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Lec 4 Integration

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14 views

Lec 4 Integration

Uploaded by

Md Arman Hussain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Integration

Business Applications
Lecture 4
Find the consumer surplus for the demand
2
function given by 𝐷 𝑥 = (𝑥 − 5) 𝑤ℎ𝑒𝑛 𝑥 = 3
• When 𝑥 = 3, we have 𝐷 3 = (3 − 5)2 = (−2)2 = 4
3
• Hence, Consumer Surplus = 0
(𝑥 − 5)2 𝑑𝑥 − 3 ∙ 4
3
= (𝑥 2 − 10𝑥 + 25)𝑑𝑥 − 12
0

𝑥3 3
= − 5𝑥 2 + 25𝑥 − 12
3 0
33 0 3
= − 5 3 2 + 25(3) − − 5 0 2 + 25(0) − 12
3 3
= 9 − 45 + 75 − 0 − 12
= 39 − 12 = 27
• Practice Problem
• Find the consumer surplus for
the demand function given by
𝐷 𝑥 =
(𝑥 2 − 6𝑥 + 16) 𝑤ℎ𝑒𝑛 𝑥 = 3
Investment flow
Discounting
• If the fund is to provide a continuous revenue stream for n years
at an annual rate of S dollars per year, then the present value
can be found by evaluating the definite integral
Future Value of an Investment. Find the future value of
$3650 invested for 3 yr at an interest rate of 5%, compounded
continuously
Present Value
Business: Finding the Present Value of a Trust.
In 10 years, you are going to receive $250,000 under the terms of a
trust.
If the money in the trust fund is invested at 4.8% interest, compounded
continuously,
What is the present value?
If P is the payment, r is the continuous interest rate, t is the term in
years, and m is the number of payments per year, then the future
value of the annuity
Determine the present and future values of an annuity of $300
every month for 20 years if the continuous interest rate is 6%.

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