Quantitative Methods - 1 - Maths

Question 1

What are real numbers?

Answer 1

Any number that is real, be it a fraction, an integer or a decimal.

Question 2

What are natural numbers?

Answer 2

Any positive integer.

Question 3

Rational Numbers?

Answer 3

Fractions such as 3/4 etc. Exact values.

Question 4

Irrational Numbers?

Answer 4

Decimals that cannot be displayed as by fractions.

Question 5

What is a set?

Answer 5

A collection of things. e.g. a lecture theatre has 150 seats.

Question 6

What is a budget set?

Answer 6

A budget set denotes the consumption bundles that are affordable to the consumer.

Question 7

What letter in the greek alphabet is often used to show profit?

Answer 7

Pi.

Question 8

What is long run with respect to Costs for firm?

Answer 8

All factors of production are variable in the long term.

Question 9

What is the total cost function?

Answer 9

TC = Fixed Cost + (Variable Cost X Q)

Question 10

Average Costs formula?

Answer 10

AC = TC/Q OR

(Fixed Costs/Quantity) + Variable Costs.

Question 11

What is the relationship between the dependent and independent variables?

Answer 11

The dependent variable depends on the independent variable. The independent variable will always be on the x axis.

Question 12

What are the differences between the domain and range?

Answer 12

Domain (x values) represents all ‘incoming numbers, whereas the range is the set of possible ‘outgoing numbers’ (y values).

Question 13

If a slope on a graph is horizontal to the x-axis, how is it described?

Answer 13

A zero slope.

Question 14

What is the formula of the point-slope method of finding the equation of a linear line?

Answer 14

y - y1 = m(x - x1)

Question 15

What extra step must be used in order to use the point-point method compared to the point-slope method?

Answer 15

The gradient must be attained by working out the change in y divided by the change in x. Then plug it into the formula.

Question 16

How in economics is it common to describe the relationship between price and quantity?

Answer 16

P = g(Q),
Price is a function of quantity.
Q is the independent variable and will therefore be on the x-axis.
A general form of the demand function may be:
P = aQ + b

Question 17

Why do we have to plot the inverse demand function on diagrams?

Answer 17

Often we have a demand function Q = f(P), however, this would imply that Quantity is on the y-axis. As quantity is our independent variable we must find the inverse demand function such that P = f(Q).

Question 18

What is a parabola?

Answer 18

Basically an x^2 function. If a > 0, it will have the shape u. If a < 0 it will have the shape n.

Question 19

What are some examples of fixed costs?

Answer 19

Cost of rent, cost of equipment. They are generally fixed in the short run.

Question 20

What are some examples of variable costs and what is the distinct difference between fixed costs and the former?

Answer 20

Raw material costs, energy.

Variable costs are given per unit as the contribution of variable costs differs with output.

Question 21

Is electricity a fixed or variable cost?

Answer 21

Variable as it can change with output. It may have a base rate of payment that doesn’t change but it will increase when you use to much.

Question 22

What can be can be said about FC and VC if VC is assumed to be constant?

Answer 22

If we plot Y= TC and X = Q and FC is constant, the total cost is linear. Then, the intercept is FC (on the Y axis/ TC/ when Q = 0), and the gradient of the line is variable cost (per unit).