Instructor: Ram Sewak Dubey ECON 317: Problem Set 4 October 17, 2017

1. [Determinant value and unique solution to system of linear equations]

Use determinants to find out if a unique solution exists in each of the following system of
linear equations.

(a)

12x1 + 7x2 = 147

15x1 + 19x2 = 168.

(b)

2x1 + 3x2 = 27
6x1 + 9x2 = 81.

(c)

4x1 + 3x2 + 5x3 = 27

x1 + 6x2 + 2x3 = 19
3x1 + x2 + 3x3 = 15.

(d)

4x1 + 2x2 + 6x3 = 28

3x1 + x2 + 2x3 = 20
10x1 + 5x2 + 15x3 = 70.

2. [Matrix Inversion in Market Equilibrium]

Find the equilibrium price for the following related markets for two goods by using the
technique of matrix inversion.

(a)

18P1 P2 = 87
2P1 + 36P2 = 98.

Submission deadline: October 25, 2017 in class Page 1 of 3

Instructor: Ram Sewak Dubey ECON 317: Problem Set 4 October 17, 2017

(b)

5P1 2P2 = 15
P1 + 8P2 = 16.

(c)

11P1 P2 P3 = 31
P1 + 6P2 2P3 = 26
P1 2P2 + 7P3 = 24.

Please use the information that the inverse of 3 3 matrix

2 3
11 1 1
A=4 1 6 25
1 2 7

is
2 3
38 9 8
1 4
A 1= 9 76 235 .
401
8 23 65

3. [Matrix Inversion in IS-LM Model]

(a) Given the IS equation

0.3Y + 100r 252 = 0,
and the LM equation
0.25Y 200r 176 = 0,
find the equilibrium level of national income Y and the interest rate r by using the
technique of matrix inversion.
(b) Given Y = C + I0 , where C = C0 + bY , find the equilibrium level of national income
Y and the aggregate household consumption C by using the technique of matrix inver-
sion.

Submission deadline: October 25, 2017 in class Page 2 of 3

Instructor: Ram Sewak Dubey ECON 317: Problem Set 4 October 17, 2017

4. [Cramers Rule]

Use Cramers rule to solve for the unknowns in each of the following.

(a) Equilibrium Prices in related markets for two goods

7P1 + 2P2 = 60
P1 + 8P2 = 78.

Solve for P1 and P2 .

(b) Equilibrium national income Y and the interest rate r

0.4Y + 150r = 200

0.1Y 250r = 35.

Solve for Y and r.

(c) Equilibrium Quantities in related markets for three goods

5q1 2q2 + 3q3 = 16

2q1 + 3q2 5q3 = 2
4q1 5q2 + 6q3 = 7.

Solve for q1 , q2 , and q3 .

Submission deadline: October 25, 2017 in class Page 3 of 3