By A.W. PEARSON' 'K. HOLDEN

ISBN-10: 0333576500

ISBN-13: 9780333576502

ISBN-10: 1349223573

ISBN-13: 9781349223572

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Extra resources for Introductory Mathematics for Economics and Business

Example text

The price received by the supplier p' is now p' = p- 3 since 3 is paid to the government in tax. The new supply function is therefore qs = -20 + lOp' = - 20 + lO(p - 3) =-50+ lOp The effect of the tax is to change the intercept term of the supply function from -20 to -50. The demand curve is unaffected. The new equilibrium is when qs = qd or -50+ 10p 1 = 100- 5p 1 or 15p 1 = 150 giving p 1 = 10 and q 1 = 50 The equilibrium has changed from Po = 8, q0 = 60 to p 1 = 10, q 1 = 50 and so the new price is higher and the quantity is lower.

Solve the following simultaneous equations: + 6y- 2z = 4 3x + 3y- z = 2 X+ 4y- Z = 3 (a) 6x (b) 2x + 2y- 3z =4 6x- 4y- 5z = 9 x+ y+ z=2 6. If the supply and demand equations for a product are 41 Linear Equations q' =SOp- 40 qd = 480- 15p determine the supplier's revenue at the equilibrium point. A flat-rate tax of 4 per unit is imposed. What effect does this have on the supplier's revenue? 7. 2Y yd T (a) If G = 25, determine the equilibrium level of national income and whether there is a budget deficit.

The demand function is qd = 170- 5p (a) Determine the equilibrium price and quantity and sketch the demand and supply equations. (b) If the demand equation changes to qd = 180 -lOp what is the new equilibrium point? 5. Solve the following simultaneous equations: + 6y- 2z = 4 3x + 3y- z = 2 X+ 4y- Z = 3 (a) 6x (b) 2x + 2y- 3z =4 6x- 4y- 5z = 9 x+ y+ z=2 6. If the supply and demand equations for a product are 41 Linear Equations q' =SOp- 40 qd = 480- 15p determine the supplier's revenue at the equilibrium point.