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Final Test 10-7-2024 def (1)

The document outlines the structure and rules for a resit exam in Mathematics 2 for Economics at the University of Amsterdam. It includes multiple problems related to production functions, difference equations, matrix operations, and dynamic economic models, each with specific tasks and points assigned. Students are required to provide mathematical explanations for their answers and adhere to strict guidelines regarding materials and tools allowed during the exam.

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Женя Зинченко
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0 views

Final Test 10-7-2024 def (1)

The document outlines the structure and rules for a resit exam in Mathematics 2 for Economics at the University of Amsterdam. It includes multiple problems related to production functions, difference equations, matrix operations, and dynamic economic models, each with specific tasks and points assigned. Students are required to provide mathematical explanations for their answers and adhere to strict guidelines regarding materials and tools allowed during the exam.

Uploaded by

Женя Зинченко
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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University of Amsterdam Resit Exam Mathematics 2 for Economics

Faculty of Economics and Business 10 July 2024


Amsterdam School of Economics Time: 09:00–12:00 hours
Section of Quantitative Economics
You may only use the formula sheet handed out with this examination.
You are not allowed to use a book or syllabus.
You are not allowed to use a graphical or programmable calculator or mobile phone.
Answers without adequate mathematical explanation are graded with 0 points.
Errors in denotation lead to subtraction of points.

Problem 1 (28 = 8 + 5 + 5 + 5 + 5 pts)

Let q be the production level, C the costs, K the amount of capital, L the amount of labor, q0 a given
amount of production, C0 a given amount of costs, PK the price of capital, PL the price of labor.
The production function is given by: q ( K , L ) = e 2 K + L
.
, L) PK K + PL L .
The cost function is given by: C ( K=
Furthermore K , L, C0 , PK , PL > 0 and q0 > 1. You may assume that for an isoquant: q0 = e 2 K + L
.

a) Derive an explicit formula of the isoquant L = g ( K ) , give the domain and show that the isoquants are
decreasing in a convex way.
b) Find RTS ( K for L ) and compute the elasticity of substitution 𝜎𝜎.
PK C0
c) Show that Lunc = and find the share of capital sK .
PL ( 4 PL + PK )
−1 −1 1 α
( PK , PL , C0 ) e K L 0 ( 4 L K ) and find the value of α.
P P 2C P +P
2 2
d) Show
= that qmax V=
e) Find the Lagrange multiplier λ ( PK , PL , q0 ) (the shadow price) of the primal problem (if you couldn’t
solve part d), then you can express λ in terms of α , PK , PL and q0 ).

Problem 2 (20 = 6 + 9 + 5 pts)


 X t   a11 a12   X t −1   b1 
a) Given is the system of difference equations:
=     +  .
 Yt   a21 a22   Yt −1   b2 

X  t  1 t  2   200 
The general solution of this system is given by:  t  =c1 ( 0.6 )   + c2 ( 0.4 )   +  .
 Yt   1  1   100 

a a  b 
Find the elements of the matrix A =  11 12  and of the vector  1  .
 a21 a22   b2 

 At   0.2 0.45   At −1  115   A   205 


Given is the system of difference equations:
=    ⋅ +  and  0  
, with a ∈ (−∞, ∞)= .
 Bt   a 0.8   Bt −1   60   B0   120 

b) Find for a = − 0.2 the solution of the system with the given initial state.
A 
c) Write down the characteristic equation and find the value(s) of a for which lim  t  exists.
t →∞ B
 t
Problem 3 ( 23 = 5 + 6 + 4 + 8 pts)

 2 1 3  2
 
    
Let matrix A be given by A   1 1 p  4  and vector y  3 .
   
2p  4 2 2p  2  b 

a) Show that A  2p 2  12p  16 and determine 21 A2 for p   1 .


 
b) Take p   1 . Compute A1 and solve A  x  y for p   1 .
c) Compute rank(A) for p   1 and for p   4 .
 
d) Find for which value(s) of p and b the system of linear equations A  x  y has infinitely many solutions,
and find those solutions.

Problem 4 (14 = 5 + 4 + 5 pts)


0.7 0.1 0.1 0   90 000 
 0.1 0.9 0.1 0.1  
     100 000 
Given is the system xt = Mxt −1 with M = and x0 = .
 0 0 0.6 0.4   50 000 
   
 0.2 0 0.2 0.5  40 000 
M = 0.144

a) Compute lim xt .
t →∞

1 
 
 0
b) Show that v = is an eigenvector of the matrix M and compute the corresponding eigenvalue λ and
b 
 
3
the value of b.
c) Find all eigenvalues of the matrix M.

Problem 5 (15 = 6 + 9 pts)


D 1000 ( 14 ) − 0.8 Pt + 600
t
= t


a) Given is the dynamic demand-supply model:  St = 200 ( 14 ) + 0.6 Pt −1 + 320 ,
t
P0 = 400

 St = Dt
Dt is the demand, St is the supply and Pt is the price in period t.
Solve the system by finding an explicit formula for Pt as a function of t.

Ct = 0.75Yt

b) Given is the dynamic macro-economic model:  I t = 13 ( Ct −1 − Ct − 2 ) + 250t + 100
Y= C + I
 t t t

Ct is the national consumption, I t is the national investments and Yt is the national income in period t.

Show that Yt − Yt −1 + Yt − 2 =pt + q (find p and q yourself) and find a formula for Yt , with initial conditions
Y0 = 1200 and Y1 = 1500 .

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