CASE ANALYSIS

Exercise 8.7
#6 A wall clock that sells for P319 can be produced by combining 2 units of labor, 3 units of land,
and 5 units of capital. An ice shaver costing P201 can be produced by combining 3 units of labor,
2 units of land, and 2 units of capital. A portable egg beater costing P283 can be produced by
using 4 units of labor, 1 unit of land, and 3 units of capital. Determine the wage W, rent R, and
interest I.
Answer:
Let W= wage / labor
R = rent / land
I = interest / capital
Wall Clock
Ice Shaver
Labor
2
3
Land
3
2
Capital
5
2
Cost
P319
P201
(2) 2 = 3W + 2R + 2I = 201
= 6W + 9R + 15I = 957 (4)
(2) 4 = 3W + 2R + 2I = 201
= 12W + 8R + 8I = 804 (6)

Portable Egg Beater

4
1
3
P283

2W + 3R + 5I = 319
3W + 2R + 2I = 201
4W + 1R + 3I = 283

(1) 3 = 2W + 3R + 5I = 319
= 6W + 4R +4I = 402

Subtract (6) & (7)

12W + 8R + 8I = 804
12W + 3R + 9I = 849
5R - 1I = - 45

Subtract (8) & (9)

5R + 11I = 555
5R - 1I = - 45
12I = 600
12
12

Substitute I= 50 to (8)
5R + 11I = 555
5R + 11(50) = 555
5R + 550 = 555
5R = 555 - 550
5R = 5
5
5

(9)

R=1
Substitute I= 50 and R= 1 to (1)
2W + 3R + 5I = 319
2W + 3(1) + 5(50) = 319
2W + 3 + 250 = 319
2W + 253 = 319
2W = 319 253
2W= 66
2
2

W= 33

Exercise 10.1

(5)

(3) 3 = 4W + 1R + 3I = 283
= 12W + 3R + 9I = 849 (7)

Subtract (4) & (5)

6W + 9R + 15I = 957
6W + 4R + 4I = 402
5R + 11I = 555 (8)

I=50

(1)
(2)
(3)

To check:
(1)
2W + 3R + 5I = 319
2(33) + 3(1) + 5(50) = 319
66 + 3 + 250 = 319
319 = 319
(2)
3W + 2R + 2I = 201
3(33) + 2(1) + 2(50) = 201
99 + 2 + 100 = 201
201 = 201
(3)
4W + 1R + 3I = 283
4(33) + 1(1) + 3(50) = 283
132 + 1 + 150 = 283
283 = 283

#40 Firms A and B start producing 300 units and 500 units of a certain product, respectively. In
what year will A and B produce the same amount if A increases production by 40 units per year
and B increases production by 15 units per year? In what year will the production of A be 100
units less than that of B?
Answer:

Let A1= the 1st term in the sequence

d = difference
n = number of year
Firm A
A1 = 300
d = 40

Firm B
A1 = 500
d = 15

An = A1 + (n-1) d
An = 300 + (n-1) 40
An = 300 + 40n 40
An = 260 + 40n (1)

An = A1 + (n-1) d
An = 500 + (n-1) 15
An = 500 + 15n - 15
An = 485 + 15n (2)

Subtract (2) & (1)

An = 485 + 15n
An = 260 + 40n
An = 225 25n
25n = 225
25 25
26

To check:
Firm A:
An = A1 + (n-1) d
A9 = 300 + (9-1) 40
A9 = 300 + (8) 40
A9 = 300 + 320
A9= 620

n= 9; 9th year will A and B

produce the same amount

Firm A
An = A1 + (n-1) d
A13 = 300 + (13-1) 40
A13 = 300 + (12) 40
A13 = 300 + 480
A13 = 780

Firm B
An = A1 + (n-1) d
A13 = 500 + (13-1) 15
A13 = 500 + (12) 15
A13 = 500 + 180
A13 = 680

n= 13; 13th year will A be

100 units less than that of
B

9 years plus another 4 years is equals to 13 years.

Exercise 10.3

Firm B:
An = A1 + (n-1) d
A9 = 500 + (9-1)15
A9 = 500 + (8) 15
A9 = 500 + 120
A9 = 620

#15 A firm owned by Consolacion Mapa produced 400 units of a certain product in its fifth year of
operation and 640 units in its ninth year. How many units did it produce in the first year assuming
that the production follows an arithmetic progression? What is the increase in production per
year? How many units were produced in the first ten years?
Answer:
Let d = the difference
A1 = units in the first year
S10 = units produce the first ten years
A5 = 400
A9 = 640
An = A1 + (n-1) d
A5 = A1 + (5-1) d = 400
A5 = A1 + 4d = 400 (1)

An = A1 + (n-1) d = 640
A9 = A1 + (9-1) d = 640
A9 = A1 + 8d = 640 (2)

Subtract (2) & (1)

A1 + 8d = 640
A1 + 4d = 400
4d = 240
4
4

d = 60

Substitute d= 60 to (1)
An = A1 + (n-1) d
A5 = A1 + (5-1) 60 = 400
A5 = A1 + (4) 60 =400
A5 = A1 + 240 = 400
A1 = 400 240

A1 = 160

Sn = n [2A1 + (n-1) d]
2
S10 = 10 [2(160) + (10-1) 60]
2
S10 = 5 [ 320 + (9) 60]
S10 = 5 [ 320 + 540]
S10 = 5 [ 860]
S10 = 4300