Mathematical Economics

MathematicalEconomics

Class

AssignmentPart A

I.)The budget constraint

Fisher

Artisan

Forester

ii.) The system of linear equation that corresponds to the budgetconstraint in matrix form

iii.)

Theminor matrix

]

Theadjoint matrix

Thedeterminant of the matrix

D=160,000

Computethe inverse

=

iv).Eachagent’s income in dollars

Fisher

Artisan

Forester

AssignmentPart B

I.)The function that best replicates the shape of the data

Thescatter graph is a linear function since it is denoted by theequation

+c

Thisis because it has only one independent variable on the x-axis. Alinear equation is usually in the form y=A+BX. In this case, our y isthe money value, and our x is the months.

ii.)Using linear regression to estimate the function

Theabove equation is a multiple linear regression equation as the graphportrays a heteroscedasticity look and has two independent variables

iii.)The corresponding SLR model and derive the first order conditions

Simplify

iv.)First order condition in matrix form

|A|= =

v.)formulas for the unknowns using Cramer’s rule

=

=