442 Chapter 6 Further Topics in Integration

2 In Section 6.1, you saw that area can be expressed as the limit of a sum, then eval-
uated with antidifferentiation by applying the fundamental theorem of calculus. This
Applications to procedure, called definite integration, was introduced through area because area is
easy to visualize, but there are many other applications in which the integration
Business and process plays an important role. In this section, we focus on applications of integra-
Economics tion to business and economics. Additional applications to a variety of other subjects
are examined in Section 6.3.
APPLYING THE Intuitively, the definite integral can be thought of as a process that “adds up” an infi-
DEFINITE INTEGRAL nite number of small pieces of a given quantity to obtain the “total” quantity. Here is
a step by step procedure for using this procedure in practical situations.

A Procedure for Using Definite Integration in Applica-

tions ■ To use definite integration to model the “totality” of a quantity f(x)
over an interval a  x  b where it is continuous, proceed as follows:

Step 1 Divide the interval a  x  b into n equal subintervals, each of length

ba
x  . For j  1, 2, . . . , n, choose a number xj from the jth sub-
n
interval.
Step 2 Approximate the contribution to the total quantity that comes from the
jth subinterval by f(xj) x. Then add the individual contributions to estimate
the total quantity by the sum
[f(x1)  f(x2)  . . .  f(xn)]x
Step 3 Take the limit as n → to pass from the approximation to the exact
value of the quantity.
Step 4 Use the fact that

lim [ f(x1)  . . .  f(xn)]x 

nfi  

a
b
f(x) dx

to transform the limit of a sum in step 3 to a definite integral. Then evalu-

ate the definite integral by the fundamental theorem of calculus to obtain
the required total quantity.

THE AMOUNT OF In our first application, we use definite integration to examine a stream of income
AN INCOME STREAM transferred continuously into an account in which it earns interest over a specified
time period (the term). The amount (or future value) of an income stream is the
total amount (money transferred into the account plus interest) that is accumulated in
this way during the specified term.
The calculation of the amount of an income stream is illustrated in the follow-
ing example. The strategy is to approximate the continuous income stream by a
sequence of discrete deposits called an annuity. The amount of the approximating
Chapter 6 ■ Section 2 Applications to Business and Economics 443

annuity is a certain sum whose limit (a definite integral) is the amount of the income
stream.

EXAMPLE 2.1
Money is transferred continuously into an account at the constant rate of $1,200 per
year. The account earns interest at the annual rate of 8% compounded continuously.
How much will be in the account at the end of 2 years?

Solution
Recall from Chapter 4 that P dollars invested at 8% compounded continuously will
be worth Pe0.08t dollars t years later.
To approximate the future value of the income stream, divide the 2-year time
interval 0  t  2 into n equal subintervals of length nt years and let tj denote the
beginning of the jth subinterval. Then, during the jth subinterval (of length nt years),
Money deposited  (dollars per year)(number of years)  1,200 nt
If all of this money were deposited at the beginning of the subinterval (at time tj ), it
would remain in the account for 2  tj years and therefore would grow to
(1,200nt)e0.08(2tj) dollars. Thus,
Future value of money deposited
 1,200e0.08(2tj) nt
during jth subinterval
The situation is illustrated in Figure 6.8.

2 – tj years
1,200∆nt 1,200e0.08(2 – t j)∆nt

0 ∆nt 2
t
t1 tj tj + 1

FIGURE 6.8 The (approximate) future value of the money deposited during the jth subinterval.

The future value of the entire income stream is the sum of the future values of
the money deposited during each of the n subintervals. Hence,
n
Future value of income stream  1,200e0.08(2tj) nt
j1

(Note that this is only an approximation because it is based on the assumption that
all 1,200nt dollars are deposited at time tj rather than continuously throughout the
jth subinterval.)
444 Chapter 6 Further Topics in Integration

As n increases without bound, the length of each subinterval approaches zero and
the approximation approaches the true future value of the income stream. Hence,
n
Future value of  lim 1,200e0.08(2tj)nt
income stream nfi   j1

 2
1,200e0.08(2t) dt  1,200e0.16 2
e0.08t dt


0 0
1,200 0.16 0.08t 2
 e (e )  15,000e0.16(e0.16  1)
0.08 0
 15,000  15,000e0.16  $2,602.66

The present value of an income stream generated continuously at a certain rate

over a specified period of time is the amount of money that must be deposited today
at the prevailing interest rate to generate the same income stream over the same term.
The calculation of the present value of a continuous income stream is illustrated in
Example 2.2. As with future value, the strategy is to approximate the continuous
income stream by a sequence of discrete payments; that is, by an annuity. The pres-
ent value of the approximating annuity is a certain sum, and by taking the limit of
this sum, we obtain a definite integral that represents the present value of the income
stream.

EXAMPLE 2.2
The management of a national chain of ice cream parlors is selling a 5-year franchise
to operate its newest outlet in Madison, Wisconsin. Past experience in similar local-
ities suggests that t years from now the franchise will be generating profit at the rate
of f(t)  14,000  490t dollars per year. If the prevailing annual interest rate remains
fixed during the next 5 years at 7% compounded continuously, what is the present
value of the franchise?

Solution
Recall from Chapter 4 that if the prevailing annual interest rate is 7% compounded
continuously, the present value of B dollars payable t years from now is Be0.07t.
To approximate the present value of the franchise, divide the 5-year time inter-
val 0  t  5 into n equal subintervals of length nt years and let tj denote the begin-
ning of the jth subinterval. Then,
Profit from the
jth interval  (dollars per year)(number of years)  f(tj) nt

Present value of the profit

Hence from the jth subinterval  f(tj)e0.07tj nt
 Chapter 6 ■ Section 2 Applications to Business and Economics 445

n
and Present value of franchise  f(tj)e0.07tj nt
j1

The situation is illustrated in Figure 6.9.

tj years
f(tj )e–0.07tj∆ nt f(tj)∆ nt

0 ∆ nt 5
t
t1 tj tj + 1

FIGURE 6.9 The (approximate) present value of the profit generated during the jth subinterval.

The approximation approaches the true present value as n increases without

bound. Thus,
n
Present value
 lim f(tj)e0.07tj nt
of franchise nfi   j1

 
5

0
f(t)e0.07t dt

 
5
(14,000  490t)e0.07t dt


0


1
0.07
5
(14,000  490t)e0.07t  7,000  5
e0.07t dt
(integration
by parts)


0 0
5
 [1,000(200  7t)e0.07t  100,000e0.07t ]


0
5
 1,000(300  7t)e0.07t
0
0.35
 1,000(335e  300)  $63,929.49

NET CHANGE In many practical applications, we are given the rate of change Q (x) of a quantity
Q(x) and required to compute the net change NC  Q(b)  Q(a) in Q(x) as x varies
from x  a to x  b. But since Q(x) is an antiderivative of Q (x), the fundamental
theorem of calculus tells us that the net change is given by the definite integral

NC  Q(b)  Q(a)  a
b
Q (x) dx
 446 Chapter 6 Further Topics in Integration

Here are several examples illustrating the computation of net change by definite
integration.

EXAMPLE 2.3
At a certain factory, the marginal cost is 3(q  4)2 dollars per unit when the level of
production is q units. By how much will the total manufacturing cost increase if the
level of production is raised from 6 units to 10 units?

Solution
Let C(q) denote the total cost of producing q units. Then the marginal cost is the
dC
derivative  3(q  4)2, and the increase in cost if production is raised from 6
dq
units to 10 units is given by the definite integral

 
10 10
C(10)  C(6)  3(q  4)2 dq  (q  4)3
6 6

 (10  4)  (6  4)  216  8  $208

3 3

yy
;;
NET EXCESS PROFIT Suppose that t years from now, two investment plans will be generating profit P1(t)
and P2(t), respectively, and that the respective rates of profitability, P 1 (t) and P 2 (t),
satisfy P 2 (t)  P 1 (t) for the first N years (0  t  N). Then

;;
yy
y (dollars per year)
E(t)  P2(t)  P1(t)
represents the excess profit of plan 2 over plan 1 at time t and the net excess profit
y = P2'(t) NE  E(N)  E(0) over the time period 0  t  N is given by the definite integral

Net excess
y = P1'(t)
NE  E(N)  E(0)   0
N
E (t) dt


profit
N
 [P 2(t)  P 1(t)] dt
0
t (years)
which can be interpreted geometrically as the area between the curves y  P 1 (t) and
y  P 2 (t) (see Figure 6.10). Here is an example.
FIGURE 6.10 Net excess profit
as the area between two curves.
EXAMPLE 2.4
Suppose that t years from now, one investment will be generating profit at the rate of
P 1 (t)  50  t2 hundred dollars per year, while a second investment will be gener-
ating profit at the rate of P 2 (t)  200  5t hundred dollars per year.
(a) For how many years does the rate of profitability of the second investment exceed
that of the first?
Chapter 6 ■ Section 2 Applications to Business and Economics 447

(b) Compute the net excess profit for the time period determined in part (a). Interpret
the net excess profit as an area.

Solution
(a) The rate of profitability of the second investment exceeds that of the first until
P 1(t)  P 2(t)
50  t2  200  5t
t2  5t  150  0
(t  15)(t  10)  0
t  15 years (reject t  10)
(b) The net excess profit for the time period 0  t  15 is given by the definite
integral

NE  0
15
[P 2(t)  P 1(t)] dt  0
15
[(200  5t)  (50  t2)] dt

  15
(150  5t  t2) dt


0

 
15
5 1
 150t  t2  t3  1,687.50 hundred dollars
2 3 0

that is, $168,750.

The rate of profit curves for the two investments are shown in Figure 6.11. The
net excess profit is the area of the (shaded) region between the curves.

yy
;;
y (hundred dollars)

y = P2 (t)

;;
yy
= 200 + 5t

200

$168,750

y = P1(t) = 50 + t2

50
t (years)
0 15

FIGURE 6.11 Net excess profit for Example 2.4.

 448 Chapter 6 Further Topics in Integration

NET EARNINGS FROM The net earnings generated by an industrial machine over a period of time is the dif-
INDUSTRIAL EQUIPMENT ference between the total revenue generated by the machine and the total cost of oper-
ating and servicing the machine. The following example shows how net earnings can
be computed by definite integration.

EXAMPLE 2.5
Refer to Example 2.5. Suppose Suppose that when it is t years old, a particular industrial machine generates revenue
a new cost rate function at the rate R (t)  5,000  20t2 dollars per year and that operating and servicing
costs related to the machine accumulate at the rate C (t)  2,000  10t2 dollars per
Cnew(t)  2,000  6t2 is in
year.
place. Compute the years of
(a) How many years pass before the profitability of the machine begins to decline?
profitability and net earnings
(b) Compute the net earnings generated by the machine over the time period deter-
under this new cost function, mined in part (a).
compared with the original cost
rate function. Use the window Solution
[0, 20]5 by [0, 8,000]1,000.
(a) The profit associated with the machine after t years of operation is P(t)  R(t) 
C(t) and the rate of profitability is
P (t)  R (t)  C (t)  (5,000  20t2)  (2,000  10t2)
 3,000  30t2
The profitability begins to decline when
P (t)  0
3,000  30t2  0
t2  100
t  10 years
(b) The net earnings NE over the time period 0  t  10 is given by the difference
NE  P(10)  P(0), which can be computed by the integral

NE  P(10)  P(0)  0
10
P (t) dt

 10
(3,000  30t2) dt


0
10
 (3,000t  10t3)  $20,000
0

The rate of revenue and rate of cost curves are sketched in Figure 6.12. The net earn-
ings is the area of the (shaded) region between the curves.
 Chapter 6 ■ Section 2 Applications to Business and Economics 449

;yy;
y (dollars per year)

y = C(t) = 2,000 + 10t2

5,000

$20,000
y = R(t) = 5,000 – 20t2
2,000

t (years)
10

FIGURE 6.12 The net earnings from an industrial machine.

THE CONSUMERS’ In studying consumer behavior, economists often assume that the price a consumer
DEMAND CURVE AND or group of consumers is willing to pay to buy an additional unit of a commodity is
WILLINGNESS TO SPEND a function of the number of units of the commodity that the consumer or group has
already bought.
For example, a young couple on a limited budget might be willing to spend up
to $500 to own one television set. For the convenience of having two sets (to elimi-
nate the conflict between Monday Night Football and the network news, for instance),
the couple might be willing to spend an additional $300 to buy a second set. Since
there would be very little use for more than two sets, the couple might be willing to
spend no more than $100 for a third set.
A function p  D(q) giving the price per unit that consumers are willing to pay
to get the qth unit of a commodity is known in economics as the consumers’ demand
function for the commodity. As illustrated in Figure 6.13, the consumers’ demand
function is usually a decreasing function of q. That is, the price that consumers are
willing to pay to get one additional unit usually decreases as the number of units
already bought increases.
The consumers’ demand function p  D(q) can also be thought of as the rate of
change with respect to q of the total amount A(q) that consumers are willing to spend
for q units; that is,
dA
 D(q)
dq
Integrating, you find that the total amount that consumers are willing to pay for q0
units of the commodity is given by
 450 Chapter 6 Further Topics in Integration

A(q0)  A(0)  
q0

0
dA
dq
dq  
q0

0
D(q) dq

In this context, economists call A(q) the total willingness to spend and D(q)  A (q)
the marginal willingness to spend. In geometric terms, the total willingness to spend
for q0 units is the area under the demand curve p  D(q) between q  0 and q  q0

yy
;;
(see Figure 6.13).

p (dollars per unit)

;;
yy
p = D(q)
Total
amount
consumers
are willing
to spend
q (units)
0 q0

FIGURE 6.13 The amount consumers are willing to spend is the area under the demand curve.

EXAMPLE 2.6
Refer to Example 2.6. If D(q) is Suppose that the consumers’ demand function for a certain commodity is D(q) 
changed to D1(q)  4(23  q2), 4(25  q2) dollars per unit.
will there be an increase or
(a) Find the total amount of money consumers are willing to spend to get 3 units of
the commodity.
decrease in the total amount of
(b) Sketch the demand curve and interpret the answer to part (a) as an area.
money consumers are willing to
spend to get 3 units of the com- Solution
modity. Use [0, 5]1 by [0, 150]10
as the size of your viewing win- (a) Since the demand function D(q)  4(25  q2), measured in dollars per unit, is
dow. Graph D(q) and D1(q) (in
the rate of change with respect to q of consumers’ willingness to spend, the total
amount that consumers are willing to spend to get 3 units of the commodity is
bold) to assist your conjecture.
given by the definite integral

    
3 3 3
1
D(q) dq  4 (25  q2) dq  4 25q  q3  $264
0 0 3 0
 Chapter 6 ■ Section 2 Applications to Business and Economics 451

(b) The consumers’ demand curve is sketched in Figure 6.14. In geometric terms, the
total amount, $264, that consumers are willing to spend to get 3 units of the com-
modity is the area under the demand curve from q  0 to q  3.

yy
;; p (dollars per unit)

;;
yy
100

p = D(q) = 4(25 – q 2 )

$ 264

q (units)
0 3 5

FIGURE 6.14 Consumers’ willingness to spend for 3 units when demand is given by p 
4(25  q2).

CONSUMERS’ AND In a competitive economy, the total amount that consumers actually spend on a com-
PRODUCER’S SURPLUS modity is usually less than the total amount they would have been willing to spend.
The difference between the two amounts can be thought of as a savings realized by
consumers and is known in economics as the consumers’ surplus. That is,

would be willing to spend   expenditure 

Consumers’ total amount consumers  actual consumer
surplus 

Market conditions determine the price per unit at which a commodity is sold.
Once the price, say p0 , is known, the demand equation p  D(q) determines the num-
ber of units q0 that consumers will buy. The actual consumer expenditure for q0 units
of the commodity at the price of p0 dollars per unit is p0 q 0 dollars. The consumers’
surplus is calculated by subtracting this amount from the total amount consumers
would have been willing to spend to get q0 units of the commodity.
To get a better feel for the concept of consumers’ surplus, consider once again
the example of the couple that was willing to spend $500 for their first television set,
$300 for a second set, and $100 for a third set. Suppose the market price for televi-
sion sets is $300 per set. Then the couple would buy only two sets and would spend
a total of 2 $300  $600. This is less than the $500  $300  $800 that the cou-
ple would have been willing to spend to get the two sets. The savings of $800 
$600  $200 is the couple’s consumers’ surplus.
yy yy
;; ;;
452 Chapter 6 Further Topics in Integration

;;
yy ;;
yy
p p p

;;
yyyy
;;
p = D(q) p = D(q) p = D(q)

p0
– p0
= p0

q q q
0 q0 0 q0 0 q0
(a) Total willingness to spend (b) Actual expenditure (c) Consumers’ surplus

FIGURE 6.15 Geometric interpretation of consumers’ surplus.

Consumers’ surplus has a simple geometric interpretation, which is illustrated in

Figure 6.15. The symbols p0 and q0 denote the market price and corresponding
demand, respectively. Figure 6.15a shows the region under the demand curve from
q  0 to q  q0 . Its area, as we have seen, represents the total amount that con-
sumers are willing to spend to get q0 units of the commodity. The rectangle in Fig-
ure 6.15b has an area of p 0 q 0 and hence represents the actual consumer expenditure
for q0 units at p0 dollars per unit. The difference between these two areas (Figure
6.15c) represents the consumers’ surplus. That is, consumers’ surplus CS is the area
of the region between the demand curve p  D(q) and the horizontal line p  p0 and
hence is equal to the definite integral

Consumers’ Surplus ■ If q0 units of a commodity are sold at a price of

p (dollars per unit) p0 per unit and if p  D(q) is the consumers’ demand function for the commod-
ity, then
(Consumers’ surplus)
Consumers’ total amount consumers actual consumer
surplus  are willing to spend  expenditure
p0 p = D(q) for q0 units for q0 units

q0
q
(units)
CS   q0

0
D(q) dq  p0 q0
 Chapter 6 ■ Section 2 Applications to Business and Economics 453

CS  
q0
[D(q)  p0] dq   q0
D(q) dq  
q0
p0 dq


0 0 0

 
0
q0
D(q) dq  p0q
q0

 
0
q0
D(q) dq  p0q0

Producers’ surplus is the other side of the coin from consumers’ surplus. In par-
ticular, a supply function p  S(q) gives the price per unit that producers are will-
ing to accept in order to supply q0 units to the marketplace. However, any producer
who is willing to accept less than p0  S(q0) dollars for q0 units gains from the fact
that the price is p0 . Then producers’ surplus is the difference between what producers
would be willing to accept for supplying q0 units and the price they actually receive.
Reasoning as we did with consumers’ surplus, we obtain the following formula for
producers’ surplus.

Producers’ Surplus ■ If q0 units of a commodity are sold at a price of

p (dollars per unit) p0 dollars per unit and p  S(q) is the producers’ supply function for the com-
modity, then
p = S(q)
p0
(Producers’ Producers’ actual consumer total amount producers
surplus)
surplus  expenditure  receive when q0
for q0 units units are supplied


q
q0 (units) q0
PS  p0 q0  S(q) dq
0

EXAMPLE 2.7
A tire manufacturer estimates that q (thousand) radial tires will be purchased
(demanded) by wholesalers when the price is
p  D(q)  0.1q2  90
dollars per tire, and the same number of tires will be supplied when the price is
p  S(q)  0.2q2  q  50
dollars per tire.
454 Chapter 6 Further Topics in Integration

(a) Find the equilibrium price (where supply equals demand) and the quantity sup-
plied and demanded at that price.
(b) Determine the consumers’ and producers’ surplus at the equilibrium price.

Solution
(a) The supply and demand curves are shown in Figure 6.16. Supply equals demand
when
0.1q2  90  0.2q2  q  50

yy
;;
0.3q2  q  40  0
q  10 (reject q  13.33)
and p  0.1(10)2  90  80 dollars per tire. Thus, equilibrium occurs at a
price of $80 per tire, where 10,000 tires are supplied and demanded.

;;
yy
p (dollars per unit)
Supply
p = 0.2q 2 + q + 50
90
80 CS
PS

50
Demand
p = –0.1q 2 + 90

q (units)
10 30

FIGURE 6.16 Consumers’ surplus and producers’ surplus for the demand and supply functions
in Example 2.7.

(b) Using p0  80 and q0  10, we find that the consumers’ surplus is

CS  0
10
(0.1q2  90) dq  (80)(10)

 
q3

10
 0.1  90q  (80)(10)
3 0

 866.67  800  66.67

or $66,670 (since q0  10 is really 10,000). The consumers’ surplus is the area
of the shaded region labeled CS in Figure 6.16.
The producers’ surplus is
 Chapter 6 ■ Section 2 Applications to Business and Economics 455

PS  (80)(10)  
10
(0.2q2  q  50) dq


0

q3   q2   50q

3 2 10
 (80)(10)  0.2
0

 800  556.67  243.33

or $243,330. The producers’ surplus is the area of the shaded region labeled PS
in Figure 6.16.

P . R . O . B . L . E . M . S 6.2

DEPRECIATION 1. The resale value of a certain industrial machine decreases over a 10-year period at a
rate that changes with time. When the machine is x years old, the rate at which its
value is changing is 220(x  10) dollars per year. By how much does the machine
depreciate during the second year?
ADMISSIONS TO EVENTS 2. The promoters of a county fair estimate that t hours after the gates open at 9:00 A.M.
visitors will be entering the fair at the rate of 4(t  2)3  54(t  2)2 people per
hour. How many people will enter the fair between 10:00 A.M. and noon?
MARGINAL COST 3. At a certain factory, the marginal cost is 6(q  5)2 dollars per unit when the level of
production is q units. By how much will the total manufacturing cost increase if the
level of production is raised from 10 to 13 units?
OIL PRODUCTION 4. A certain oil well that yields 400 barrels of crude oil a month will run dry in 2 years.
The price of crude oil is currently $18 per barrel and is expected to rise at a constant
rate of 3 cents per barrel per month. If the oil is sold as soon as it is extracted from
the ground, what will be the total future revenue from the well?
FARMING 5. It is estimated that t days from now a farmer’s crop will be increasing at the rate of
0.3t2  0.6t  1 bushels per day. By how much will the value of the crop increase
during the next 5 days if the market price remains fixed at $3 per bushel?
SALES REVENUE 6. It is estimated that the demand for a manufacturer’s product is increasing expo-
nentially at the rate of 2% per year. If the current demand is 5,000 units per year and
if the price remains fixed at $400 per unit, how much revenue will the manufacturer
receive from the sale of the product over the next 2 years?
EFFICIENCY 7. After t hours on the job, a factory worker can produce 100te0.5t units per hour. How
many units does a worker who arrives on the job at 8:00 A.M. produce between
10:00 A.M. and noon?
INVESTMENT 8. Suppose that t years from now, one investment plan will be generating profit at the
rate of P 1 (t)  100  t2 hundred dollars per year, while a second investment will be
generating profit at the rate of P 2 (t)  220  2t hundred dollars per year.
 456 Chapter 6 Further Topics in Integration

(a) For how many years does the rate of profitability of the second investment
exceed that of the first?
(b) Compute the net excess profit assuming that you invest in the second plan for
the time period determined in part (a).
(c) Sketch the rate of profitability curves y  P 1 (t) and y  P 2 (t) and shade the
region whose area represents the net excess profit computed in part (b).

INVESTMENT 9. Answer the questions in Problem 8 for two investments with respective rates of
profitability P 1 (t)  130  t2 hundred dollars per year and P 2 (t)  306  5t
hundred dollars per year.
INVESTMENT 10. Answer the questions in Problem 8 for two investments with respective rates for
profitability P 1 (t)  60e0.12t thousand dollars per year and P 2 (t)  160e0.08t
thousand dollars per year.
INVESTMENT 11. Answer the questions in Problem 8 for two investments with respective rates of
profitability P 1 (t)  90e0.1t thousand dollars per year and P 2 (t)  140e0.07t thousand
dollars per year.
NET EARNINGS 12. Suppose that when it is t years old, a particular industrial machine generates revenue
at the rate R (t)  6,025  8t2 dollars per year and that operating and servicing costs
accumulate at the rate C (t)  4,681  13t2 dollars per year.
(a) How many years pass before the profitability of the machine begins to decline?
(b) Compute the net earnings generated by the machine over the time period deter-
mined in part (a).
(c) Sketch the revenue rate curve y  R (t) and the cost rate curve y  C (t) and
shade the region whose area represents the net earnings computed in part (b).

NET EARNINGS 13. Answer the questions in Problem 12 for a machine that generates revenue at the rate
R (t)  7,250  18t2 dollars per year and for which costs accumulate at the rate
C (t)  3,620  12t2 dollars per year.
EFFICIENCY 14. After t hours on the job, one factory worker is producing Q1(t)  60  2(t  1)2
units per hour, while a second worker is producing Q2(t)  50  5t units per hour.
(a) If both arrive on the job at 8:00 A.M., how many more units will the first
worker have produced by noon than the second worker?
(b) Interpret the answer in part (a) as the area between two curves.

FUND-RAISING 15. It is estimated that t weeks from now, contributions in response to a fund-raising
campaign will be coming in at the rate of R (t)  5,000e0.2t dollars per week, while
campaign expenses are expected to accumulate at the constant rate of $676 per week.
(a) For how many weeks does the rate of revenue exceed the rate of cost?
(b) What net earnings will be generated by the campaign during the period of time
determined in part (a)?
(c) Interpret the net earnings in part (b) as an area between two curves.
 Chapter 6 ■ Section 2 Applications to Business and Economics 457

FUND-RAISING 16. Answer the questions in Problem 15 for a charity campaign in which contributions
are made at the rate of R (t)  6,537e0.3t dollars per week and expenses
accumulate at the constant rate of $593 per week.
THE AMOUNT OF 17. Money is transferred continuously into an account at the constant rate of $2,400 per
AN INCOME STREAM year. The account earns interest at the annual rate of 6% compounded continuously.
How much will be in the account at the end of 5 years?
THE AMOUNT OF 18. Money is transferred continuously into an account at the constant rate of $1,000 per
AN INCOME STREAM year. The account earns interest at the annual rate of 10% compounded contin-
uously. How much will be in the account at the end of 10 years?
THE PRESENT VALUE OF 19. An investment will generate income continuously at the constant rate of $1,200 per
AN INVESTMENT year for 5 years. If the prevailing annual interest rate remains fixed at 12%
compounded continuously, what is the present value of the investment?
THE PRESENT VALUE OF 20. The management of a national chain of pizza parlors is selling a 6-year franchise to
A FRANCHISE operate its newest outlet in Orlando. Experience in similar localities suggests that t
years from now the franchise will be generating profit at the rate of f(t)  10,000 
500t dollars per year. The prevailing rate of interest remains fixed during the next 6
years at 6% compounded continuously. What is the present value of the franchise?
THE PRESENT VALUE OF 21. The management of a national chain of fast-food outlets is selling a 10-year
A FRANCHISE franchise in Cleveland, Ohio. Past experience in similar localities suggests that t
years from now the franchise will be generating profit at the rate of f(t)  10,000 
500t dollars per year. If the prevailing annual interest rate remains fixed at 10%
compounded continuously, what is the present value of the franchise?
CONSUMER’S WILLINGNESS For the consumers’ demand functions D(q) in Problems 22 through 27:
TO SPEND (a) Find the total amount of money consumers are willing to spend to get q 0 units
of the commodity.
(b) Sketch the demand curve and interpret the consumers’ willingness to spend in
part (a) as an area.
22. D(q)  2(64  q2) dollars per unit; q0  6 units
300
23. D(q)  dollars per unit; q0  5 units
(0.1q  1)2
400
24. D(q)  dollars per unit; q0  12 units
0.5q  2
300
25. D(q)  dollars per unit; q0  10 units
4q  3
26. D(q)  40e0.05q dollars per unit; q0  10 units
27. D(q)  50e0.04q dollars per unit; q0  15 units
CONSUMERS’ SURPLUS In Problems 28 through 31, p = D(q) is the price (dollars per unit) at which q units of a
particular commodity will be demanded by the market (that is, all q units will be sold at
this price), and q0 is a specified level of production. In each case, find the price
 458 Chapter 6 Further Topics in Integration

p0 = D(q0) at which q0 units will be demanded and compute the corresponding

consumers’ surplus CS. Sketch the demand curve y = D(q) and shade the region whose
area represents the consumers’ surplus.
28. D(q)  2(64  q2); q0  3 units
29. D(q)  150  2q  3q2; q0  6 units
30. D(q)  40e0.05q; q0  5 units
31. D(q)  75e0.04q; q0  3 units
PRODUCERS’ SURPLUS In Problems 32 through 35, p  S(q) is the price (dollars per unit) at which q units of a
particular commodity will be supplied to the market by producers, and q0 is a specified
level of production. In each case, find the price p0  S(q0) at which q0 units will be
supplied and compute the corresponding producers’surplus PS. Sketch the supply curve
y  S(q) and shade the region whose area represents the producers’ surplus.
32. S(q)  0.3q2  30; q0  4 units
33. S(q)  0.5q  15; q0  5 units
34. S(q)  10  15e0.03q; q0  3 units
35. S(q)  17  11e0.01q; q0  7 units
CONSUMERS’ SURPLUS 36. A manufacturer has determined that when q units of a particular commodity are
produced, the price at which all the units can be sold is p  D(q) dollars per unit,
where D is the demand function given by
300
D(q) 
(0.1q  1)2
(a) How many units can the manufacturer expect to sell if the commodity is priced
at p0  $12 per unit?
(b) Find the consumers’ surplus that corresponds to the level of production q0
found in part (a).

CONSUMERS’ SURPLUS 37. Answer the questions in Problem 36 for the demand function
400
D(q) 
0.5q  2
and price p0  $20 per unit.
CONSUMERS’ SURPLUS 38. Parts for a piece of heavy machinery are sold by the manufacturer in units of 1,000,
and q such units will be sold when the price is p  110  q dollars per unit. The total
cost of producing those q units is C(q)  q3  25q2  2q  3,000 dollars.
(a) How much profit is derived from the sale of the q units at p dollars per unit?
[Hint: profit  revenue  cost; how much revenue is derived from the sale
of the q units?]
(b) For what value of q is profit maximized?
 Chapter 6 ■ Section 2 Applications to Business and Economics 459

(c) Find the consumers’ surplus for the level of production q0 that corresponds to
maximum profit.

CONSUMERS’ SURPLUS 39. Repeat Problem 38 for p  124  2q and C(q)  2q3  59q2  4q  7,600.
CONSUMERS’ AND 40. Suppose that q units of a certain commodity are demanded by the market (that is,
PRODUCERS’ SURPLUS sold) when the price is p  D(q) dollars per unit and that the same number of units
are supplied by manufacturers when the price is p  S(q) dollars per unit, where the
demand and supply functions are, respectively,
1
D(q)  110  q 2 and S(q)  q 2  2q  5
3
(a) At what level of production q0 does supply equal demand? This is called the
equilibrium level, and the corresponding price p0 is the equilibrium price.
(b) Compute the consumers’ surplus and the producers’ surplus at market
equilibrium. 1
(c) First sketch the demand curve y  32  q2 and the supply curve y  q2 
3
2q  5 on the same coordinate axes, and then shade and label the regions
whose areas respectively correspond to consumers’ surplus and producers’ sur-
plus at market equilibrium.

CONSUMERS’ AND 41. Repeat Problem 40 for a commodity whose demand and supply functions are,
PRODUCERS’ SURPLUS respectively,
16 1
D(q)  3 and S(q)  (q  1)
q2 3
PRESENT VALUE 42. A certain investment generates income continuously over a period of N years. After
t years, the investment will be generating income at the rate of f(t) dollars per year.
Derive an expression for the present value of this investment if the prevailing annual
interest remains fixed at r (expressed as a decimal), compounded continuously.
TOTAL REVENUE 43. Consider the following problem: “A certain oil well that yields 300 barrels of crude
oil a month will run dry in 3 years. It is estimated that t months from now the price
of crude oil will be P(t)  18  0.3 t dollars per barrel. If the oil is sold as soon as
it is extracted from the ground, what will be the total future revenue from the well?”
(a) Solve this problem using antidifferentiation, as in Chapter 5.
(b) Solve the problem using definite integration. [Hint: Divide the 3-year (36
month) time interval 0  t  36 into n equal subintervals of length t and
let tj denote the beginning of the jth subinterval. Find an expression that esti-
mates the revenue R(tj) obtained during the jth subinterval. Then express the
total revenue as the limit of a sum.]
(c) Read an article on the petroleum industry and write a paragraph on mathe-
matical methods of modeling oil production.*

* A good place to start is the article by J. A. Weyland and D. W. Ballew, “A Relevant Calculus Problem:
Estimation of U.S. Oil Reserves,” The Mathematics Teacher, Vol. 69 (1976), pp. 125–126.
 460 Chapter 6 Further Topics in Integration

INVENTORY STORAGE COSTS 44. A manufacturer receives N units of a certain raw material that are initially placed in
storage and then withdrawn and used at a constant rate until the supply is exhausted
1 year later. Suppose storage costs remain fixed at p dollars per unit per year. Use
definite integration to find an expression for the total storage cost the manufacturer
will pay during the year.
[Hint: Let Q(t) denote the number of units in storage after t years and find an
expression for Q(t). Then subdivide the interval 0  t  1 into n equal subintervals
and express the total storage cost as the limit of a sum.]
In Problems 45 and 46 use the numeric integration feature of your calculator to
compute the required quantity.

45. An investment will generate income continuously at the constant rate of $1,750
per year for 10 years. If the prevailing rate of interest remains fixed at 9.5% com-
pounded continuously, what is the present value of the investment?
46. An investor is planning to buy a business that t years from now is expected to be
generating income at the rate of f(t)  5,000  300t  1.7t2 dollars per year. If
this pattern continues for the next 7 years and the prevailing rate of interest
remains fixed at 8% compounded continuously, what is the present value of the
investment?

3
Additional
Applications In Section 6.2, we examined applications of definite integration to business and eco-
nomics, and in this section, we extend our list of applications to areas such as biol-
of Definite ogy, the social sciences, and medicine. We begin by showing how integration can be
Integration used to compute the average value of a function over an interval.
AVERAGE VALUE A teacher who wants to compute the average score on an examination simply adds
OF A FUNCTION all the individual scores and divides by the number of students taking the exam, but
how should one go about finding, say, the average level of pollution in a city during
the daytime hours? The difficulty is that since time is continuous, there are “too many”
pollution levels to add up in the usual way, so how should we proceed?
We begin by subdividing the interval a  x  b into n parts, each of length nx
ba
 . If xj is a number taken from the jth subinterval for j  1, 2, . . . , n, then
n
the average of the corresponding functional values f(x1), f(x2), . . . , f(xn) is