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Assignment_2_Narrative_Questions__Spring_2025_

The document outlines a series of mathematical assignments related to economics, including solving systems of equations using determinants and Cramer's rule, analyzing the Keynesian national-income model, and working with input-output models in various sectors. It also includes tasks on linear dependence and independence of vectors, as well as calculating input requirements for firms producing multiple outputs. Each question requires the application of mathematical concepts to derive solutions and interpretations relevant to economic models.

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2 views

Assignment_2_Narrative_Questions__Spring_2025_

The document outlines a series of mathematical assignments related to economics, including solving systems of equations using determinants and Cramer's rule, analyzing the Keynesian national-income model, and working with input-output models in various sectors. It also includes tasks on linear dependence and independence of vectors, as well as calculating input requirements for firms producing multiple outputs. Each question requires the application of mathematical concepts to derive solutions and interpretations relevant to economic models.

Uploaded by

godwithkse
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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Assignment 2 Narrative Questions

Mathematics for Economics 1 - Spring 2025

Not for submission

1. Use determinants to find all values of k for which the following system has a
unique solution, and for those cases, use Cramer’s rule to compute the solution.

3x1 + 3x2 + x3 = 1
4x1 + kx2 + 2x3 = 2
2kx1 + 2kx2 + kx3 = 1

2. Consider the basic Keynesian national-income model below.


Y = C + I0 + G0
C = a + b(Y − T )
T = d + tY,
where a > 0, d > 0, 0 < b < 1 and 0 < t < 1
Solve for Y , C, and T using an inverse matrix. What condition should be
satisfied to guarantee the existence of the inverse matrix in your solution?

3. Find a nonsingular 2 × 2 matrix A such that

A3 = A2 B − 3A2 ,
where
 
4 1
B= .
2 6
Verify that the matrix A you obtained is actually a nonsingular matrix.

4. (a) Show that if S = {v1, v2, v3} is a linearly dependent set of vectors in Rn ,
then so is the set {v1, v2, v3, v} for every vector v in Rn .

(b) Show that if S = {v1, v2, v3} is a linearly independent set of vectors in
Rn , then so is every nonempty subset of S.

1
5. Consider the input-output model discussed in class.

The model consists of three industries: an agricultural sector (sector A), a


manufacturing sector (sector M), and a textile sector (sector T).

To produce one unit of agricultural output, sector A requires 0.1 of its own
output, 0.6 of output in sector M and 0.4 of output in sector T. To produce one
unit of manufacturing output, sector M requires 0.3 of output in sector A, 0.2
of its own output, and 0.3 of output in sector T. To produce one unit of textile
output, sector T requires 0.4 of output in sector A, 0.1 of output in sector M,
and 0.2 of its own output.

Final demands by consumers amount to 1930, 3860, and 5790 for goods from
the agriculture, manufacturing, and textile sector, respectively. Find the equi-
librium quantities of output for the three sectors.

6. Consider a firm that produces two types of outputs, y1 and y2 , with two inputs,
z1 and z2 . Let aij denote the amount of input i required to produce 1 unit
of output j. Then the 2-by-2 matrix A = [aij ] describes what is known as
the input-requirements matrix. To be specific, assume that the firm’s input
requirement matrix is given by
 
3 5
A = .
2 8

(a) If the firm plans to produce


   
y1 6
y = = ,
y2 9
i.e., 6 units of output 1 and 9 units of output 2, then how much of z1 and
z2 will be required?

(b) Let the prices of inputs be $7 per unit and $10 per unit, respectively, so
that  
7
w =
10
is an input price vector. What is the interpretation of wT Ay?

2
7. Consider a firm that produces two types of outputs, y1 and y2 , with two inputs,
z1 and z2 . Let aij denote the amount of input i required to produce 1 unit
of output j. Then the 2-by-2 matrix A = [aij ] describes what is known as
the input-requirements matrix. To be specific, assume that the firm’s input
requirement matrix is given by
 
2 7
A = .
5 6

(a) If the firm plans to produce


   
y1 9
y = = ,
y2 8
i.e., 9 units of output 1 and 8 units of output 2, then how much of z1 and
z2 will be required?

(b) Let the prices of inputs be $7 per unit and $10 per unit, respectively, so
that  
7
w =
10
is an input price vector. What is the interpretation of wT Ay?

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