Math for Econ I, Homework Assignment 1

Due Friday, September 19th

New York University
If you have the textbook, please read chapter 4, especially sections 4.1 through 4.5.
Please write neat solutions for the problems below. Show all your work. If you only write the answer with no work you
will not be given any credit.

Write your name and recitation section number.

Staple your homework if you have multiple pages!

1. (6 pts) Residents of the town of Maple Grove who are connected to the municipal water supply are billed a fixed
amount monthly plus a charge for each cubic foot of water used. In other words, the monthly bill is a linear
function of the water used. A household using 1000 cubic feet was billed $40, while one using 1600 cubic feet was
billed $55.
(a) (2 pts) What is the charge per cubic foot?
(b) (2 pts) Write an equation for the total cost of a residents water as a function of cubic feet of water used.
(c) (2 pts) How many cubic feet of water used would lead to a bill of $100?
2. (8 pts) In a class of 120 students, everybody would take two hamburgers if the price were zero, and no one would
buy hamburgers if the price were $4 or more.
Assume that the classs demand curve for hamburgers is linear, and give a formula
(a) (3 pts) describing quantity as a function of price
(b) (3 pts) describing price as a function of quantity
(c) (2 pts) Total revenue is a function of quantity and can be computed by R = price quantity. Find the total
revenue function corresponding to the demand curve, and conclude that it is quadratic.

3. (6 pts) The demand curve for a product is given by q = 120000 500p, and the supply curve is given by q = 1000p
for 0 q 120000, where price is in dollars.

(a) (2 pts) At a price of $100, what quantity are consumers willing to buy and what quantity are producers
willing to supply? Will the market push the prices up or down?
(If supply > demand, the market pushes prices down; if supply < demand, the market pushes prices up)
(b) (2 pts) Find the equilibrium price and quantity. Does your answer to part (a) support the observation that
market forces tend to push prices closer the equilibrium?
(c) (2 pts) Suppose a tax of 1.5 dollars per item is imposed on the supplier by the government. Find the new
eqilibrium price and quantity.
(d) (2 pts) How much of the 1.5 dollars tax is paid by the consumers? By the suppliers?
(e) (2 pts) Find the total tax revenue received by the government.
(f) (3 pts) On the same graph, draw the demand curve, the original supply curve, and the supply curve which
takes tax into account.

4. (6 pts) For both (a) and (b) below, be sure to show your work!

(a) (3 pts) Find the domain of the function f (x) = x2 x.
(b) (3 pts) Determine the interval (or intervals) on which the function g(x) = xex 3ex is positive.