ANSWERS TO TECHNICAL PROBLEMS eg Meme, Pi, oe Moa Expt cos of 5000 pr eat. The Sm foros ‘8000 pr je oben he hee cmp Inpiot of 5.0 er ye. The ome eras ‘ing $500 (= 10 SS sally a ting the rv ase te money ae a vein Hanning turn Imps on of $2 lon por yor. The wae ‘ul al the baling and inet the proce {eam i percent sal. The wre ares 'Smilon (10x 0 eer arma tmutpa the computes programas S50 pe hour {orth urs Sofie rep $lon (C350 rH he he programe [No cast The icnerntor as er market vale snc oto fn pays anything fo hae $0 {hereisrhng given phy heme xp he Itinertran epee Ne Shuts wou gies kl foie sso s7ouo $1000 sso 9500 “$500 snss98905 sszsosz rol ndependent of dessins in ther Hine pede lupe ‘Shp 2 Dam Spo rt ini 00 ants of goad can ol ach moth Mery. fyand Nae allsmaltoncuay oa a J 1-4. he slope parameter or a gost en pice ‘moat be mopave cts thew of dead Sips tat quant demand and pce os fos are ively elt | «5 TheslopepurmteronM(-On) eats tt ‘Hicrte average hol acme a ‘ott wl dove also go Ay 6 per month (Ora $1000 Incr nt wl de ‘Bene by aa per monn) Cond A ian iis potest depen 4 Complements The slope parameter on Pix Sepals AS ices abe ce of good &, ty del fad i dco ye These te slap pramatrs should al epost the snc sch ofthe vanbles vanes ily (Gather tan tery) ith quant dane, | Fortes note tthe sop arte) ‘nt ett ange ise va of the tendo £6004) —ous5 000) — 1240) S165) + 6525) + 152000) = 24790 of good A per month 1 Q.=Aino~ 16? + 07820000 +3060) =8an0 = 16+ 22500 + 1500 = 32000167 Interop parameter If pce were, consumers ‘woul take 2.00 ats pod torte Sipe preter AST ines pre lle contin rena conser buy 16 eter nl per penal he flowing ch plots prc on the vetenl | rand qumety demande on the hot Se Doma ea tag Lie hat eect tha Ficus S200 andthe quantity demanded Sr Sn ta 75706 Anew tenia Pens 0 ae Gy When P= $1.00, = s2qm0 — 14200) = {Wo st Wen P= 6150, 8/0 6 P= 200 (1/160, or? = 2000 — 006250, T ‘uate demand pice P~ 2000-05240, ‘Sha P= $0 Tre msximom pecs onal yt bay 200 npr Psd 950 (i Feraprice of he amu aout he a ‘umes ing and ale tay 3 no {ihe mma pre omamere wl py fr as {@.~ 320108 0582009 ~ 2aa00) 13200 100+ 24m 4800 Whenever he rc ofa god (P changes nity ‘enone (2) cng in opp ct, Ts ‘sults a movement lang agen dean cre, ‘xchange gant deranded ct change Sakon nthe ge by rene am Ao ‘When nya fhe ve demand ting varies ‘hanger insu he demand carve ere ‘eur or tghward he five derandhfng vr tbls that eae demand fo tae) omeamer Income hi pie a reed gods) (3) pee ‘pecans senso tastes (9) (9) the Immo af enn (0) ge den ck ‘in beeased oly by Change eo efi ‘ran raha nthe iu by tee Do No eangein dc. A change rice mes change qty demande whichis ove Demand incenes, Demand decrees ForP AS nce in th pice of con fee const wil nerane quantity spl bySmipe pod, Fe sa neresein te pie of hey ip “heron cing proces dent ell ‘owas qunnty suppl by 2 wt erp oe fone mor fi eins pang the com oy al ter thing el ont he quan $s fh cry il ny .=60 50" 149% +1020) 60+ 57160 +20» 500 +5 The skate pots peice onthe vera! ais and qian supped onthe arora si Sepply Eats line that neo pic a Stand he quantity sep asa 8a Onythesegnenfestplyie a asoveInsrcept of he supply cre, $64, ound by ‘Shing 0." Wnt sppy eon aod sg, Foe Sos the price nce 16 alos thatthe peel which ms wil at pra Inge comments 4) "20 + 50) = 6 ant = 109 +5500 = 148 To deco the inverse supply fect, ke the Supply eeuton prt ad save lgbrely lor asalincon of. Theives spe ons 168-0200 Supy pce ort us Poa +2060) ~ The rim pce Drodcer wil ace to pradace unt er od 690 (0) Fora pce of 25, the main amount pro ces ling upp 500 te ‘numa pace pres wl ace pre Santee 2-304 am, 4b Q’= 40+ 20, ‘The yap shown reas date ie «Sc the coetfclent oP native (32) an increas the pr ofthe lta god renal ina raucion i the quantity spp al tse "hangs constant Throne tea ee “Tw coffee om each ofthe vasa in the Supp reat an ierete allo PA incase pce esl in 20 more its ‘ing upped al ey gs nig cost _ nove Tiles 707 2 AS incre the pie fae esl 10 fewer uns ng wep a te ngs ma epotet faite in 8 mare useing procter ths emg costo 1; AS cease In the pice of elite god ‘oul in ower ng proc or ings emg ct 112A icrene i the expected tute pce of 2 ol sn 0 fone ut of ang pd ‘nthe avert ps al ther ings emi The addin of ne mre Gm sali Snore lt btn produced all her Hg rena 10, Whenever the rc of» god (P) hangs guntiy ‘pi (0) changes in these ection This re alsin a movement longa given suppiy curve A Change in sant supped se to change in P ‘Schown nthe guys movement rah ‘When ay on of he fee sappy iting varies hanger al esp cues ea regard The ve py aing arabes at se upp ts ae) ecko np fc (Fp of gods lated In podton (8), price expecintons (Pana (he mamber ‘tons producing te goo (A hag n ap ‘eich an bcs ony a changes one of ese Hive wre shown nthe gre Sy Stos' orsSar + cane ovaniy sop Sapna Sopp dees Supply creases Supply ecesesin the on! pero as manag SPR some cus ott forsale he ghee engi te ure ed Sopp ices spp 500 ean 7300 50 20 aon ‘neil 0, ~ 0, $050 AP = 175 +10, inafe= S75 snd Q,= 20 ‘When P= #275, 0,= 50~ 9025) = 2 and 0. = na = 1 ee a Spite poe dcesning gy Sena tt Mes amty spp. cours a Mlapeace tad rnc 75 per ch ‘finden un sped hen? = $4250, 16nd, ~ 25 there ea ‘ipso uss fee omer pe 8 tebe acing ud i in nl el eae pe Bi ‘requ, 39~ 4? = 175 +10 hs Bsawoe. ‘Newnan, 8 — 80 = a9 10% us Sto, 0. Se demand nd spy tes $20 $2250, been the demand prea 200 units Sth manu pce te Bye woul ao ‘Eran unter mange ethout i S125. Commer supe (thee f he raped ‘lw dona und te $0020 uns 59200 ite ~ 200525) ~ $750. Pre up (5) he nea af rape ‘owe Stan above py md 200 PS 200 wis ~20mn (3-575) ~ 2500 ‘750m, bose consumer spas measures he ‘pin otbebuyers of 20 ti 22.0, becnse pradcer surplus measures the Seen to esa 20 rt {30/08 el sere saan: c5 e400 nis = 24000 $5 ~ se 80000 PS 000 nite $4000 ‘15-9000, $40 1070+ $300, en Sc The crs in demand est ances in toh rand, ‘The incense n demand es an nee in both Frade ins dcranein ‘The decree in damand ests in decree in orn Pand ‘eden sappy esas in an nce in Ila cicene a Or otha ‘The decease man esl eres in fh Prange The incremensuply rule ina decrease nF, edon pease incase n By Hl ewer Foul eause etree n fan cease Gy See both ‘ewe cca ssn nly pushed” [te same ineton by events Tere Oy I pret tae ut hang i, side mieten here gue 210 ‘yl vent wold casa dacensein Pad 1 ecrns mQ. By Hal event e would cate Siinmens in Pad acne a Or ince ath anor sialtenseny, nl Gs posbel™ inthe some irctonby toh events. Tate Oy prea al bu change ste ‘elctecnse ects ponte Fens Tis the unto presented ane D ‘ger? 10 Dy fal and change in Qian See PhgeBot gare 10 | |ns 4 ® nye ser and chang iQ indtrinte So ‘Goa Xs normal Beas wh income (4) in ‘est ler see stn ny ‘fone () ern he fit on M2 peste) ‘Conds X and ore substan whe he Pome th elated god (ncaa or Ene ons, quantity demanded (2) i trees (he ftom Pp). 1, =€0~ 20 0010.00) + Fam) =n 2° SO 2F = 60+ 1, = 31 = ‘Now 0, ~60~ 27+ aap) +7299 = 7a0— 2PP,= sidandQe=sante Now 0, = 60 ~ 2° 00140000) +711) = 555 2P'Fe= Ssband = em PSS and 0, = 4 ui Sore: 5900| 1900 no ~ 41.00 spi 150 [Link] 0, = 0 ui, ‘Aor 0 (= 40 ~ 20 ts ozs ‘Arie oro $50 hase ef an mre pie fa pet since mart pice Gl nents $0 ‘Aloe pice of $70 rents na surplus o 20 500 ani P= $05 and = 50 P= $85and = 8s Neil Ai Op os Consent amit bjt he ct co Stat fhe ast The she vats ae typ of PCs. The obj ep man ‘ile sta prods “An ueontan atinzation ren wih he ‘hici ft the mort prot om avert ing The che verbs eth amicus spend ‘seach fhe 1 constined minimization poem with the tomabing the qua, The cota he qt, ‘The choke vas are the levels of he ee Inputs postive upward $20. The slope ofthe tangle at paint ses ‘arate of $0 pe 00 un inesenacty the sap os tangent 3339 ‘er nitchange n= ATE © 120/10), lees 58.032; sane dey 1 Atthe maxim or minimum pa an acure, iesiped acme eS Nh te spe '$20,The slope ofthe angen ine at point staat of 0 por 10 tinea ai Iya theslope we ung ine pot ‘50 pe ort change A i 4 dees $52; 2: seme ety 4 ater: MMB 1 TRTCNB, patie = MBN Mca = Me Ne g ane aes 85 poems A mw we 0 $0 $0 $0 1 8 oF 8 88 2 6 w # » © 2 eae me 5m 0 8 2 %70. Anew een Pans ‘Nor = $85, Me optimal vel of ott, by de Pilon ti eel th he pretest pile net tm ene ce gern For unconiined optimization problems wlth {cv any level fay ot be possible ‘ijt te posecly hs lel rere B= MG: Fieve ating to the pe whee ME os A malo proce masa re Feet an th example. Atte fatty Nis wero Many St apse (= 810310, ‘Spar (~ $20"— $12}. The correct rue to follow for dec che vores eto nctesce Aun the to ight eve att ech or mc Me Me ac +o ou wm) ts be te 3 7 Wo uw oY we era ‘dng the $4 fs cont canes tot cst ie ipstir cy bn ofc Ths a causes et ett io tae et fs. Marin ot si afectel nay way by a Ihe ue cot of 2 The aso MC pre (SE these ar Teck Prin 6 ‘Toepialee fscivity 3ot ain Tech Tei lem 6 Soe MB and MC ar ncn pang ed ot the opti act evel ‘ding or changing tbe anu of fe os (este aoc Mn an ange ‘othr ftom te opin eel fac, ‘ren ough higher owe) ed ists case ne esr Ace mind tA = 5, no the op ‘level acti tn genera i 808 toespet neg cotta be mini tthe op th evel ey bens changes in average {etl st ret bonis th Sty level ‘anges Averys soto He fe es ont ‘nator ding ‘The S10 le fo sn sak cont sinc it en teen pid and Cot be recovered no ties at doesn made sow wearing the cont level of sty Sonik costs ke acct sn verge cnt ae lean For fing 1 Campo the marginal beni pe dalla for each Sprint for Jane, MB/P = 6/200 ~ 9 fr Jo Hy pi ror 4/7 00/100 ‘Thus fon rks Gat Jos al Joe ee or od 9. grater than festa 6 MBP, MBI, 10, Always compere B/P,and MEF A aitreducn in Bes at by 50, whch anpunhase2 unis nS Tote al ‘pene by ad (" A MB = 2% 30) ~ 00 (abe ny= 1 40) = 20. 4 tment, /P, = Mi) en 20/2 TBS" Mba st ase 50. 1 a 10-4270 38) = #96 {The combination 1X, 4Y, 32 copia hen Income 58 At Ts combination Ml, = MMuoy ~ MUy/Py Tae combination 2X, 2, 12 nt pina cae MP > MP ~ uisPs The deco maker shuld ngage nor tf att Yan ewer wo 2 taxed,cope oe te ea lt has Sing rei 0 Siw 1 When nome is $3, the optinal combination 155K 5,42 With two are dll Yo spend (rcome ~ $3) th econ paker can eh i= ‘Ses acy by untae “Two more dels opet on acy X eras ncrby 9 (nS het er alae Sent onset Y inrsaes Bett by only ‘hecplinal combina af setter 3 YA 12. The cmbirnon 3X, 27 maninizes total benefit bjt toabnget constant of 28 6, Tl bonfitf 1,27 42 372+ $190, earn Taal Dr oF 5 $8 Es sn, 13, Compare bP, and MB SM /P, = 0/10 = > MPs = 20/90 = 9, ‘Ones Hest 30 Oneal wi ‘Ande (1/3600 9 Ct lb 610 S338 1 Since Py = Fim elim, where M8? = MBq/t 88 ue cal hee ton atin ean 2 Repremion aati chooses parameter vals Ate linet a partule dts tebe fess ‘then the parma alae ine ww he ‘une es ee te mae “ee ues” Tests for state sgiscance mt low eins hone prams eas the erates ames {teat rts fat ee nt ty eben ‘othe Wue value a he parent Testing fo sta "alse allows a sare to deere eater aetna fr enough aay er {once tha the te wie fhe pret at ale 4.2 Comet he small ithe smaller he dee ‘Sen ofthe parameter etinate oun fe ‘rivor ee Gr th ato (= 1/5, indeed age the Slr the anda ne soso Tati atlas 710 ™ esn-20e4 Yeu 2492 > 2064.0 he tint esgic at (022.452 ithe cial for 8 gine co ‘with anya 5 pret chance of bing wrong, {ie making Type leon ‘Yeu canbe peat tat fb actly a Theat wl pt eject te hyphal b= 8 (Gey wil alee ypeT an ‘he nigalicance level pts the probably of making Type Leor while the conence evel get probity om making’ Type rr hey esate same ty ee Kg sere set he The cll for ~ k= 10—2-= 8 degre of fred a he D1 it sition 3358 ‘het are act = 294 Sincetneptive [|= |-294|= 3255 Biot etl ac Ford the oact level of sgicance is 0002, ‘wich nsane tee oly #029 pacet cance {hata =O witha toss age as 423 For the ‘Su! guia 04187 hh mene thee tly a B57 percent chancetiat Deh “Teer Ptah (= Mand(= 8) Agee of erm othe 1 oct igiance ler 1126 Smee Faubeic or ethan 1125 te oneal equation st stately i iat he erent ee of sean The rae for the Pts OTD hayes at the fenton ssl sign ae 18 pe Yes 2540-350 105225, 35025 percent ofthe varition In expand y the egesion eatin Ford! =24> 2.00% sty ica For bt =278> 200 antalya712 Anos nial Plone The eat gcc lvl fe #6 0.05, and IMecaatagntence lor 008 Tho St conde eves aro 0984 (34 pret) sd {69148 percent respecte As athe percent inden ete ucts th ogee fonder smocated wihfand hee = 0748 el tha 7482 prot of the ta ‘ariatonin repaint sgn ep {am by van X and 28s perc of ‘he vacaionin Yeu Fo 1n2- 1 = Landy =F 28 nat 295 pr cnt andes Wve hcl act Fi 28 ‘he tegesson equations ttl spent Tecate (8251s er an he Keates ff The pale te tee "han 01, so heresy cane ht he Fat ismistakeniy indting sfeance or he ‘qustonass whole S221 + as7100) = asst ‘hai + aM = 3526 Ina male erin ve he coco Ue expan verals dona menu the por Ss ett ei yak {ako ung in Ys fat epanatory vrale ‘hanes ll ter exlnatory oe inn “Th ttrment oct te i as set emair an he nur of dg of fo [fee Sth ableton he x ‘shen Y= foal cures paneer es) 287 Fort = 151 < 2457 statist perce eve exact iniaee~ 118 pret Fact ~ 609 > 245% tail sgt 2 penen lov: oat igi Of percent or f= [248] > 2457 satiny hilt at 2 percent level exc sigaticanae = {percent Ford 1~ 846 > 2457 sail sgn at 2 pret ee eat gine = il pret 3179 pect of variation Ris expe bythe ‘mode 21 percent of he saration fw Tpentar (Sl Sinetie ts 4645 the real pron equation telly ph 126-2200) ~ 4168) + 6318) ~ 7. 126+ 200 — 41 + 1630) = 126 = 200 — Ssumx + nuTTI6 The crea tale for 15 (= 8 B= 18 — 3) fii pt fri alus a the endo the to Se these ation 837, 28a ee rath ‘Social tn heel at 28) al “The vale fore 0425, There th here teas pee (= oe 00) cance at he tha waveofe is even hough = Daria 4951 (= 291060 ~ SRADIX + 00712685, ‘Thecshal for 60 (= 63 ~3) apes of fewdom an 23 pore eve of signees 200, Fein 0] 2 acy For but = 258 > 200 ttaly sigan ‘actin = 123 pean, For 1 = 306 > 2100; tiscali ‘ac nputeane = 09 prere, redo and perentend opens 318 Terao! S02 saree 1S othe over gata tonto quires wfc este sipaon ‘hemos fis the dts wel 815 pet fhe ‘aa varaten inin¥iexpaie by feel hi AS pent oan ead Shc Ina esate tobe LK, soul to one aes "Y= as, 5099" = 245 upd inated claticty f = Hak timote styofS = e485 =OO lp 5 ey ine 4 = 2 Ths P= and = 0. Fo Ciprin Wicabewatteahs10 1. Prefers Chaise Coke regal Peps $20 and 1D = 0) whch ans — 50 3 Canty tome he ea evince SNM ‘oe He might fr the ers butt Given te vera oszotl intercepts of rae ope highs pie badge MN fs at incre slg NC « Shelly pfs de Rea bec sheiewi- Ean eal byes f= Fear Gen ingtopay the hier pie = 0 and P= 40, nome a be ated 4. Cannot tay for sure, Can sy, however, that either a two san way => 30 Tame’ ad Jones pdr ate ter id Slider =¥3 $09 $140 Sry, or badge ference betveen brands af eiar—a0 ey ght aw EM =X yor 0 Piven Py 0 Mipmcointocioeer dink or itey preety and P.~8then tome ah can od ‘obs thay chose heros M= 53 $40 = 6aDoe M= 10% 30 2.4, Any othethoe ements could bet sn. 1. mot; Bundle Eh he same amount of X(2DN) 7 a 50 S10 S00 Totmore than bundle BOY water an OY ADP, ~ SM hs, = $1350 sine the consumer ot sat, so the cone, ForL21259K + 10Y WO, or Y 80 — 125K fumer mus reer bundle Eto bundle B- Sine. The ‘onaumer wl chose 30 ts of X and Preerncesarewanive E> 5.B~ [Link] Seat wha indirencecane sang En bret E> 4 to budget line 1 No other combitn os mae: BundleChis more Yond hesameameunt 0) paes mane an Fea sitasbundle 1 Atte opal ce, MES = PP, = $1250/80 4 les Bundie Faster ofbethgonds Xanthan" Ais! é nce. 4 Atcombiatin 4 By the defiton of MRS the 2. Unliy wil be unchanged i the consumer ex — Sogumer em gir ep tat of er or ange Suni of Yor {unt of X(SY78X = Mtns more unio Yand the sansa’ ty “a= 3. trl nt change: With mas pices Pad P the 6 Ua wl be wchanged i he consumer ‘ussumer cam buy (= 125) mores of hangs 1/9 eit ot frat of ANIA Yi ess ut 8 pr! ap main ot “3 the bing ne Vis nope of he slope Ms the inden uve a bate tp A a MS = shows hat PP = RS a coiaton Tae om Po onsumer can PP, mote Yi Teer nt Se ASA mee SE purchased, which mre ¥ th would be Extend tangnt Tote io ae cba MARS ‘ead remain indie, Thee giving “(smn/1i0) 9/11 ead 1 aman ni Spl ont off to ge RS mre uns oft Seams “arc naj = aor, ital Xa MES oe al net ante eee itmieatawsi-reco-s ae teatarenetan ce oY a Pa a aaa ioe ee nae eh peopel ee a tet eer ae bycin- asx Soar een ae Snare eee CoS eoieeee ys «eat tasr ele ae ‘buen LA tows ae, 10 $2uDand FY). Se th cosumer ges ups han the