BUSINESS

MATHEMATICS
UNIT I
TOPICS
FUNCTIONS
CONCEPT OF TRADE OFF
DIFFERENTIATION
INTEGRATION
CONCEPT OF INTEREST
Functions arise whenever one quantity depends on another.
For e.g., The area of a circle depends on the radius of the circle. The rule that connects ‘r’ and ‘A’
and is given by the equation ‘πr2’. With each positive number r there is associated one value of
‘A’, and we say that A is a function of ‘r’.
The human population ‘P’ of the world depends on the time ‘t’ .
The cost ‘C’ of mailing a first-class letter depends on the weight ‘w’ of the letter.
A function ‘f’ is a rule that assigns to each element ‘x’ in a set ‘A’ exactly one element, called
‘f(x)’, in a set ‘B’.
The set ‘A’ is called the domain of the function.
The range of ‘f’ is the set of all possible values of ‘f(x)’ as ‘x’ varies throughout the domain.
Mathematical Models
A mathematical model is a mathematical description (often by means of a function or an
equation) of a real-world phenomenon such as the size of a population, the demand for a
product, the speed of a falling object, the concentration of a product in a chemical reaction, the
life expectancy of a person at birth, or the cost of emission reductions.

The purpose of the model is to understand the phenomenon and perhaps to make predictions
about future behavior.
Linear Models
When we say that y is a linear function of x, we mean that the graph of the function is a line.
y = f(x) = mx + b,
m = slope of the line
b = y – intercept

A characteristic feature of linear functions is that they grow at a constant rate

Polynomials
A function ‘P’ is called a polynomial if
P(x) = anxn + an-1xn-1 + ……..+ a2x2 + a1x + a0

where ‘n’ is a nonnegative integer and the numbers a0,a1,a2,…,are constants called the
coefficients of the polynomial
The degree of the polynomial is ‘n’.
A polynomial of degree 2 is of the form ‘P(x) = ax2 +bx + c’ and is called a quadratic function
Its graph is always a parabola
A polynomial of degree 3 is of the form P(x) = ax3 +bx2 + cx + d and is called a cubic function
Power Functions
A function of the form f(x) = xn, where ‘n’ is a constant, is called a power function
A function of the form f(x) = x1/n, is called a root function
Functions in Business and Economics
Demand function, Qd = a – bp, p is the price, a & b are constants
Supply function, Qs = c – dp, p is the price, c & d are constants
Total cost function, C = F + V(x), F – Fixed cost, x is the quantity produced
Consumption function, C = a + cY, Y – national income
Cobb-Douglas Production function, P = aLαKβ, L –Labour, K - Capital
At a price of Rs. 2.50 per unit, a firm will supply 8000 copies per month. At Rs. 4 per unit, the
firm will supply 14000 copies per month. Determine the supply equation assuming it to be
linear.
TRADE OFF
A trade-off (or tradeoff) is a situational decision that involves diminishing or losing one aspect in
return for gains in other aspects. In simple terms, a tradeoff is where one thing increases and
another must decrease.
EXAMPLE
Large cars can carry many people (five or more), and since they have larger crumple zones, they
may be safer in an accident. However they also tend to be heavy (and often not
very aerodynamic) and hence have relatively poor fuel economy
Differentiation
In Mathematics, differentiation is used to find out the rate of change.

The result we obtain when we differentiate a function is known as derivative.

The derivative of a function y = f(x) of a variable x is a measure of the rate at which the value y of the
function changes with respect to the change of the variable x

Derivative of y with respect to x is written as dy/dx

dy/dx measures the rate of change of y with respect to x.

dy/dx represent the slope of the curve, y = f(x) at a given point

At the maximum or minimum point of the curve, y = f(x), its slope is

zero or dy/dx = 0
Rules of differentiation
 y, u, & v are functions of x y=f(x), u = f(x), v = f(x)
k, c are constants

Rule 1: (c) = 0

Rule 2:
Rules of differentiation
 y, u, & v are functions of x y=f(x), u = f(x), v = f(x)
k, c are constants

Rule 3:

Rule 4:
Rules of differentiation
 y, u, & v are functions of x y=f(x), u = f(x), v = f(x)
k, c are constants

Rule 5:

Rule 6:
Relationship among Total cost, Average
Cost, Marginal cost
Let
Total Cost = C(x), Average Cost = AC, Marginal Cost = MC
x = Price Per Unit

AC = C/x
MC = dC(x)/dx
The total profit y in rupees of a toy manufacturing company from the manufacturer and sale of x
number of toys is given by
y = (- x2/400)+ 2x - 80.
(a) How many toys the company must sell per year to achieve maximum profit.
(b) What is the profit per toy when the maximum is achieved?
The annual cost of production of a product as a function of the production quantity is as given
below. Find ,the optimal production quantity.

F(X)=5x2 -20000X +1000.

A manufacturer can sell ‘x’ items per week at a price P = 20-0.001x rupees each. It cost, C =
5x+200 rupees to produce ‘x’ items. Determine the number of items the manufacturer has to
produce per week for maximum profit.
Integration (∫)
Integration is the process of finding a function when its derivative is known. It is the process
reverse to that of differentiation.
Integration is the process of finding the area of a plane region bounded by the curve.

If d/dx of F(x) is f(x), then ∫f(x) dx = F(x) + C

If the marginal cost function of manufacturing x pairs of shoes is 6+10x-6x2. The total cost of
producing a pair of shoes is Rs. 12. find the total and average cost function.
The marginal cost of a manufacturing is obtained as MC(x) = 16x - 1591 , where x is the number
of units produced, The fixed cost is Rs. 1800. Find the cost function. If the price of product is
fixed at Rs. 9, find the revenue function, profit function and the sales volume that yields the
maximum profit. Also obtain the profit at this sales volume.