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Practice Quiz Problems for ECON 118

Tomoki FUJII

1. b 0.072727272 . . . can be considered as a sum of geometric sequence


with initial term a and common ratio r. What are a and r? Write b in
a fraction in the lowest terms.
2. b 1.010101010 . . . can be considered as a sum of geometric sequence
with initial term a and common ratio r. What are a and r? Write b in
a fraction in the lowest terms.
3. Let f (x) = e2x + 2ex 1, where e is the base of the natural logarithm.
Find f 0 (x). At what value of x is f (x) maximized? Find the maximum
value of f (x).
2

4. Let f (x) = x2 + ln x for x > 0. Find f 0 (x) and f 00 (x). At what value
of x is f (x) maximized? Find the maximum value of f (x).
5. You throw two balanced dice. Let X be the sum of the numbers the
dice are displaying after the throw. Find P (X = 2). Answer in a
fraction in the lowest terms.
6. (Continued from previous question) What are E[X] and E[max(X, 10)]?
Answer in a fraction in the lowest terms.
7. Write 1.1111 in the form of a fraction in the lowest terms. Notice
that this number can be considered as a sum of a geometric sequence.
8. a = 0.1010101 . . . can be considered as a sum of a geometric sequence.
What are the initial value and common ratio of the sequence? Write a
in a fraction in the lowest terms.
1
1
, (1+i)
9. Consider a sequence 1, 1+i
2 , . . . , for i > 0. What is the sum S of
this sequence?

These problems are provided for you to practice on your own. You do not need to
submit what you did. In the actual quiz, you should expect about five questions.

10. Suppose X is a random variable that takes 0 with probability 12 , 2 with


probability 14 and 6 with probability 14 . Find E[X], and E[X 2 ].
11. Let f (x) = ex + ln x 3x2 . Find f 0 (x) and f 00 (x).
2

12. Let f (x) = ex . Find f 0 (x) and f 00 (x).


13. You have a small die and a big die, both of which are balanced. You
throw them together. Let X and Y be the numbers the big and small
dice are displaying. Find E[X], E[X 2 ], and E[max(X, Y )].
p
14. Let f (x) = x(b x), where b > 0 and x (0, b). Find f 0 (x), and the
maximum of f (x) on (0, b).
15. Suppose that g(x) = ex 2ex 3x. Find the maximum and minimum
of g(x) when x satisfies ln 2 x ln 2. You may use ln 2 0.693.
16. Let f (x) = [x(b x)]c , where b, c > 0 and x (0, b). Find f 0 (x), and
the maximum of f (x) on (0, b).
17. Suppose there are two good X and Y . Your utility function is given by
U (X, Y ) = ln X + (1 ) ln Y with (0, 1). The prices of X and Y
are p and q. Suppose your income is I. Find the optimal consumption
schedule (X , Y ) that maximizes your utility U (X, Y ) subject to the
budget constraint pX + qY = I.
18. Let X be the number displaying after a throw of an unbalanced die.
The random variable X follows the probability distribution given in the
table below. Find the probability that X is an even number? Answer
in a fraction in the lowest terms. Also write E[X] in a fraction in the
lowest terms.
x
P (X = x)

1
2
3
4
5
6
1/21 2/21 3/21 4/21 5/21 6/21

19. Write a = 0.45454545 . . . in a fraction in the lowest terms.


20. Let x > 0 and f (x) = xe + ex , where e is the base of the natural
logarithm or the Napiers constant. Find f 0 (x).
21. Find the minimum of f (x) in the previous problem.
22. Let X be the number displaying after a throw of an unbalanced die.
The random variable X follows the probability distribution given in the
table below. Find the probability that X is an odd number? Answer
in a fraction in the lowest terms.
2

x
P (X = x)

1 2
3
4 5 6
0 1/4 1/3 1/4 0 1/6

23. What are E[X] and E[X 2 ]? Answer in a fraction in the lowest terms.
24. Suppose you throw two balanced dice. Let X be the product of the
numbers the dice are displaying after the throw. Find P (X = 4) and
E[X]. Answer in a fraction in the lowest terms.

Answers
1. b = 0.0727272 = 0.072 + 0.00072 + 0.0000072 + . Thus, it can be
considered as a sum of a geometric sequence with initial value a = 0.072
0.072
4
and common ratio r = 0.01. b = 10.01
= 55
.
2. b = 1.0101010101 = 1 + 0.01 + 0.0001 + . Thus, it can be considered as a sum of a geometric sequence with initial value a = 1 and
1
common ratio r = 0.01. r = 10.01
= 100
.
99
3. f 0 (x) = 2e2x + 2ex . Solving f 0 (x) = 0, we haveex = 1 or x = 0. The
maximum is f (0) = 0.
4. f 0 (x) = x + x1 and f 00 (x) = 1
maximum is f (1) = 1/2.

1
.
x2

f 0 (x) = 0 when x = 1. The

5. X = 2 occurs only when both dice are displaying 1. Therefore, P (X =


2) = 1/36.
6. First, notice P (X = 2) = P (X = 12) = 1/36, P (X = 3) = P (X =
11) = 2/36, P (X = 4) = P (X = 10) = 3/36, P (X = 5) = P (X = 9) =
4/36, P (X = 6) = P (X = 8) = 5/36, and P (X = 7) = 6/36. Thus,
E[X] = (2+12)1/36+(3+11)2/36+(4+10)3/36+(5+9)4/36+(6+
8) 5/36 + 7 6/36 = 7 (This is a sure way to do, but there is a simpler
way. You can calculate E[X] as twice the expectation of a single die
throw). E[max(X, 10)] = P (X 10) 10 + P (X = 11) 11 + P (X =
12) 12 = 33/36 10 + 2/36 11 + 1/36 12 = 91/9.
7. Notice that 1.1111 = 1 + 0.1 + 0.01 + 0.001 + . Thus, it is a sum
of a geometric sequence with a unit initial value and the common ratio
of 0.1. Hence,
1.1111 =

10t

t=0

1
1 101
10
=
10 1
10
=
9
=

8. a = 0.1010101 . . . can be considered as a sum of a geometric sequence


0.1
with initial value 0.1 and common ratio 0.01. a = 10.01
= 10
.
99
4

9. This is a geometric sequence.


common
1 The initial value is unity, and theP
1
< 1. Therefore, the sum is S = (1 +
. Notice that 1+i
ratio is 1+i
i=0
i)i = 11 1 = 1+i
.
i
1+i

10. E[X] = 0 21 + 2 14 + 6

1
4

= 2. E[X 2 ] = 02 21 + 22 41 + 62

1
4

= 10.

11. f 0 (x) = ex + x1 6x, f 00 (x) = ex x2 6.


12. You use the chain rule. For f 00 (x), you also need to use the product
rule.
2

f 0 (x) = 2xex

0 x2

00

f (x) = (2x) e
= 2e

x2

+ 2x e

+ (2x)2 ex

= (4x2 + 2)ex

x2

0

13. Note that P (X = 1) = P (X = 2) = P (X = 6) = 16 . If you are


not comfortable with this notation, read the slides carefully and make
yourself familiar with it.
E[X] =

6
X

xP (X = x)

x=1

= 1 P (X = 1) + 2 P (X = 2) + + 6 P (X = 6)
7
1
= (1 + 2 + + 6) =
6
2
6
X
E[X 2 ] =
x2 P (X = x)
x=1
2

= 1 P (X = 1) + 22 P (X = 2) + + 62 P (X = 6)
1
91
= (12 + 22 + + 62 ) =
6
6
Now, let Z = max(X, Y ). Z = 1 when X = 1 and Y = 1. Thus
1
P (Z = 1) = P (X = 1&Y = 1) = 36
. Likewise, P (Z = 2) = P (X =
3
1&Y = 2) + P (X = 2&Y = 2) + P (X = 2&Y = 1) = 36
, and
P (Z = 3) = P (X = 1&Y = 3) + P (X = 2&Y = 3) + P (X = 3&Y =
5
3) + P (X = 3&Y = 2) + P (X = 3&Y = 1) = 36
.

7
9
Verify P (Z = 4) = 36
, P (Z = 5) = 36
and P (Z = 6) = 11
. There36
3
5
7
9
1
+4 36
+5 36
+6 11
= 161
.
fore, E[max(X, Y )] = E[Z] = 1 36 +2 36 +3 36
36
36

14. f 0 (x) = b2x . f 0 (x) = 0 when x = 2b . It is straightforward to see


2

x(bx)

that f 0 (x) > 0 if and only if 0 < x < 2b and f 0 (x) < 0 if and only
if 2b < x < b. Thus, f 0 (x) takes a maximum at x = 2b . Thus, the
maximum of f (x) is f ( 2b ) = 2b .
15. Taking the derivative of x, we have g 0 (x) = ex + 2ex 3 = ex (ex
1)(ex 2). Since ex > 0, g 0 (x) = 0 if and only if ex is equal to 1 or 2.
g 0 (x) < 0 if and only if 1 < ex < 2, or 0 < x < ln 2. Similarly, g 0 (x) > 0
if and only if x < 0 or x > ln 2. So, you can verify that x = 0 is a local
maximum, and x = ln 2 is a local minimum by drawing the graph of
g(x). Therefore, g(x) is maximized on [ln2, ln 2] when x = 0. Thus,
the maximum is g(0) = 1.
From the preceding argument, it is not necessary to check the second
order condition. However, to show that the second order condition
allows you to identify whether g(x) = 0 is held at a local minimum or
a local maximum, lets us check the second order condition. g 00 (x) =
ex 2ex = ex (e2x 2). Hence, g 00 (x) < 0 if and only if x < ln22 , and
g 00 (x) > 0 if and only if x > ln22 . So, g(x) is locally concave around
x = 0, and thus g(x) takes a local maximum around x = 0, and a local
minimum at x = ln 2.
To find the minimum, we compare the values of g(x) at x = ln 2
and x = ln 2. Since g( ln 2) = 7/2 + 3 ln 2 1.421, and g(ln 2) =
13 ln 2 1.079, the minimum occurs at x = ln 2 and the minimum
is 7/2 + 3 ln 2.

-1

-0.5

-ln 2

0.5

1
ln 2

-0.5

-1
1-3ln 2

-7/2+3ln 2

-1.5

-2

16. f 0 (x) = c[x(b x)]c1 (b 2x). Obviously, f 0 (x) = 0 when x = 2b . It is


straightforward to show that f 0 (x) > 0 if and only if 0 < x < 2b and
f 0 (x) < 0 if and only if 2b < x < b. Thus, f 0 (x) takes a maximum at
 2c
x = 2b . Thus, the maximum of f (x) is f ( 2b ) = 2b .
17. The maximization you face is as follows:
ln X + (1 ) ln Y

max
X,Y

s.t. pX + qY = I

Plugging the constraint in the objective function, we have


max
X

ln X + (1 ) ln(I pX)q 1 .

Now, let us define f (X) = ln X + (1 ) ln(I pX)q 1 . Then,


p
f 0 (X) = X1 + (1 ) IpX
. Setting this equal to zero and solving for
X, we have X =

I
p

and Y =

IpX
q

(1)I
.
q

2
18. P (Xis an even number) = P (X = 2) + P (X = 4) + P (X = 6) = 21
+
4
6
4
+
=
.
E[X]
=
1P
(X
=
1)+2P
(X
=
2)+3P
(X
=
3)+4P
(X
=
21 21
7
1
4
9
16
25
36
91
13
4) + 5 P (X = 5) + 6 P (X = 6) = 21 + 21 + 21 + 21 + 21 + 21 = 21 = 3

19. a = 0.45454545 . . . can be considered as a sum of a geometric sequence


5
0.45
= 11
.
with initial value 0.45 and common ratio 0.01. Thus, a = 10.01
20. f 0 (x) = xe2 + ex
21. f 0 (x) = 0 when ex =
is f (1) = 2e.

e
.
x2

This occurs when x = 1. Thus, the minimum

22. X is an odd number when X = 1, X = 3 or X = 5. Thus, P (X =


1) + P (X = 3) + P (X = 5) = 0 + 1/3 + 0 = 1/3.
23. E[X] = 10+21/4+31/3+41/4+50+61/6 = 1/2+1+1+1 = 7/2.
E[X 2 ] = 12 0+22 1/4+32 1/3+42 1/4+52 0+62 1/6 = 1+3+4+6 = 14.
24. X = 4 occurs when both are two or one of the dice is 1 and the
other is 4. Therefore, P (X = 4) = 3/36 = 1/12. To find E[X], we
distinguish the two dice by arbitrarily calling the first die and the second die. Let X1 and X2 be the numbers that the first and second
dice are displaying, respectively.
By definition X = X1 X2 . ThereP6 P
6
i j P (X1 = i, X2 = j) =
fore, E[X] = E[X1 X2 ] =
i=1
j=1 i
h
P6  P6
P6 P6
2121
1
49
1
j=1 j = 36 = 4
j=1 i j = 36
i=1
i=1 i
36