Chapter 1:
1. The linear supply and demand functions of good are given by
𝑃 = 𝑎𝑄 + 𝑏 and 𝑃 = 𝑐𝑄 + 𝑑
a. State whether each of the values of parameters a, b, c, and d are positive or negative.
b. Find expressions, simplified as far as possible, for equilibrium price and quantity.
2. The demand and supply functions of a certain good, respectively, are:
𝑃 = −3𝑄𝐷 + 12
𝑃 = 2𝑄𝑆 + 10
a. What are the equilibrium price and quantity? (P = 10.8)
b. If the government imposes as tax, $1 of the market price on each good. How much of
the tax is paid by the firm and how much is paid by the customer?
c. If the government imposes as tax, 15% of the market price on each good. How much of
the tax is paid by the firm and how much is paid by the customer?
Chapter 2:
3. Given the production function:
𝑓(𝐾, 𝐿) = 4𝐾 𝑚 ∗ 𝐿1/3 + 3𝐾
a. What value should be assigned to 'm' in order to render the function 𝑓(𝐾, 𝐿)
Homogeneous?
b. If m = 2/3, does the function display decreasing, constant, or increasing returns to
scale?
4. The total cost of producing 500 items a day in a factory is $40,000, which includes a
fixed cost of $2,000.
a. Work out the variable cost per item
b. Work out the total cost of producing 600 items a day.
Chapter 3:
5. Vietnam's State budget revenue and Vietnamese consumer price index (CPI) year-by-year
data are shown in the table below:
State budget revenue
(billion VND)
CPI
2017
1,293,627
2018
1,431,662
2019
2020
2021
1,277,988 1,293,728 1,304,619
102.60
102.98
105.23
100.19
101.81
a. Calculate the index numbers for Vietnam's State budget revenue data shown below,
taking 2017 as the base year.
b. If the change in the CPI measures inflation, what is the inflation rate for each year?
c. Convert the data on Vietnam's State budget revenue to the 2018 price level (that is,
find the 'real' value with 2018 as the base year)
6. You're considering purchasing a new home and feel confident in handling a monthly
mortgage payment of $1000 due at the end of each month. You're eligible for a 30-year
mortgage at an 8% annual interest rate, compounded monthly, on the condition that you
make a down payment of 40% of the home's price. Assuming you have the necessary
savings for the down payment, what is the maximum price range for a home you can
afford?
7. You want to make a loan arrangement to buy a house worth VND 20 billion by making
equal repayments at the end of each year for 5 years with an annual interest rate of 9%,
compounded annually.
a. How much is each yearly repayment?
b. Suppose that after the end of year 3, you experience a sudden financial decline and
are unable to fulfill the debt repayment under the current plan. Following discussions,
the debtor agrees to allow you to repay the remaining loan amount over the next 7
years, with an annual interest rate of 9%, compounded annually. What will the new
yearly repayment amount be?
8. Suppose you deposit VND 80 million in a savings account at the bank, which provides a
return of 6% per year, compounded annually. Additionally, you plan to deposit VND 10
million at the end of the first year, VND 15 million at the end of the second year, VND 20
million at the end of the third year, and VND 25 million at the end of the fourth year.
What would be the total amount in the account after 5 years?