Econ 103 Main-2018

2018 EXAMINATIONS
PART I
ECONOMICS
ECON 103 - Quantitative Methods for Economics Main Paper (3

hours)
Candidates should answer ALL questions and give detailed answers. You can use a non-programmable
calculator.
Good Luck!
1 (Please Turn Over)

SECTION A: Mathematics [50 marks]
√
1. Find the derivative of y = 2 x + x5 . (2 Marks)
2. Let f (x) = x2 − 3x − 2, find the tangent to f at point x = 2. (3 Marks)
3. Let f (x) = x2 e−x with −1 ≤ x ≤ 3.

(a) Find all local extreme points of f . (4 Marks)
(b) Find all global extreme points of f . (3 Marks)
4. If the graph of y = f (x) is shown below, arrange the following in ascending order, i.e. from smallest to
largest. (3 Marks)
A. f 0 (A), B. f 0 (B) C. f 0 (C) D. slope of line AB E. 1 F. 0
2 2
5. The function f (x, y) = e−(x−a) −(y−b) where a and b are constants is sometimes referred to as a “bump
function” and is used to construct functions which take on maximum values at certain points. Show that
f (x, y) has a maximum at (a, b). (10 Marks)
√
6. Consider the function f (x) = 3x + 9 , defined in the interval [−3, ∞) . Find its inverse. (2 Marks)
7. Evaluate the following integrals:
R 3
(a) x − x−2 − 5x10x
2 −10 dx (2 Marks)
R 4x
(b) xe dx (4 Marks)
8. Find the present value of a continuous stream of income that flows at a constant rate A = 10000 a year for 5
years when the interest rate is r = 8% per year compounded continuously. (4 Marks)
9. Find real numbers a, b and x such that:

a b 2 1 1 0 a b 2 1
− =
x 0 1 1 2 1 x 0 4 4
(3 Marks)
10. Show that the following system of equations has a unique solution for all values of a, b and c.
3x + y = a
x − y + 2z = b
2x + 3y − z = c
(3 Marks)
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11. Consider the following simplified, two-equation, economic model:
Y = C + I ∗ + G∗
C = aY + b
where Y (national income) and C (private consumption) are variables. The symbols I ∗ (private investment),
G∗ (government spending), a (marginal propensity to consume) and b (autonomous consumption) all represent
constants, with 1 < a < 0 and b, I ∗ , G∗ > 0. Represent this linear equation system in matrix form and solve
it using the inverse matrix method. (7 Marks)
SECTION B: Statistics [50 marks]
1. 80% of all potential customers were reached in a focused advertising program. 30% of those received the
advertising material bought the product, while 10% of those who did not receive the promotional material
bought the product.
(a) What is the probability that a customer buys the product? (7 marks)
(b) If a customer has bought the product, what is the probability that she did not receive the advertising
material? (6 marks)
2. The number of students using the ATM on campus daily is normally distributed with a mean of 237.6 and
a standard deviation of 26.3. You take a random sample of 30 days. Find two values “a” and “b” that are
symmetric around the mean such that the probability is 0.95 that the sample mean is greater than “a” and
less than “b”. (12 marks)
3. A researcher wants to find out whether there is a difference in a test score between economics students
and mathematics students. He has obtained the following information: The mean score of a sample of 200
economics students is 83.5 and the mean score of a sample of 150 mathematics students is 80.2. Assume
the population standard deviation is known from experience to be 11.5 for economics students and 9.2 for
mathematics students.
(a) State the appropriate null hypothesis and alternative hypothesis to determine whether there is a signifi-
cant difference in the average test score between the two groups of students. (2 marks)
(b) Perform the appropriate test of hypothesis at α = 0.05 level to determine whether there is a significant
difference in the mean test score between the two groups of students. (4 marks)
(c) Find the p-value associated with the above test. (3 marks)
4. You are the HR manager of a technology company. You want to explore the relationship between the annual
income of employees (measured in thousands of dollars) and the number of years they have been employed
by the company. You have obtained the following regression results using 8 observations: b0 = 65.384,
b1 = 0.2698, Sb1 = 0.0609, R2 = 0.7656, and SST = 23.739.
(a) Determine the least squares regression line by choosing appropriate dependent and independent variables.
(2 marks)
(b) Interpret the meaning of b0 and b1 based on your answer in part (a). (2 marks)
(c) What is the estimated income for an employee with 20 years of experience? (2 marks)
(d) Calculate the sample correlation coefficient and explain your result. (3 marks)
(e) Calculate the Error Sum of Squares. (3 marks)
(f) Perform the appropriate test to determine whether there is a linear relationship between the annual
income and years of employment. (4 marks)
3 (End of Paper)
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2018 EXAMINATIONS

ECON 103 - Quantitative Methods for Economics Main Paper (3

1 (Please Turn Over)

3. Let f (x) = x2 e−x with −1 ≤ x ≤ 3.

A. f 0 (A), B. f 0 (B) C. f 0 (C) D. slope of line AB E. 1 F. 0

9. Find real numbers a, b and x such that:

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