Lecture 3: Applications Sec 4.1 and 4.

Additional Properties:

1. 𝐥𝐨𝐠 𝒃 𝒃𝒙 = 𝒙

log 2 2𝑥 = 𝑥
2. 𝒃(𝐥𝐨𝐠 𝒃 𝒙) = 𝒙

or 10log 𝑥 = 𝑥

Simplify I )ln 𝑒 3𝑥

ln 𝑒 3𝑥 = 3𝑥(ln 𝑒 ) = 3𝑥
2
ii) Find 𝑒 (𝑙𝑛𝑥 ) .

2)
𝑒 (𝑙𝑛𝑥 = 𝑥2
2
iii) Solve 10𝑙𝑜𝑔𝑥 = 25

𝑥 2 = 25 𝑠𝑜 𝑥 = 5 𝑎𝑛𝑑 𝑥 = −5

Important

lnx 2 ≠ (𝑙𝑛𝑥)2 . 𝐻𝑒𝑟𝑒 𝑙𝑛𝑥 2 = ln(𝑥. 𝑥 )𝑎𝑛𝑑 (𝑙𝑛𝑥)2 = (𝑙𝑛𝑥)(𝑙𝑛𝑥)

Notation:

(𝑙𝑛𝑥 )2 = ln2 𝑥
Change of Base Formula

Original base is b ; New base is a

𝐥𝐨𝐠 𝒂 𝒎
𝐥𝐨𝐠 𝒃 (𝒎) =
(𝐥𝐨𝐠 𝒂 𝒃)

Example: Express log 𝑥 in terms of natural logarithms.

𝑙𝑛𝑥
log 𝑥 = log10 𝑥 = log 𝑒 𝑥 /(log 𝑒 10) =
𝑙𝑛10
Applications
𝑟 𝑘𝑡
Formula : 𝑆 = 𝑃 (1 + 𝑘) : Interest is compounded k times a
year.
𝑆 = 𝑃𝑒 𝑟𝑡 ∶ 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑖𝑠 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑒𝑑 𝑐𝑜𝑛𝑡𝑖𝑛𝑢𝑜𝑢𝑠𝑙𝑦

1. If a person invests $1000 at 8% annual interest

compounded continuously how long does it take for
the investment to double.
P = $1000, S = $ 2000, r = 0.08
𝑆 = 𝑃𝑒 𝑟𝑡
2000 = 1000𝑒 0.08𝑡
2 = 𝑒 0.08𝑡
𝑙𝑛2
𝑡= = 8.66 𝑦𝑒𝑎𝑟𝑠
0.08

Would the doubling time change if something other than $1000

was invested?

No.

2. . How long will it take $5000 to grow to $7000 in an

investment earning interest at an annual rate of 6% if
compounding is
a. Quarterly

𝑃 = 5000, 𝑆 = 7000, 𝑟 = 0.06, 𝑘 = 4, 𝑡 = ?

 𝑟 𝑘𝑡
𝑆 = 𝑃 (1 + )
𝑘
0.06 4𝑡
7000 = 5000 (1 + )
4
7
= 1.0154𝑡
5
Taking the natural log on both sides
7
ln ( ) = ln(1.015)4𝑡
5
𝑙𝑛1.4 = 4𝑡𝑙𝑛1.015
𝑡 = 5.65 𝑦𝑒𝑎𝑟𝑠

b. Compounded continuously
𝑆 = 𝑃𝑒 𝑟𝑡
7000 = 5000𝑒 0.06𝑡
7000
= 𝑒 0.06𝑡
5000
Take natural log on both sides
𝑙𝑛1.4 = 0.06𝑡𝑙𝑛𝑒
𝑡 = 5.61 𝑦𝑒𝑎𝑟𝑠
 3. . A person has $1500 to invest and wants it to grow to
$2000 in 5 years. At what annual rate r compounded
continuously must she invest her money to achieve her
goal.

For continuous compounding 𝑆 = 𝑃𝑒 𝑟𝑡

2000 = 1500𝑒 5𝑟
4
= 𝑒 5𝑟
3
Take natural log on both sides

4
ln ( ) = 5𝑟 𝑙𝑛𝑒
3
𝑟 = 0.0575 𝑜𝑟 5.75%
4. A person has $1500 to invest and wants it to grow to
$2000 in 5 years. At what annual rate r compounded
semi annually must she invest her money to achieve her
goal.
𝑟 𝑘𝑡
𝑆 = 𝑃 (1 + )
𝑘
 𝑟 10
2000 = 1500 (1 + )
2
4 𝑟 10
= (1 + )
3 2
1
4 10 𝑟
( ) =1+
3 2
1
4 10
𝑠𝑜 𝑟 = 2 [ ( ) − 1] = 0.0583 𝑜𝑟 5.83%
3

5. 𝐓𝐡𝐞 𝐩𝐨𝐩𝐮𝐥𝐚𝐭𝐢𝐨𝐧 𝐝𝐞𝐧𝐬𝐢𝐭𝐲 𝐨𝐟 𝐚 𝐜𝐢𝐭𝐲 𝐱 𝐦𝐢𝐥𝐞𝐬 𝐟𝐫𝐨𝐦 𝐭𝐡𝐞 𝐜𝐢𝐭𝐲 𝐜𝐞𝐧𝐭𝐞𝐫

𝐐 = 𝐀𝐞−𝐤𝐱 .
𝐅𝐢𝐧𝐝 𝐭𝐡𝐢𝐬 𝐟𝐮𝐧𝐜𝐭𝐢𝐨𝐧 𝐢𝐟 𝐭𝐡𝐞 𝐩𝐨𝐩𝐮𝐥𝐚𝐭𝐢𝐨𝐧 𝐝𝐞𝐧𝐬𝐢𝐭𝐲 𝐚𝐭 𝐭𝐡𝐞 𝐜𝐢𝐭𝐲 𝐜𝐞𝐧𝐭𝐞𝐫
𝐢𝐬 𝟏𝟓𝟎𝟎𝟎 𝐩𝐞𝐨𝐩𝐥𝐞 𝐩𝐞𝐫 𝐬𝐪𝐮𝐚𝐫𝐞 𝐦𝐢𝐥𝐞 𝐚𝐧𝐝 𝐚𝐭 𝟏𝟎 𝐦𝐢𝐥𝐞𝐬 𝐚𝐰𝐚𝐲 𝐟𝐫𝐨𝐦
𝐭𝐡𝐞 𝐜𝐢𝐭𝐲 𝐜𝐞𝐧𝐭𝐞𝐫 𝐢𝐬 𝟗𝟎𝟎𝟎 𝐩𝐞𝐨𝐩𝐥𝐞 𝐩𝐞𝐫 𝐬𝐪𝐮𝐚𝐫𝐞 𝐦𝐢𝐥𝐞.

𝑄 = 𝐴𝑒 −𝑘𝑥
𝒙 = 𝟎, 𝑸 = 𝟏𝟓𝟎𝟎𝟎 𝑆𝑜 𝐴 = 15000
 𝑄 = 15000𝑒 −𝑘𝑥
When x = 10, Q = 9000

So 9000 = 15000𝑒 −10𝑘

3
= 𝑒 −10𝑘
5
Take natural log on both sides
3
ln ( ) = 𝑙𝑛𝑒 −10𝑘
5
3
ln ( ) = −10𝑘 𝑙𝑛𝑒
5
𝑘 = 0.051

So 𝑄 = 15000𝑒 −0.051𝑥 𝑝𝑒𝑜𝑝𝑙𝑒

6. Qs 53 Sec 4.2
A manufacturer determines that the supply function for x
units of a commodity is
𝑺(𝒙) = 𝐥𝐧(𝒙 + 𝟐) 𝒂𝒏𝒅 𝒅𝒆𝒎𝒂𝒏𝒅 𝒊𝒔 𝑫(𝒙) = 𝟏𝟎 − 𝐥𝐧 (𝒙 + 𝟏)

a. Find the demand price p = D(x) when x =10 units.

𝐷(𝑥 ) = 10 − ln(𝑥 + 1) 𝐷(10) = 10 − ln(11) = 7.60
 Logarithmic Functions𝑆(𝑥 ) = ln(𝑥 + 2) 𝑠𝑜 𝑆(100) =
ln(100 + 2) = ln(102) = 4.62

b. Find the level pf production and price at market

equilibrium.
Supply = Demand
ln(𝑥 + 2) = 10 − ln(𝑥 + 1)

To solve a log equation , combine all logarithmic terms and

write them as a single log
ln(𝑥 + 2) + ln(𝑥 + 1) = 10
ln((𝑥 + 2)(𝑥 + 1)) = 10
(𝑥 + 2)(𝑥 + 1) = 𝑒 10
𝑥 2 + 3𝑥 + (2 − 𝑒 10 ) = 0

−3 ± √9 − 4(2 − 𝑒 10 )
𝑥=
2
−3 + √𝑒 10 + 1
𝑆𝑜 𝑥= = 147 𝑎𝑝𝑝𝑟𝑜𝑥.
2
𝑝 = 5 𝑑𝑜𝑙𝑙𝑎𝑟𝑠 𝑎𝑝𝑝𝑟𝑜𝑥.
 7. An investment firm estimates that the value of its
portfolio after t years is A million dollars where
𝑨(𝒕) = 𝟑𝟎𝟎 𝐥𝐧(𝒕 + 𝟑)
a. What is the value of the account when t = 0.

A(0) = 300 ln(3) = 329.6 million dollars

b. How long does it take for the account to double its initial
value?
2(300 ln(3)) = 300 ln(t+3)
2ln(3) = ln(t+3)
ln9=ln(t+3)
so t = 6

OR 659.2 =300 ln(t+3)

ln(t+3) =659.2/300 = 2.1973
𝑡 + 3 = 𝑒 2.1973 = 8.9979
; 𝑡 = 5.9979
c. How long does it take before the account is a billion
dollars?
1000 =300 ln(t+3) ;
10
𝑒 =t + 3
3
10
so t = 𝑒 3 − 3= 25 years approx..