Topic 1 - Working with simple relationships

1 Linear Relationships
• Relationship between quantities that are represented by a straight-line graph. This graph can be plotted
by choosing a set of 𝑥-values, and computing the corresponding y-values by substituting this equation. This
set of (𝑥, 𝑦) points can be located on a graphing sheet and joined by a smooth line.
• Described by an equation of the form, 𝑦 = 𝑚𝑥 + 𝑐, where 𝑚 is the slope and 𝑐 is the 𝑦-intercept of the
graph. The slope is also referred to as the gradient in your lecture notes.
• A positive slope indicates a rise in height (𝑦-value) as 𝑥-value increases (i.e. from left to right). A negative
slope indicates a fall in 𝑦-values, as 𝑥-value increases.
• Solving a linear equation can be done visually, i.e. plotting the straight-line graph of the equation, and
visually locating the point wherein the line crosses the 𝑥-axis.
• The solution of a linear equation can also be determined algebraically, i.e. substituting 𝑦 = 0, and
computing the value of the 𝑥, through elementary algebra operations. Sometimes, this will require
rearranging equations. Please see section 4 below for a quick tip on this.

2 Simultaneous Equations
• Multiple linear equations with multiple unknowns.
• The number of equations must match the number of unknowns to obtain a unique solution.
• A quick way of finding the shared solution of a system of two equations, is to plot the straight-lines describing
them, and visually locating a common point of intersection.

3 Inequalities
• Unlike an equation, an inequality has many sets of solutions. When plotted on the graph paper, the solution
set represents an entire region/area.
• Tip: In problem statements on your assignments and quizzes here in EdX, you might often be asked to
graph the solution region described by the given inequalities. So, it is a good idea to brush up your
skills with thorough practise.

• The first step in graphing an inequality is to use your knowledge from the previous section (linear
relationships) and plot the straight-line represented by the linear equation. This represents either the
upper/lower bound of the region where the inequality holds good.
• The next thing is to determine whether the solution region lies above, below, left or right of the straight-line
you just plotted. This can be resolved by carefully looking at the signs describing the inequality (i.e. <, ≤
, >, ≥)
• Sometimes, to correctly cast the problem in an affine form, you might have to rearrange the given inequality.
See the section below!



4 Rearranging Equations
More involved topics in your MBA course such as option pricing, stock trends, etc., will require manipulating and
re-arranging equations. The sample problems in your quizzes and your final exams may deal with topics such
as dividend yields, capital gains and such. Even though the terms and notations involved might be unfamiliar,
it is important to recognise that you can get off to a nice start by re-arranging the equations such that the
terms containing the quantity of interest is isolated to one side of the equals sign.

Top tip: The best way to be on your way to become a pro is simple - practise, practise and practise !

5 Multi-variable linear equations

• Linear equations can have any number of variables. These type of equations are quite commonly seen
during your MBA program. Refer to the Operating Cash Flow (OCF) problem in your lecture notes.

• The approach to solve such equations is as follows:

1. Start with one equation, writing out all the variables of interest, including unknowns.

2. Successively keep substituting for each unknown, the relationships given in problem statement, one by
one.
3. The problem ultimately reduces to a linear equation in a single variable for which the solution is
desired.