5 5
T
7 7 10
9 AB 5 3 4
6 10
710 ANSWERS

5 4 3 35
7 (a) 7 (d)
2 21 (f)  9 6 13 (c) 75
5 5 5 27 15 28 30
Total raw material costs to manufacture one item
5 7 9 of each good.
(g) 3 3 3 (h) 5 6
6 9 12 11 15
(d)
1005
Parts (b), (c) and (e) are impossible. 205

8 Ax is the 3 × 1 matrix Total raw material costs to manufacture requisite

number of goods for each customer.
x 1 4y 1 7z
[7000]
(e)
2z 1 6y 1 5z
8x 1 9y 1 5z Total revenue received from customers.
(f) [1210]
However, x + 4y + 7z = −3, 2x + 6y + 5z = 10 and
8x + 9y + 5z = 1, so this matrix is just Total cost of raw materials.
[5790]
(g)
23
10 Profit before deduction of labour, capital and
1 overheads.

which is b. Hence Ax = b. 12
5 (a) [8 30 15] 30 5 [1371]
Exercise 7.1 25

1 (a) J 5 35 27 13 1300.2; 5.2% decrease

(b)
F 5 31 17 3
42 39 24 25 29 16
6 (1) (a) 1 3 5
2 4 6
(b) 66 44 16
67 68 40
(b)
1 2 23
21 1 4
(c) 4 10 10
17 10 8 2 1
(c) 5 5
4 6 2 18 2 10
2 (a) 2 0 10 0
12 14 16 8
(d) 2 5 2
1 5 10
2 14 18 12
(b) 4 2 0 10 (A + B)T = AT + BT: that is, ‘transpose of the sum is
12 8 10 6 the sum of the transposes’.

6 20 20 30 (a) 1 5
(2)
(c) 6 2 10 10 4 9
24 22 26 14
2 21
Same answer as (c).
(d) (b) 1 0
3 4B, (CB)T, CBA are possible with order 2 × 3, 3 × 4, 0 1
4 × 3 respectively.
(c) 22 1 4
4 (a) 5900 1 5 9
1100
Total cost charged to each customer. 22 1
(d) 1 5
(b) 13 7 23 22 4 9
3 1 4 5
(CD)T = DTCT: that is, ‘transpose of a product is
Amount of raw materials used to manufacture
the product of the transposes multiplied in reverse
each customer’s goods.
order’.
 ANSWERS  711

0 6 It is the total weekly profit on T-shirts across all

7 (a) B 1 C 5 shops in the chain.
5 2
b33 = 1327.50
(b)
215 24
so A(B 1 C) 5 It is the total weekly profit from Shop C for all
5 14
three goods.
27 25 5 (a) At the end of one year, the market share of
AB 5 and
6 10 customers shopping in A, L, S and W is 29.5%,
25.5%, 33%, 12%.
28 21 215 24
AC 5 , so  AB 1 AC 5 (b) (i) 29.8%  (ii) 33.2%
21 4 5 14

6 6
(b) 27 25
AB 5 , so  6 2 11
6 10
13 1
32 43 7 −109
(AB)C 5
4 26
a b 1 0 a b
8 (a) AI 5 5 5A
c d 0 1 c d
4 11
BC 5 , so 
24 4 Similarly, IA = A.
32 43 A21 A
(b)
A(BC) 5
4 26
1 d 2b a b
5
1 2 24 3 ad 2 bc 2c a c d
7 14 228 21 1
8 AB 5 [9]; BA 5 da 2 bc db 2 bd
3 6 212 9 5
2 4 28 6 ad 2 bc 2ca 1 ac 2cb 1 ad

1 ad 2 bc 0
5 5 1 0
7x 1 5y ad 2 bc 0 ad 2 bc 0 1
9 (a)
x 1 3y
Similarly, AA−1 = I.
2 3 22 x 6
A 5 1 21
(b) 2 , x5 y , b5 3 1 0 x x
Ix 5
(c) 5 5x
4 2 5 1 0 1 y y
z

Exercise 7.1* k2 k1
9
2c 1 2 a
1 (a), (c) and (f) are possible
with orders, 5 × 2, 3 × 5, 5 × 5, respectively. Section 7.2
2 a = 2, b = 6, c = 4, d = 5 Practice Problems
a d 1 A is non-singular and its inverse is given by
g i k
3 (a) AT 5 b e , BT 5
h j l 1/4 21/2
c f
21/8 3/4
ag 1 bi 1 ck ah 1 bj 1 cl
AB 5
(b) B is singular so its inverse does not exist.
dg 1 ei 1 f k dh 1 ej 1 fl
2 We need to solve Ax = b, where

ga 1 ib 1 kc gd 1 ie 1 kf 9 1 P1 43
BTAT 5 A5 x5 b5
ha 1 jb 1 lc hd 1 je 1 lf 2 7 P2 57
(AB)T = BTAT
(c)
P1 4
(ATBTCT)T = CBA 5
P2 7
4 (a) a11 = 137.50
712 ANSWERS

3 In equilibrium, QS = QD = Q, say, so the supply 2 (1) (a) u A u = −3 (b)

u B u = 4
equation becomes
4 4
P = aQ + b AB 5
(c)
7 4
Subtracting aQ from both sides gives
so u AB u = −12. These results give u AB u = u A u u B u: that
P − aQ = b (1) is, ‘determinant of a product is the product of the
Similarly, the demand equation leads to determinants’.
P + cQ = d (2) 21/3 1/3 1 0
(a) A21 5
(2) B21 5
(b)
In matrix notation, equations (1) and (2) become 5/3 22/3 21/2 21/4

1 2a P b 21/3 1/3
5 (AB)21 5
(c)
1 c Q d 7/12 21/3

cb 1 ad 2b 1 d These results give (AB)−1 = B−1A−1: that is, ‘inverse

P5 and Q 5
c1a c1a of a product is the product of the inverses multiplied
in reverse order’.
21
The multiplier is . 3 a = −3/2, b = −8/3
c1a
Given that c and a are both positive, it follows that 4
10 0 so the inverse is 1 5 23
the multiplier is negative. Consequently, an increase 0 10 10 210 8
in b leads to a decrease in Q. 5 (a) x = 1, y = −1 (b) x = 2, y = 2
4 A11 = 7 6 (a) 50 − 2P1 + P2 = −20 + P1  1 3P1 − P2 = 70
A12 = −1 10 + P1 − 4P2 = −10 + 5P2  1  −P1 + 9P2 = 20
A13 = −1 1 9 1
(b) Inverse 5
A21 = −3 26 1 3
A22 = 1 1 9 1 70 25
5
A23 = 0 26 1 3 20 5
A31 = −3 7 (a) (i)   a × 0 − b × 0 = 0    
(ii) kab − kab = 0
A32 = 0 a b
(iii) 2 512150
A33 = 1 a b
5 1 and 0 (b) (i) ak ≠ 0   (ii) a2 > 0   (iii) a2 + b2 > 0

7 23 23 Exercise 7.2*
6 A 5 21 1 0 1 a = ±2, b = ±4
21 0 1
ae 1 bg af 1 bh
2 (a)
The determinant of B has already been found in ce 1 dg cf 1 dh
Practice Problem 5 to be 0, so B is singular and does
(b) det(A) = ad − bc; det(B) = eh − fg
not have an inverse.
det(A) × det(B) = (ad − bc)(eh − fg)
P1 8
= adeh − adfg − bceh + bcfg
7 P2 5 5
P3 det(AB) = (ae + bg)(cf + dh) − (af + bh)(ce + dg)
3
= acef + adeh + bcfg + bdgh − acef − adfg
Exercise 7.2 − bceh − bdgh
1 (a) (i) 1  (ii) 2  (iii) 2  (iv) 10 = adeh + bcfg − adfg − bceh
2 (c) AB singular;
(b) (i) 4 27 (ii) 23
21 2 21.5 2.5 det(AB) = det(A) × det(B) = 0 × det(B) = 0
3 D
(iii) 2 5     (iv) 20.7 0.4
20.5 21 0.8 20.6 4 364
5 7
 ANSWERS  713

6 The determinant of A is −10 ≠ 0, so matrix is Section 7.3

non-singular. Practice Problems
1/10 3/10 21/2 266 26
1 (a) x2 5 5 3 (b)
x3 5 51
A21 5 3/10 21/10 1/2 222 26
21/2 1/2 21/2
2T* 2 (I* 1 G*)(21 1 t) 2 b(21 1 t)
It is interesting to notice that because the original 2 yd 5
1 2 a 1 at
matrix A is symmetric, so is A−1. The determinant of
B is 0, so it is singular and does not have an inverse. 0.6 20.1 Y1 250
3 5
7 Commodity market is in equilibrium when Y = C + I, 20.3 0.3 Y2 400
so Y = aY + b + cr + d, which rearranges as
Y1 = 766.67 and Y2 = 2100; 20
(1 − a)Y − cr = b + d(1)
Exercise 7.3
Money market is in equilibrium when MS = MD,
so MS* = k1Y + k2r + k3, which rearranges as 1 (a) (i) 10 (ii) −31 (iii)
27
(b) x = −3.1, y = 2.7
k1Y + k2r = MS* − k3(2)
2 (a) 1 (b) 1 (c) 5
In matrix notation, equations (1) and (2) become 3 (a) 2 (b) −1 (c) 1
1 2 a 2c Y b1d 4 (a) x = 1, y = −1
k1 k2 5 M* 2 k
r S 3 x = −2, y = 3
(b)
Using the inverse of the coefficient matrix, x = 7, y = −10
(c)

Y 1 k2 c b1d 5 (a) 400 2 5P1 2 3P2 5 260 1  3P1 1 8P1 1 3P2 5 460
5 3
r k 2
(1 2 a) 1 ck 1
2k 1
1 2 a MS* 2 k3 300 2 2P1 2 3P2 5 2100 1 2P2  1  2P1 1 5P2 5 400
k2(b 1 d) 1 c(MS* 2 k3) 6
Y5 32
(b)
k2(1 2 a) 1 ck1 17

and 1 21 Y 5 I*
6 (a)
2k1(b 1 d ) 1 (1 2 a)(MS* 2 k3) 2a 1 C b
r5
k2(1 2 a) 1 ck1
1 I*
The required multiplier is 2a b b 1 aI*
C5
(b) 5
0r 12a 1 21 12a
5 2a 1
0M*S k2(1 2 a) 1 ck1

Now 1 − a > 0 since a < 1, so numerator is positive. 7 (a) 2 4 a 5 14

3 9 b 9
Also k2 < 0, 1 − a > 0, gives k2(1 − a) < 0 and c < 0,
k1 > 0 gives ck1 < 0, so the denominator is negative. a = 15; b = −4;  TR = 11
(b)
8 a − 1, which is non-zero provided a ≠ 1 Exercise 7.3*
2a 21 a 1 (a) 1 (b)
4 (c)
1/2
1
3a 2 4 21 3 2 2a b 2 aT* 1 a(I* 1 G*)(t 2 1)
a21 2
1 1 21 1 2 a 1 at
29 11 3 P1 20 Y
1 1 21 0 I* 1 G*
9 A21 5 4 10 21 ; P2 5 5 3 (a) 2a 1 a C 5 b
241
9 2 8 P3 8 2t 0 1 T T*
I* 1 G* 1 b 2 aT*
1 8 2a 2 9 6 2 4a (b)
Y5
10 A21 5 21 18 2 7a 5a 2 12 a = 2.5 1 2 a 1 at
45 2 18a
218 9 9 4 The equations can be rearranged as
11 (a) a2c − a2b − ac2 + ab2 + bc2 − b2c Y − C + M = I* + G* + X*
(b) The factors in the expression (a − b) (a − c) −aY + C + 0M = b
(c − b) are all non-zero if the numbers, a, b and −mY + 0C + M = M*
c are distinct.
714 ANSWERS

as required. 1 1/2
1 (c) 
Autonomous investment multiplier, , is 0 1/4
12a1m
positive because 1 − a and m are both positive. Impossible
(d) 
2 P = 9, Q = 13
5 The multiplier is
3 (a)  (i)  Impossible
2k1
k2(1 2 a) 1 ck1 5 25 2 13
(ii) 
214 10 0 6
which is positive since the top and bottom of this (iii) Impossible
fraction are both negative. To see that the bottom is
negative, note that k2(1 − a) < 0 because k2 < 0 and 24 219 26 18
(iv) 
214 23 10 22
a < 1, and ck1 < 0 because c < 0 and k1 > 0.
6 The equations are 21 5
2 21
0.6Y1 − 0.1Y2 − I1* = 50 (b)  (i) 
21 1
−0.2Y1 + 0.3Y2 = 150 23.5 22
0.2Y1 − 0.1Y2 = 0
1 3 10 6 36
(ii) 
The third equation follows from the fact that if the 26 222 22 8 24
balance of payments is 0, then M1 = X1, or
P1 = 5, P2 = 6
4 (a) 
equivalently, M1 = M2. Cramer’s rule gives
−7
(b) 
det(A 3) 4
I *1 5 5 5 100 Number of customers using Airme are made up
5 (a) 
det(A) 0.04
of two types: those who used it the previous
1 2 a1 1 m1 2m2 Y1 b1 1 I *1 month which are 80% of At−1, and those
7 5
2m1 1 2 a2 1 m2 Y2 b2 1 I *1 switching airlines who are 25% of Bt−1. Likewise,
for the numbers using Blight in month t.
(b1 1 I*1)(1 2 a2 1 m2) 1 m2(b2 1 I*2)
Y1 5 (i)  12000
(b) 
(1 2 a1 1 m1)(1 2 a2 1 m2) 2 m1m2
(ii) 13705
The multiplier is 7500 and 5200, respectively
(c) 
m2
5a 2 1 2a 2 1 3
(1 2 a1 1 m1)(1 2 a2 1 m2) 2 m1m2 1
6 (a)  2a 2 4 4a 2 4 22 ; 7/8
16a 2 14
which is positive since the top and bottom of the 18 4 16
fraction are both positive. To see that the bottom is
10, 5, 7
(b) 
positive, note that since ai < 1, 1 − ai + mi > mi,
so that (1 − a1 + m1)(1 − a2 + m2) > m1m2. Hence 1 4 1 8t 4t 4
7 A−1 = ; P1 5 6 1 , P2 5 10 1 ;
the national income of one country rises as the 26 2 7 13 13 13
investment in the other country rises.
−Y 1
Multiple Choice Questions 8 (d) 5 .1
−I * 12a 12t
1  E 2  D 3  E −Y Y 12a
(e) 5 . 0, so increases
4  C 5  C 6  B −a 1 2 a 1 2 t
7  A 8  B 9  D 2
9 (a) 
10  C (c)  (i)  False
Examination Questions (ii) True
13 26
1 (a) 
210 8

14 27
(b) 
216 8
 ANSWERS  715

Chapter 8
y c53
Section 8.1 4
c51
c increases

Practice Problems c50

3
1 The line and region are shown in Figure S8.1. c 5 22
2
c 5 24
y 1
5
(1, 4)
4
1 2 3 4 5 x
2x 1 3y . 6 3
2
1

27 26 25 24 23 22 21 1 2 3 4 5 6 7 x
21
22
Figure S8.3
23
24 4 Minimum is −2, which occurs at (0, 2).
25
5 Maximum is 26, which occurs at (2, 4).

Exercise 8.1
Figure S8.1
1 (1, 1), (1, −1), (−1, −1), (2, −1), (−2, −1)
2 The feasible region is shown in Figure S8.2.
2 6
3 The feasible regions for parts (a), (b) and (c) are
y sketched in Figures S8.4, S8.5 and S8.6, respectively.
11
10
y
9
15
8
14
7
13
6
12
5
11
4
10
3
9
2
feasible
8
1 region
7
1 2 3 4 5 6 7 8 9 10 11 x 6
5
Figure S8.2 4
3
3 The answers to parts (a) and (b) are shown in 2
feasible
Figure S8.3. region
1
Once c becomes greater than 3, the lines no
(c)
longer intersect the feasible region. The 1 2 3 4 5 6 7 x

maximum value of c (that is, the objective

function) is therefore 3, which occurs at the
corner (0, 3), when x = 0, y = 3. Figure S8.4
716 ANSWERS

y y
9
6 8
5 7
4 c increases
6
3
5
2
feasible 4
1 region
3
1 2 3 4 5 6 7 8 9 10 11 x 2

Figure S8.5 1 2 3 4 5 6 7 8 9 10 x
c51 c53 c55 c57

y
Figure S8.7
6

5 6 Figure S8.8 shows that the problem does not have a

feasible finite solution.
4 region

2
y
1
c 5 248
1 2 3 4 5 6 7 8 9 x 17
16
Figure S8.6 15
14
c 5 224
4 (a) Maximum is 90, which occurs at (0, 10). 13

Maximum is 25, which occurs at (5/3, 10/3).

(b) 12
Note that the exact coordinates can be found 11
by solving the simultaneous equations 10
c50
2x + 5y = 20 9
8
x+y=5
7
using an algebraic method.
6
Minimum is 1, which occurs at (1, 0).
(c) 5
5 Figure S8.7 shows that the problem does not have a 4
finite solution. The lines x + y = c pass through (c, 0) 3
and (0, c). As c increases, the lines move across the 2
region to the right without bound. 1

1 2 3 4 5 6 7 8 9 10 x

Figure S8.8
 ANSWERS  717

2
7 (a) Unique solution at (2, 0). The line 2x + 3y = 24 rearranges as y 5 8 2
(c) x,
3
Unique solution at (0, 2).
(b) 2
so has slope, 2 .
Infinitely many solutions.
(c) 3
c a
Exercise 8.1* The line ax + 2y = c rearranges as y 5 2 x,
2 2
1 −3.8 so has slope, 2 a .
2 A
2
a 2 4
3 (a) Maximum is 16, which occurs at (2, 4). #    a #
2 3 3
Maximum is 12, which occurs at any point on
(b)
the line joining (0, 3) and (1, 5). Section 8.2
4 (a) There is no feasible region, since the constraints Practice Problems
are contradictory.
1 The firm should produce 20 tablets of model TAB1
The feasible region is unbounded and there is no
(b) and 10 of model TAB2 to achieve a maximum profit
limit to the values that the objective function can of $19 000.
take in this region.
2 (24, 22); $50
5 Maximum is 16, which occurs at the two corners
3 We need to buy nine items of clothing and visit the
(2, 2) and (8/3, 0), so any point on the line segment
theatre 10 times per year.
joining these two corners is also a solution.
Exercise 8.2
8 2 1
2 x 0
6 c 5 , x5 ,b5 6 , 05 , A5 1 1 1 The manufacturer should produce 10 bikes of type B
3 y 0
10 1 2 and 15 of type C each month to achieve a maximum
7 (a) (i) Line 1: passing through (8, 0) and (0, 16). profit of $5100.
Line 2: passing through (12, 0) and (0, 8). 2 The firm should produce 720 cartons of ‘The
Caribbean’ and 630 cartons of ‘Mr Fruity’ each week
Line 3: passing through (0, 12) and, for
to give a maximum profit of $650.70.
example, (8, 20).
3 The student should order a quarterpounder served
Shade under the y = 0, line 1, line 2, but
with six oz chips to consume a minimum of 860
above line 3.
calories. Note that the unbounded feasible region
Corners: (12, 0), (6, 4). causes no difficulty here, because the problem is one
For the third corner, solve simultaneous equations of minimisation.
2x + y = 16 4 600 of each
−x + y = 12
5 375 goods of type A and 150 goods of type B
1 1 6 40 copies of Macro and no copies of Micro
to get 1 , 13 .
3 3
(ii) 7 P1 for one day a week and P2 for three days a week
Corners Objective function 8 (a) 12 000x + 15 000y; maximise
(12, 0) 12 Total number of students is x + y and this must
(b)
(6, 4) 10 not exceed 9000, so
1 1 2
1 , 13 14 x + y ≤ 9000
3 3 3
At least ¾ of the students are US citizens, so
3
Optimal point (6, 4). (x + y) ≤ x 1 3x + 3y ≤ 4x 1 x ≥ 3y
4
(iii) x ≥ 0
All non-US students together with a quarter of the
(i) No solution since x + y increases without
(b)
US students must be given residential places, so
bound as the lines x + y = c sweep across the 1
region to the right. y1 x # 5000
4
(ii) Infinitely many solutions; any point on the x ≥ 0; y ≥ 0
1 1
line segment between (6, 4) and 1 , 13 x and y must be whole numbers.
(c)
3 3
will be a solution.
718 ANSWERS

Exercise 8.2* 8 (a) If x and y denote the number of goods of types

1 1 and 6 X and Y then the problem is to
2 4 cosmetic and 6 orthopaedic patients Maximise 40x + 45y (profit)
3 (a) If x and y denote the number of goods of type X subject to 5x + 8y ≤ 6150 (raw material 1)
and Y, then the problem is to x + y ≤ 1086 (raw material 2)
Maximise 15x + 20y (profit) 3x + 8y ≤ 5190 (machine time)
subject to  3x + 5y ≤ 31  500 (raw materials) 3x + 10y ≤ 5250 (labour)
2x + 2y ≤ 17  000 (labour) x ≥ 0, y ≥ 0  (non-negativity)
x ≥ 0, y ≥ 0  (non-negativity) 846 of type X and 240 of type Y
(b) 5500 of type X and 3000 of type Y. (b) 0; no
(c) $2.50; it would be worthwhile providing an extra Multiple Choice Questions
unit of raw materials provided the cost is less
than $2.50. 1  A 2  A 3  D

4 (a) The firm should make 30 jackets and 6 pairs of 4  C 5  C 6  E

trousers each week to achieve a maximum profit 7  D 8  A 9  E
of $444. 10  D
(b) The profit margin on a pair of trousers should be
between $8 and $15. Examination Questions

5 The optimal diet consists of 1.167 kg of fish meal 6 at (4, 2)

1 (a) 
and 1.800 kg of meat scraps, which gives a minimum (i)  
(b)  −9 at (0, 3)
cost of $1.69 per pig per day. (ii) 5 at any point on the line segment joining
6 (b) $150  000 in A, $75  000 in B and $75  000 in C. (5, 0) and (4, 2)
7 (a) If the number of copies sent from A to C is 2 42 at (2, 6); no solution since the feasible region
denoted by x and the number of copies sent from unbounded
A to D is denoted by y, then the problem is to 3 (a)  70x + 84y
Minimise 0.1x + 0.2y + 133  (cost) x + 1.5y ≤ 900, 2x + y ≤ 1600, x ≥ 0, y ≥ 0
(b) 
subject to x + y ≤ 90  (warehouse A supplies) Feasible region has corners (0, 0), (0, 600),
(c) 
x + y ≥ 70  (warehouse B supplies) (750, 100) and (800, 0)
0 ≤ x ≤ 50, 0 ≤ y ≤ 80 750 scarves and 100 blouses
(d) 
(b) The feasible region is sketched in Figure S8.9. x and y are number of chocolate cakes and fruit
4 (a) 
cakes made each week.
y
20x + 24y
(b) 
2x + y ≤ 320, x + y ≤ 200, 2x + 3y ≤ 520, x ≥ 0,
(c) 
80 y≥0
1
(d) 0, 173 , (80, 120) (120, 80) (160, 0) (0, 0)
3
60
80 chocolate cakes and 120 fruit cakes
(e) 
Let x and y denote the number of shares in
5 (a) 
40
companies A and B.
Maximise 0.8x + 0.65y subject to x + 2y ≤ 1000,
20 y ≥ 2x, x ≥ 0, y ≥ 0
(0, 0), (0, 500), (200, 400)
(c) 

20 40 60 80 x 200 of A and 400 of B; $420

(d) 
x and y denote the number of kilos of raspberries
6 (a) 
and blueberries supplied to the supermarket.
Figure S8.9
Minimise 4.4x + 3.1y subject to x + y ≥ 200,
A sends 50 to C and 20 to D; B sends 60 to D. 100 ≤ x ≤ 200, 50 ≤ y ≤ 300
 ANSWERS  719

(100 100), (150 50), (200 50), (100 300), (200 300)
(c) 
Yt
100 kg of each
(d)  6
$2790
(e)  equilibrium value
1 7 23 10 4 5
7 (a)  ; x 5 80 y 5 192
13 25 4 13 13
4
(b)  (i) Let x and y denote the number of cartons of
Exotic and Floridian.
3
Maximise 4.5x + 4y subject to

4x + 3y ≤ 900, 2x + y ≤ 400, 5x + 7y ≤ 1750, 2
1
x ≥ 0, y ≥ 0 Yt 5 24(2 2 )t 1 4
1
(iii) (0, 0), (0, 250), (200, 0), (150, 100),
10 4
80 , 192 1 2 3 4 5 t
13 13
(iv) 81 cartons of Exotic and 192 cartons of
Floridian Figure S9.1

Yt
Chapter 9 18

Section 9.1 16
Yt 5 (22)t 1 3
Practice Problems 14

1 (1) (a) 1, 3, 9, 27; 3t 12

t
7, 21, 63, 189; 7(3 )
(b)
10
A, 3A, 9A, 27A; A(3t )
(c)
t 8
1 1 1 1
(2) (a) 1,  ,  ,  ;
2 4 8 2 6
t
1 1 1 1 4
7, 7
(b) , 7  , 7  ,7
2 4 8 2
2
t
1 1 1 1
A, A 
(c) , A  , A  , A  
2 4 8 2 1 2 3 4 5 t
22
A, Ab, Ab2, Ab3; A(bt )
(3)
t 24
1
2 (a) Y t 5 24 2 14
2
Figure S9.2
From the staircase diagram shown in Figure S9.1,
we see that Yt oscillates about Yt = 4. Moreover, 3 Yt = 500(0.9)t + 6000; stable.
as t increases, these oscillations damp down and t
1
Yt converges to 4. Oscillatory convergence can be 4 Pt 5 2 1 10
expected for any solution. 2

Yt = A(bt) + PS 1
t

Qt 5 22 2 12
when −1 < b < 0. 2
Yt = (−2)t + 3. From Figure S9.2, we see that Yt
(b) The system is stable.
oscillates about 3 and that these oscillations
5 Pt = −12(−1.5)t + 20
explode with increasing t. Oscillatory divergence
can be expected for any solution Qt = 24(−1.5)t + 40

Yt = A(bt ) + PS The system is unstable.

when b < −1.

720 ANSWERS

Exercise 9.1 1
t

2 (a) Yt 5 27 1 8; uniform convergence to 8.

1 (a) Y0 = 0, Y1 = 2 = 2 × 1, 4
Y2 = 4 = 2 × 2, Y3 = 6 = 2 × 3,  .  .  . Yt = (−4)t + 1; oscillatory divergence.
(b)
Hence Yt = 2t and displays uniform divergence as 3 Yt = 500(0.8t ) + 2500; stable.
shown in Figure S9.3. 4 Pt = 10(−0.5)t + 60; stable.
Y0 = 4, Y1 = 2, Y2 = 4, Y3 = 2,  .  .  .
(b) 5 1075
So Yt is 4 when t is even and 2 when t is odd. 6 Substitute assumptions (1) and (2) into (3) to get
Hence Yt oscillates with equal oscillations as
b(Yt − Yt−1) = aYt
shown in Figure S9.4.
which rearranges as
Y0 = 3, Y1 = 3, Y2 = 3, Y3 = 3,  .  .  .
(c)
Hence Yt = 3 for all t and remains fixed at this b
Yt 5 Y
value. b 2 a t21
with solution
t
Yt b
Yt 5 Y
8 b2a 0

If a = 0.1 and b = 1.4 then Yt = (1.08)tY0.

7
As t increases, Yt diverges uniformly, so unstable.
6
Exercise 9.1*

5 1 uniform convergence
2 (a) −1, 1/2, 2, −1; 1/2
4
7, 11, 15, 19; Yt = 4t + 3
(b)
c(1 2 bt)
3 3 Y t 5 1 abt
12 b
Yt 5 2t
2 4 Yt = 4000 + 400t, so unstable
5 (a) aPt−1 − b = −cPt + d
1 a b1d
2cPt 5 aPt21 2 (b 1 d) Pt 5 2 Pt21 1
c c
0 1 2 3 4 5 t Pt21 5 Pt 5 D
(b)
aD b 1 d
D52 1  (a 1 c)D 5 b 1 d
c c
Figure S9.3
b1d
 D 5
a1c
Yt t
a b1d
4 Pt 5 A 2 1
c a1c
a,c
(c)
3
b1d
P5
2 a1c

4 if t is even b1d a(b 1 d) 2 b(a 1 c) ad 2 bc

1 Yt 5
Q5a 2b 5 5
a1c a1c a1c
2 if t is odd

1 2 3 4 5 t 6 Pt = (1 − ae − ce)Pt−1 + e(b+d)

Figure S9.4
 ANSWERS  721

4 P(t) = −e−t + 2

7
rA QS(t) = −2e−t + 2
2N
r QD(t) = e−t + 2
1200 1 2 1 1
1200 All three functions involve a negative exponential, so
the system is stable.
8 (a) CF = A(0.1) t

PS = 6(0.6)t
(b) Exercise 9.2
Yt = A(0.1)t + 6(0.6)t, Yt = 3(0.1)t + 6(0.6)t
(c) 1 (a) t2 + 7  (b) −1/3e−3t + 1/3  (c) 1/3t3 + 3/2t2 − 5t + 1
stable
(d) 2 (a) −20e−3t + 60; starting at 40, y(t) increases
9 (a) CF = A(0.2) t uniformly to 60.
PS = t + 6
(b) (b) 20e−3t + 60; starting at 80, y(t) decreases
uniformly to 60.
Yt = A(0.2)t + t + 6, Yt = 4(0.2)t + t + 6
(c)
(c) 60; y(t) remains at the equilibrium level of 60 for
unstable
(d)
all time.
Section 9.2 3 $202.04
4 Y(t) = 5000e−0.05t + 10000; stable.
Practice Problems
5 Y(t) = 2000e0.15t − 1800; unstable.
1 (a) y = 6e4t
6 P(t) = −e−2.5t + 2; QS(t) = −3e−2.5t + 5; QD(t) =
y = 2e−5t
(b) 2e−2.5t + 5; stable.
2 y(t) = 10e + 20
3t
7 (a) N = Ae−kt
A graph of y against t is sketched in Figure S9.5,
which indicates that y(t) rapidly diverges. We would Exercise 9.2*
expect divergence to occur for any solution 1 t 3 2 8 t 1 4
y(t) = Ae + D (A ≠ 0)
mt
1
2 (23 1 4e22.4t)
when m > 0. 3
continuous
3 (a) S = 4000e0.06t (b)
y 4 y = 14 − 4e−2t; graph has a y-intercept of 10,
increases and approaches 14.
5 1200
6 (a) Y = 4400e−0.04t + 3600
S = 880e−0.04t + 300
(b)

y(t) 5 10e3t 1 20 t = 52; dY/dt = −22

(c)
7 0

30 8 Substitute assumptions (1) and (3) into (2) to get

dY
b 5 aY
dt
t which rearranges as
dY a
5 Y
Figure S9.5 dt b
with solution
3 Y(t) = −2000e−0.01t + 4000 Y(t) = Y(0)e(a/b)t
This system is stable because the complementary This is unstable because a/b > 0.
function is a negative exponential and so Y(t)
converges to its equilibrium value of 4000 as t
increases.
722 ANSWERS

9 (b) The graph is sketched in Figure S9.6. Examination Questions

1 P = 5.5, Q = 23; 2.5(−1.5)t + 5.5; oscillatory
S divergence
M
2 (a) y 5 8 x 1 2x 3 2 141

N = 5 000 000e0.015t; 46.2 years

(b) 
G = 500e−0.05t
3 (a) 
(b)  (i)  $370 billion
(ii) 27.7
Y2 = 5360, C2 = 4360
4 (a) 
Yt = 0.8Yt−1 + 1200
(b) 
C
Yt = 6000 − 1000(0.8)t
(c) 
Ct = 5000 − 1000(0.8)t; 7
(e) 
t Y(t) = 7000 − 5000e−0.12t; negative exponential so
5 (a) 
Y(t) converges at t increases
Figure S9.6  The graph of Y against t is sketched in Figure
(b) 
S9.7
As t S ∞, S(t) S M
(c) 3164 Y
7000
10 The right-hand side is
c
my 1 c 5 m Aemt 2 1c
m

5 Amemt 2 c 1 c 5 Amemt
which we recognise as the derivative of y(t).
2000
11 (a) Ae−2t
e3t
(b)
Ae−2t + e3t; 6e−2t + e3t
(c) t

unstable
(d)
.
Figure S9.7
12 (a) Ae−t
4t − 7
(b)
16.4
(c) 
y = Ae−t + 4t − 7; y = 8e−t + 4t − 7
(c)
C(t) = 6,200 − 4,000e−0.12t
(d) 
unstable
(d)
a 2 2 20.1a t 1 12
Multiple Choice Questions
6 Pt 5 ; 0 < a < 10; a = 2.5
1 1 0.1a
1  E 2  B 3  C
4  D 5  B 6  A
7  B 8  C 9  B
10  E