Mathematics for Economists: The Hidden Price in Every Constraint
Functions, derivatives, optimization, Lagrange multipliers, concavity, comparative statics, integrals and difference equations, each tied to the economic question it answers.
Mathematics for Economists · 50 questions
Try 3 questions
1. A demand function is Q = 100 − 2P. At what price does quantity demanded fall to zero?
- 50
- 100
- 98
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Answer: 50
Setting 100 − 2P = 0 gives P = 50, the 'choke price' where the demand curve meets the price axis.
2. What is the inverse demand function for Q = 100 − 2P?
- P = 50 − 2Q
- P = 100 − 2Q
- P = 50 − Q/2
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Answer: P = 50 − Q/2
Solving for P: 2P = 100 − Q, so P = 50 − Q/2; economists often draw this form, with price on the vertical axis.
3. A firm's cost function is C(Q) = 500 + 10Q. What is its average cost when it produces 50 units?
- 20
- 510
- 10
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Answer: 20
Average cost is C/Q: 500 divided by 50 is 10 of fixed cost per unit, plus 10 of variable cost, giving 20.
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