THE CATHOLIC UNIVERSITY OF MALAWI

FACULTY OF SOCIAL SCIENCES

DEPARTMENT OF ECONOMICS

ECON 2101M: MATHEMATICS FOR ECONOMISTS I

PRACTICE SET 1

1. A firm faces the demand schedule 𝑄 = 40 − 𝑃0.5 where 𝑝0.5 ≥ 0 and

𝑄 ≤ 40. Given the cost schedule 𝑇𝐶 = 𝑄3 − 2.5𝑄2 + 50𝑄 + 16. What
price should it charge to
maximize profit?

2. Assuming a firm is faced by the following demand and cost schedules

1
𝑞 = 220 − 𝑃
3
TC = 25 + 240q2 + 6q3

Where q is quantity and P is unit price

Determine profit maximization point for the firm and actual profits at that
point.

3. Suppose a company discovers that the cost of producing x units of a

product is given by 𝐶(𝑥) = 2400𝑥 2 + 5200 and the demand function for
what it can charge for selling x units of this product is given by 𝑝(𝑥) =
100000 − 0.1𝑥 2 . Find the number of units that the company must produce
and sell to maximize profit.
4. Explain why the demand function 𝑄 = 265𝑝−1 will have the same point
elasticity of demand at all prices and say what its value is.
5. Given the demand function 𝑄 = (1450 − −0.14𝑝)0.9 what is elasticity of
demand when quantity is 45?
6. Assume a market has the demand function q = 26−0.5p and the supply
function q = 2p − 6. The government currently imposes a per-unit tax of
K4. If this tax is slightly increased by α will government collect more in
taxes?