Exercise 1.1

+ = 3

( 2 = 3) Eliminate x

3 = 6

= 2

+ (2) = 3 Substitute and solve for x

= 1

= 1 = 2

Solution 1.1

Exercise 1.2

2( 3 = 1) Solve by eliminationmultiply function by 2

2 6 = 2

2 6 = 2(2 + = 9)

7 = 7

= 1

3(1) = 1 Substitute back and solve

= 1 + 3

= 4

= 4 = 1

Solution 1.2

Exercise 1.3

6 = 12 Supply

= 6 12

() = 6 12 Supply Function

6 = + 12

=1

6 + 2

() =1

6 + 2

Inverse Supply Function

Solution 1.3

Exercises13 July 2015 01:53 PM

Functions Page 1

+ 2 = 40 Demand

= 40 2

() = 40 2 Demand Function

2 = 40

= 20 1

2

() = 20 1

2

Inverse Demand Function

: 6 12 = 40 2 Equilibrium Set =

8 = 52

=52

8

=13

2

= 6 12

Back sub and solve

= 6 13

2 12

= 39 12

= 27

27,13

2

Sketch

Exercise 1.4

() = 6 12 Supply Function

() = 6( ) 12 Taxed Supply Function

() = 40 2 Demand Function - Remains Unchanged

6( ) 12 = 40 2 Solve for to find new consumer price

6 6 12 = 40 2

6 + 2 = 40 + 12 + 6

8 = 52 + 6

Solution 1.4

Functions Page 2

=13

2+

3

4

Exercise 1.5

Finish Exercise 1.5

Solution 1.5

Exercise 1.6

() = 12( ) 4 Taxed Supply Function

() = 8 4 Taxed Demand Function

12 12 4 = 8 4 =

12 + 4 = 8 + 4 + 12

16 = 12 + 12

=12

16+

12

16

=3

4+

3

4

= 8 4

= 8 4 3

4+

3

4

Back sub and solve

= 8 3 3

= 5 3

Solution 1.6

Functions Page 3