(a) Consider the three-sector model

Y = C + I

C = aYd + b

T = tY + T*

I = cr + d

(I) Show that

Y= b+d-aT*+cr/1-a(1-t)

(II) If a = 0.8,b =100,t = 0.25,T * = 250, c =-60, d = 1700 & r = 8, calculate the equilibrium level of income.

(b) (i) Find the marginal cost of a firm's different products when the total cost function

is c = 5x^2 + 7x + 2.5xy + 6y + 3y^2

(ii) Determine the marginal cost of ywhen x = 3, y = 5