Quantitative Analysis for

Business and Economics

Semester 1, 2014
Assorted Questions
Students are invited to solve these questions and exchange their ideas in the
discussion forum.
1. If a person watches a certain TV daily evening news program on one evening, then the
probability that the person watches that program the next evening is 0.7. However, if the
person does not watch the program one evening, then the probability that the person
watches the program the next evening is 0.2.
(a) If the person watches the program on Monday, what is the probability that the
person watches the program on Wednesday?
(b) If 20% of the population watches the program on Thursday, what percentage can be
expected to watch on Friday?
2.

A college dining hall has available two fruit juices for breakfast: orange and grapefruit.
One hundred students drink juice on a daily basis. It is found that a student will not drink
grapefruit juice on two successive days, and if a student drinks orange juice one day, then
the following day the student is equally likely to drink orange juice as to drink grapefruit
juice. If 40 of the regular juice drinkers drink orange juice on Monday, how many can be
expected to drink orange juice on Wednesday?

3. If
is an initial state vector for the transition matrix
Compute the state vector.

4. (from Final exam June 2000):

a) If revenue is given by R = pq where p = price and q = quantity, show using the
dR
1
p 1 where is point elasticity of demand.

product rule that dq
b) Demand for haircuts in a certain chain of salons is given by the function
200
q
for p 11
p 10
Where q is the number of haircuts per day in one salon and p is the price of each
haircut. Calculate the elasticity of demand when p = 15.
c) After a 10% GST is introduced, the price of haircuts will rise by the full 10% as there
are no offsetting decreases in wholesale sales tax. Assuming that there is no change
in the demand function, show whether turnover (i.e. revenue including the tax) will
rise or fall when the price increases.

5. A surfboard manufacturer knows that the weekly cost of production, C, and revenue, R,
are functions of output, q, given by:
C 1550 800 q
R 0.58q 2 400q
Evaluate:

a.
b.
c.
d.

profit;
marginal cost;
marginal revenue;
average cost when 30 surfboards are produced per week.

6. The Springhill Spa company can sell 3000 litres of mineral water per day if it charges 80c
per litre. For each extra 5c rise in price it sells 100 fewer litres of water per day. What
selling price will maximise the company's income? What is the maximum daily income?
7. A fast food chain has been petitioned by environmentalists to reduce the amount of
polystyrene used in packaging. The company wishes to design a new chicken container
that will minimise the area of polystyrene needed. The box must have a volume of 800
cubic cm. It will be made from a single T shaped piece of material which can be folded
to form a top, bottom, four sides and a tuck-in flap. The flap has the same dimensions as
one of the sides. The top and bottom are equal sized squares. What are the dimensions of
the box that minimise the area of polystyrene used?
8. A monopolist producing a single commodity has a production function given by
1/ 2
q x , where q is the quantity produced and x is the amount of the sole input used.
The monopolist can buy any amount of the input at the per unit price of 2, and faces an
industry (inverse) demand function given by p 30 3q , where p is the price per unit of
the output. Assume there are no fixed costs. If all output is sold and the production level
is set to maximise profits, what will the market price be? Also derive an expression for
the marginal revenue product of the input.
9. (From final exam Session 1, 1993)
Suppose that the sales revenue from a particular cultured pearl harvest is (6 + 2.4t) thousand
dollars if the pearls are harvested t years after implantation in the oysters. If the discount rate
is 6% per annum compounded continuously, and the present value of sales revenue is to be
maximised, when should the pearls be harvested and sold (expressed as number of years after
implantation). Do not bother to check the second order condition for a maximum.
10. (Part of Problem 7 from June 1995 exam)
Last year Desert Bloom sold its harvest of 300 tonnes of NiceNSalty wheat at a price of
$1800 per tonne. A market study undertaken last year by the firm of accountants Arthur
Sanderson estimated that the price elasticity of annual demand for NiceNSalty wheat is
given by

p
(2400 p) , for p < 2400 where p is the price per tonne.
Assuming the price elasticity expression above is correct, show that the annual demand for
NiceNSalty wheat as a function of p is given by

Q 1200

p
2

where Q is the annual production in 3ones.

For each of the following differential equations, find the general solution and the particular
solution corresponding to the given initial condition.
(i)

dy
1
3x 2 y, y 0
dx
2

(ii)

dy e x

, y 0 n2
dx e y

(iii)

dy
x2

, y 0 7
dx y 5 2

11. A country town, affected by the withdrawal of key manufacturing industries, has had a
declining population for a considerable period. The rate of change at any time has been
proportional to the population at that time. At 30th June, 1990 the population was 24,500
and four years later it was 18,000. At the current rate of change how long will it take for
the towns population to decline to 6,000 people?