1

Topic 1
Topic 1 : Elementary functions


Section 1.1 - Graphs of linear equations
Section 2.1 Quadratic functions
Section 2.2 Revenue, Cost and Profit


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Simplest Linear Relationship:
y = a+bx independent
dependent . | variable
variable intercept

This represents a straight line on a graph i.e. a
linear function has a constant slope
b = slope of the line = change in the dependent
variable y, given a change in the independent
variable x.
Slope of a line = Ay / Ax
= (y2-y1) / (x2-x1)

3
Example: Student grades
Example:
y = a + bx
y : is the final grade,
x : is number of hours
studied,
a%: guaranteed


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Example Continued.
y=5+15x

output= constant slope input
y a b X
5 5 15 0
20 5 15 1
35 5 15 2
50 5 15 3
65 5 15 4
Linear Functions
-5
5
15
25
35
45
55
65
0 1 2 3 4
Independent X Variable
D
e
p
e
n
d
e
n
t

Y

V
a
r
i
a
b
l
e
If x = 4, what grade
will you get?
Y = 5 + (4 * 15) = 65

5
Demand functions: The relationship
between price and quantity
Demand Function: D=a-bP
D= 10 -2P
D a - b P
10 10 -2 0
8 10 -2 1
6 10 -2 2
4 10 -2 3
Demand Function
0
2
4
6
8
10
12
0 1 2 3 4 5
Price
Q

D
e
m
a
n
d
If p =5, how much will be
demanded?
D = 10 - (2 * 5) = 0
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Inverse Functions:
Definition
If y = f(x)
then x = g(y)
f and g are inverse functions
Example
Let y = 5 + 15x
If y is 80, how many hours per week did they
study?

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Example continued..

If y is 80, how many hours per week did
they study?
Express x as a function of y: 15x = y 5....
So the Inverse Function is: x = (y-5)/15
Solving for value of y = 80
x = (80-5 / 15)
x = 5 hours per week
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An inverse demand function
If D = a bP then the inverse demand
curve is given by P = (a/b) (1/b)D
E.g. to find the inverse demand curve
of the function D= 10 -2P
First, re-write P as a function of D
2P = 10 D
Then, simplify
So P= 5 0.5D is the inverse function

More Variables:
Student grades again:
y = a + bx + cz
y : is the final grade,
x : is number of hours
studied,
z: number of
questions completed
a%: guaranteed
Example:
If y = 5+ 15x + 3z, and a
student studies 4 hours per
week and completes 5
questions per week, what
is the final grade?
Answer:
y = 5 + 15x + 3z
y = 5 + (15*4) + (3*5)
y = 5+60+15 = 80
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Another example: Guinness
Demand.
The demand for a pint of
Guinness in the Student
bar on a Friday evening
is a linear function of
price. When the price
per pint is 2, the
demand is 6 pints.
When the price is 3,
the demand is only 4
pints. Find the function
D = a + bP
6 = a + 2b
=> a = 6-2b
4 = a + 3b
=> a = 4-3b
6-2b = 4-3b
Solving we find that b = -2
If b = -2, then a = 6-(-4) = 10
The function is D = 10 2P
Note, the inverse Function is
P = 5- 0.5D
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Topic 1 continued:
Non- linear Equations


Sections 2.1 and 2.2
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Quadratic Functions
Represent Non-Linear Relationships

y = ax
2
+bx+c where a=0, c=Intercept
a, b and c are constants

So the graph is U-Shaped if a>0,
And Hill-Shaped if a<0
And a Linear Function if a=0
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Solving Quadratic Equations:
1) Graphical Approach: To find Value(s), if any,
of x when y=0, plot the function and see where it
cuts the x-axis
If the curve cuts the x-axis in 2 places: there
are always TWO values of x that yield the
same value of y when y=0
If it cuts x-axis only once: when y=0 there is
a unique value of x
If it never cuts the x-axis: when y=0 there is
no solution for x
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e.g. y = -x
2
+4x+5

y a x
2
b X C
-7 -1 4 4 -2 5
5 -1 0 4 0 5
9 -1 4 4 2 5
5 -1 16 4 4 5
-7 -1 36 4 6 5

Since a<0 => Hill Shaped Graph
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Quadratic Functions
-8
-6
-4
-2
0
2
4
6
8
10
-2 0 2 4 6
Independent X Variable
Y

=

X
2
y=0, then x= +5
OR x = -1
Grafik : y = -x
2
+4x+5

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Special Case: a=1, b=0 and c=0
So y = ax
2
+bx+c => y = x
2
y = a x
2
b x c
16 1 16 0 -4 0
4 1 4 0 -2 0
0 1 0 0 0 0
4 1 4 0 2 0
16 1 16 0 4 0
36 1 36 0 6 0

Quadratic Functions
-10
-5
0
5
10
15
20
25
30
35
40
-4 -2 0 2 4 6
Independent X Variable
Y

=

X
2
Min. Point: (0,0)
Intercept = 0
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Practice examples
Gambarkan kurva grafik :
y = x
2
-4x+4
y = 3x
2
-5x+6
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Solving Quadratic Equations:
2) Algebraic Approach: find the value(s),
if any, of x when y=0 by applying a simple
formula
( )
a
ac b b
x
2
4
2

=
19
Example
e.g. y = -x
2
+4x+5
hence, a = -1; b=4; c=5





Hence, x = +5 or x = -1 when y=0
Function cuts x-axis at +5 and 1
( )
2
) 5 1 ( 4 16 4

= x
( )
2
6 4
2
20 16 4

+
= x
20
Example 2
y = x
2
-4x+4
hence, a = 1; b= - 4;
c=4
If y = 0

( )
2
) 4 1 ( 4 16 4 +
= x
2
0 4
= x
x = 2 when y = 0
0
2
4
6
8
10
12
14
16
18
-2 -1 0 1 2 3 4 5
X
Y
y
Function only cuts x-axis at one point,
where x=2


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Example 3
y = 3x
2
-5x+6
hence, a = 3;
b= - 5; c=6
If y = 0
( )
6
) 6 3 ( 4 25 5 +
= x
6
47 4
=
when y = 0 there is no solution

0
20
40
60
80
100
120
-6 -5 -4 -3 -2 -1 0 1 2 3 4 5
X
Y
y
The quadratic function does not intersect
the x-axis
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Understanding Quadratic Functions
intercept where x=0 is c
a>0 then graph is U-shaped
a<0 then graph is inverse-U
a = 0 then graph is linear

b
2
4ac > 0 : cuts x-axis twice
b
2
4ac = 0 : cuts x-axis once
b
2
4ac < 0 : no solution
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Essential equations for
Economic Examples:
Total Costs = TC = FC + VC
Total Revenue = TR = P * Q
t = Profit = TR TC
Break even: t = 0, or TR = TC
Marginal Revenue = MR = change in total
revenue from a unit increase in output Q
Marginal Cost = MC = change in total cost
from a unit increase in output Q
Profit Maximisation: MR = MC
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An Applied Problem

A firm has MC = 3Q
2
- 32Q+96
And MR = 236 16Q
What is the profit Maximising Output?
Solution
Maximise profit where MR = MC
3Q
2
32Q + 96 = 236 16Q
3Q
2

32Q+16Q +96 236 = 0
3Q
2

16Q 140 = 0
Solve the quadratic using the formula
where a = 3; b = -16 and c = -140
Solution:
Q = +10 or Q = -4.67
Profit maximising output is +10 (negative Q inadmissable)
( )
a
ac b b
Q
2
4
2

=
25
Graphically
0
50
100
150
200
250
300
350
-5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12
Q
M
R

a
n
d

M
C
MC
MR
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Another Example.
If fixed costs are 10 and variable costs per unit
are 2, then given the inverse demand function
P = 14 2Q:
1. Obtain an expression for the profit function in
terms of Q
2. Determine the values of Q for which the firm
breaks even.
3. Sketch the graph of the profit function against
Q
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Solution:
1. Profit = TR TC = P.Q (FC + VC)
t = (14 - 2Q)Q (2Q + 10)
t = -2Q
2
+ 12Q 10

2. Breakeven: where Profit = 0
Apply formula to solve quadratic where t = 0
so solve -2Q
2
+ 12Q 10 = 0 with
Solution: at Q = 1 or Q = 5 the firm breaks
even
( )
a
ac b b
Q
2
4
2

=
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-50
-40
-30
-20
-10
0
10
20
-2 -1 0 1 2 3 4 5 6 7 8
Q
P
r
o
f
i
t
Profit
Mathematical Modeling
The price-demand function for a company is
given by



where x represents the number of items and
P(x) represents the price of the item.
Determine the revenue function and find the
revenue generated if 50 items are sold.
( ) 1000 5 , 0 100 p x x x = s s
Solution
Revenue = Price Quantity, so
R(x)= p(x) x = (1000 5x) x
When 50 items are sold, x = 50, so we will
evaluate the revenue function at x = 50:


The domain of the function has already been
specified. We are told that


(50) (1000 5(50)) 50 37, 500 R = =
0 100 x s s
Break-Even and Profit-Loss
Analysis
Any manufacturing company has costs C and
revenues R.
The company will have a loss if R < C, will break even
if R = C, and will have a profit if R > C.
Costs include fixed costs such as plant overhead, etc.
and variable costs, which are dependent on the
number of items produced.
C = a + bx
(x is the number of items produced)


Break-Even and Profit-Loss Analysis
Price-demand functions, usually determined by
financial departments, play an important role in
profit-loss analysis.
p = m nx
(x is the number of items than can be sold at $p
per item.)
The revenue function is
R = (number of items sold) (price per item)
= xp = x(m nx)
The profit function is
P = R C = x(m nx) (a + bx)

Example of Profit-Loss Analysis
A company manufactures notebook computers.
Its marketing research department has
determined that the data is modeled by the price-
demand function
p(x) = 2,000 60x, when 1 < x < 25, (x is in
thousands).
What is the companys revenue function and
what is its domain?
Answer to Revenue Problem
Since Revenue = Price Quantity,
2
( ) ( ) (2000 60 ) 2000 60 R x x p x x x x x = - = - =
The domain of this function is the same as the domain
of the price-demand function, which is 1 x 25 (in
thousands.)
Profit Problem
The financial department for the company in the
preceding problem has established the following cost
function for producing and selling x thousand
notebook computers:
C(x) = 4,000 + 500x (x is in thousand dollars).
Write a profit function for producing and selling x
thousand notebook computers, and indicate the
domain of this function.
Answer to Profit Problem
Since Profit = Revenue Cost, and our revenue function from the preceding
problem was R(x) = 2000x 60x
2
,
P(x) = R(x) C(x) = 2000x 60x
2
(4000 + 500x)
= 60x
2
+ 1500x 4000.
The domain of this function is the same as the domain of the original price-
demand function, 1< x < 25 (in thousands.)
5000
Thousand dollars
25
Thousand cameras