Name: .....................................................................................................

MIDTERM 1 – Mathematics for Economics

Time: 60 minutes

ALGEBRA (4 marks)

A1. [2] Let

1 −1 2
𝐴𝐴 = � 0 3 −1�
−1 2 1
a) Find the (3, 2) – entry of matrix 𝐴𝐴𝐴𝐴 .
𝑇𝑇

b) Find the first row of the inverse matrix of matrix 𝐴𝐴.

A2. [2] A company makes three types of chocolate candy: CC, MM, and AD. Each kilogram of CC
requires 0.5 kg of sugar and 0.2 kg of chocolate; each kilogram of MM requires 0.4 kg of sugar and
0.3 kg of chocolate; and each kilogram of AD requires 0.3 kg of sugar and 0.3 kg of chocolate. The
company has 90 kg of sugar, 70 kg of chocolate and needs to produce a special shipment of 250 kg
of three types of chocolate candy. Use a system of equations to determine how many of each type
could be producted?

A3. [2] The figure shows the flow of traffic (in vehicles per hour) through a network of streets.
Solve this system for 𝑥𝑥𝑖𝑖 , 𝑖𝑖 = 1, 2, . . . , 5.

A4. [2] Compute the determinant of

1 −1 2 3
2 𝑚𝑚 0 1
𝐵𝐵 = � �.
2 1 −1 0
0 3 1 −2
CALCULUS (6 marks)

C1: [1] The daily output at a certain factory is 𝑄𝑄(𝐿𝐿) = 600𝐿𝐿2/3 units, where 𝐿𝐿 denotes the size of the
labor force measured in worker-hours. Currently, 1,000 worker-hours of labor are used each day. Use
calculus to estimate the number of additional workerhours of labor that will be needed to increase daily
output by 25 units.

C2: [1] A manufacturer can produce the flashlights at a cost of $3 per flashlights. The manufacturer has
been selling flashlight at $5 apiece, and at this price, consumers have been buying 4,000 flashlights per
month. The manufacturer wishes to raise the price and estimates that for each $1 increase in the price,
1,000 fewer flashlights will be sold each month. At what price should the manufacturer sell the
flashlights to generate the greatest possible profit?
C3: [1] A manufacturer of machinery parts determines that 𝑞𝑞 units of a particular piece will be sold
when the price is 𝑝𝑝 = 110 − 𝑞𝑞 dollars per unit. The total cost of producing those 𝑞𝑞 units is 𝐶𝐶(𝑞𝑞) dollars,
where 𝐶𝐶(𝑞𝑞) = 𝑞𝑞 3 − 25𝑞𝑞 2 + 2𝑞𝑞 + 3,000. For what value of 𝑞𝑞 is profit maximized?
C4: [1] When a particular commodity is priced at 𝑝𝑝 dollars per unit, consumers demand 𝑄𝑄 units, where
𝑝𝑝 and 𝑄𝑄 are related by the equation 2𝑄𝑄 2 + 𝑝𝑝𝑝𝑝 = 20. For a unit price of $6, is the demand elastic,
inelastic, or of unit elasticity?
C5: [2] It is determined that 𝑞𝑞 units of a commodity can be sold when the price is 𝑝𝑝 hundred dollars
per unit, where 𝑞𝑞(𝑝𝑝) = 1,000(𝑝𝑝 + 3)𝑒𝑒 −𝑝𝑝 .
a) Verify that the demand function 𝑞𝑞(𝑝𝑝) decreases as 𝑝𝑝 increases for 𝑝𝑝 ≥ 0.
b) For what price 𝑝𝑝 is revenue 𝑅𝑅 = 𝑝𝑝𝑝𝑝 maximized? What is the maximum revenue?
C6: [2] The value 𝑉𝑉 (in thousands of dollars) of an industrial machine is modeled by
3𝑁𝑁 + 430 2/3
𝑉𝑉(𝑁𝑁) = � �
𝑁𝑁 + 1
where 𝑁𝑁 is the number of hours the machine is used each day. Suppose further that usage varies with
time in such a way that 𝑁𝑁(𝑡𝑡) = √𝑡𝑡 2 − 10𝑡𝑡 + 45 where 𝑡𝑡 is the number of months the machine has been
in operation.
a) Over what time interval is the value of the machine increasing? When is it decreasing?
b) At what time 𝑡𝑡 is the value of the machine the largest? What is this maximum value?
C7: [2] During a recession, Congress decides to stimulate the economy by providing funds to hire
unemployed workers for government projects. Suppose that 𝑡𝑡 months after the stimulus program
begins, there are 𝑁𝑁(𝑡𝑡) thousand people unemployed, where 𝑁𝑁(𝑡𝑡) = −𝑡𝑡 3 + 45𝑡𝑡 2 + 648𝑡𝑡 + 2,078.
a) What is the maximum number of unemployed workers? When does the maximum level of
unemployment occur?
b) To avoid overstimulating the economy (and inducing inflation), a decision is made to terminate the
stimulus program as soon as the rate of unemployment begins to decline. When does this occur? At
this time, how many people are unemployed?
C8: [2] The number of units 𝑄𝑄 of a particular commodity that will be produced when 𝐿𝐿 worker-hours
of labor are employed is modeled by 𝑄𝑄(𝐿𝐿) = 300𝐿𝐿1/3 . Suppose that the labor level varies with time in
such a way that 𝑡𝑡 months from now 𝐿𝐿(𝑡𝑡) workerhours will be employed, where 𝐿𝐿(𝑡𝑡) = √739 + 3𝑡𝑡 − 𝑡𝑡 2
for 0 ≤ 𝑡𝑡 ≤ 12.
a) How many worker-hours will be employed in producing the commodity 5 months from now? How
many units will be produced at this time?
b) At what rate will production be changing with respect to time 5 months from now? Will production
be increasing or decreasing at this time?
C9: [2] A manufacturer of digital cameras estimates that when cameras are sold for 𝑥𝑥 dollars apiece,
consumers will buy 8,000𝑒𝑒 −0.02𝑥𝑥 cameras each week. He also determines that profit is maximized when
the selling price 𝑥𝑥 is 1.4 times the cost of producing each unit. What price maximizes weekly profit?
How many units are sold each week at this optimal price?
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