Econ 101 Macroeconomics1

1st Semester, AY 2013-2014

First Long Exam Solution Key
Total: 100 points
1. [18 points]
(a) [5 points] A has to be nonnegative, square and
either all the row sums are less than one, i.e.,
a11 + a12 + a13
a21 + a22 + a23
a31 + a32 + a33

< 1;
< 1;
< 1;

or all the column sums are less than one, i.e.,

a11 + a21 + a31

a12 + a22 + a32
a13 + a23 + a33

< 1;
< 1;
< 1:

Note: Either stating that all the row sums are less than oneor all
the column sums are less than one would do.
(b) [7 points]

(I

x = Ax + d
A)x = d
1

x = (I A) d
x
2
3 = Ld
2
x1
L11 L12
4 x2 5 = 4 L21 L22
x3
L31 L32
x1
x2
x3
1 S.

32
3
L13
d1
L23 5 4 d2 5
L33
d3

= L11 d1 + L12 d2 + L13 d3

= L21 d1 + L22 d2 + L23 d3
= L31 d1 + L32 d2 + L33 d3 :

Daway

(c) [6 points]

2
4

x
3

x1
x2 5
x3

(I
2

A)

32
L11 L12 L13
= 4 L21 L22 L23 5 4
L31 L32 L33
=)
x1 = L12 d2 ;
=)
x3 = L32 d2 :

3
0
d2 5
0

2. [12 points]
(a) [4 points] B must be real and symmetric.
(b) [8 points] LP M1 = 1 > 0; LP M2 = 0; LP M3 = 0 =) We cannot
outrightly conclude that B is positive semidenite. We have to check
all the principal minors of B:
P M1 = 1; 0; 1
P M2 = 0; 1; 0
P M3 = 0
Since all the principal minors of B are nonnegative, B is positive
semidenite.
3. [15 points]
(a) [8 points] A is nonsingular if and only if det A 6= 0:
If is an eigenvalue of A then det A = 1 2 ::: n 6= 0:
Thus, = 0 cannot be an eigenvalue of A:
(b) [7 points] By a theorem, the product of the eigenvalues of a matrix A
equals its determinant. Let 1 ; 2 , ... n be eigenvalues of A; which
is an nxn matrix. Thus,
1 2 ::: n

= det A:

By another theorem, we know that det A2 = det (A) det (A) : Thus,

det A2

Thus,

= ( 1 2 ::: n ) (
2 2
2
=
1 2 ::: n :

is an eigenvalue of A2 :

4. [30 points]

1 2 ::: n )

(a) [5 points] For an t > 0;

U (tx1 ; tx2 )

= (tx1 ) (tx2 )
= t + x1 x2
= t + U (x1 ; x2 ) :

Thus, U (x1 ; x2 ) is homogeneous of degree

+ :

(b) [5 points]
@U
= x1
@x1

x2 ; and

@U
= x1 x2
@x2

@U
@U
Since @x
> 0 and @x
> 0, the rst partial derivatives indicate that
1
1
the marginal utilities with respect to x1 and x2 are positive or that
utility is increasing in both x1 and x2 :

(c) [5 points]
@2U
=(
@x21
@2U
@x21

< 0 when

1) x1

< 1; while

e (x1 ; x2 )
(d) [5 points] U
x2 > 0:
e=
(e) [5 points] dU
2

x1

x2

1
x1

x2 ; and

@2U
@x22

@2U
=(
@x22

< 0 when

ln U (x1 ; x2 ) =
dx1 +

1
x2

1) x1 x2

< 1:

ln x1 + ln x2 : x1 > 0 and

dx2 =

1
x1

1
x2

(2) +

(2) =

(f) [5 points] 0 =

1
x1

1
x2

dx1 +

dx2 =)

5. [25 points]
(a) [5 points]
2
dy
= ex (2x)
dx

(b) [5 points]
2
d2 y
= 2ex 1 + 2x2
2
dx

(c) [15 points]

dx2
dx1

x2
x1

f (x)

f (1) +

f 0 (1)
(x
1!

e + 2e (x
e + 2ex

1) +

6e
(x
2
2e + 3e x2
1) +

e + 2ex + 3ex
3ex2 4ex + 2e

f 0 (1)
(x
2!

1)

1)

2x + 1

6ex + 3e

BONUS
[5 points] Free for all:
Given q (x1 ; x2 ) = 4x21 6x1 x2 x22 ; nd a symmetric matrix that yields q (x1 ; x2 ) :
4
3

Answer:

3
1

[2 points] For those who helped in making the lantern:

x

Given y = f (x) = ln ee ; nd dy=dx:

dy
= ex
dx
[2 points] For those who joined the Lantern Parade:
Answer:

Given y = f (x) = eln x ; nd dy=dx:

Answer:

dy
= eln x
dx

1
x

[2 points] Only for those who attended the latest Kapekonomiya:

2

Given y = f (x) = 3x ; nd dy=dx:

Answer:

2
dy
= 3x (ln 3) (2x)
dx