International

University Math for Business

REVISION
Chapter 1: Linear Equation
1.1: Algebra
 Like terms: P, 2P, 0.3P are all multiples of P
 Distributive law: a(b + c) = ab + ac
 Factorization: 12a + 8b = 4(3a + 2b)
 Difference of two squares: 𝑎2 − 𝑏 2 = (a + b)(a − b)
Ex: 17 page 20 – Remember to note down the conditions.
1.2: Further algebra
𝒂
 Fractions: a: numerator, b: denominator
𝒃
𝟒 𝟐
, : equivalent fractions
𝟔 𝟑

To add (or subtract) two fractions you write them as equivalent fractions with a
common denominator and add (or subtract) their numerators.
 Equations: 2𝑥 + 1 = 3
 Inequalities: 𝑎 < 𝑏, 𝑎 > 𝑏 : a lies to the left/right of b (less/greater than)
If both sides are multiplied or divided by a negative number then the sense of
the inequality is reversed.
Ex: 5 page 38
1.3: Graph of linear equation
 Linear equation: 𝑎𝑥 + 𝑏𝑦 = 𝑐 a, b: coefficients
Or: 𝑦 = 𝑎𝑥 + 𝑏 a: slope, b: intercept
─ Draw 2 axes → Find 2 coordinates → Sketch the graph.
 Simultaneous linear equations: have point of intersection.

Ex: 9 page 52.

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TA: Tran Hoang Lam - Bui Nguyen Hoang Trieu – Doan Ngoc Van Khanh
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University Math for Business

1.4: Algebraic solution of simultaneous linear equations

Elimination method:
Step 1
─ Add/subtract a multiple of one equation to/from a multiple of the other
to eliminate x.
Step 2
─ Solve the resulting equation for y.
Step 3
─ Substitute the value of y into one of the original equations to deduce x.
Step 4
─ Check that no mistakes have been made by substituting both x and y into
the other original equation.
Ex: 4 page 65, 6 page 83 – Step by step, no calculator.
1.5: Supply and demand
 Demand function: 𝑄 = 𝑓(𝑃), 𝑃 = 𝑔(𝑄)
 Inverse functions: 𝑔 & 𝑓
 𝑃 = 𝑎𝑄 + 𝑏 a, b: parameters. 𝑎 < 0 → P is a decreasing function of Q.
 Substitutable good: good that could be consumed instead of others.
 Complementary good: good that is used in conjunction with others.

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 International
University Math for Business

 𝑄 = 𝑓(𝑃, 𝑌, 𝑃𝑠, 𝑃𝑐, 𝐴, 𝑇)

─ Y, Ps, Pc, A, T fixed → Q and P are endogenous variables. The remaining
are exogenous.
 Inferior good: income ↗, demand ↘
 Normal good: income ↗, demand ↗
 Equilibrium point: intersection of demand and supply, Qs = Qd.
 Tax: added to supply function.
Ex: 5 page 83 – New price is from new supply function after tax.
1.6: Transposition of formulae
 Flow chart: in an order.
 Reverse flow chart: in a reverse order.
Ex: 7 page 92

Chapter 2: Non-linear equation

2.1: Quadratic function
 𝑓(𝑥) = 𝑎𝑥 2 + 𝑏𝑥 + 𝑐
−𝑏±√(𝑏2 −4𝑎𝑐)
 𝑎𝑥 2 + 𝑏𝑥 + 𝑐 = 0 ↔ 𝑥 = 𝑏 2 − 4𝑎𝑐: discriminant
2𝑎
─ If 𝑏 2 − 4𝑎𝑐 > 0 : 2 solutions
𝑏 2 − 4𝑎𝑐 = 0 : 1 solution
𝑏 2 − 4𝑎𝑐 < 0 : no solution
 The graph of quadratic is always parabolic.
 Sketch the graph:
Step 1
Determine the basic shape. The graph has a U shape if a > 0, and an inverted U
shape if a < 0.
Step 2
Determine the y intercept. This is obtained by substituting x = 0 into the
function, which gives y = c.
Step 3

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 International
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Determine the x intercepts (if any). These are obtained by solving the quadratic
equation 𝑎𝑥 2 + 𝑏𝑥 + 𝑐 = 0
Ex: 4abc, 5abc page 129, 10 page 130
2.2: Revenue, cost and profit
 Revenue: 𝜋 = 𝑇𝑅 − 𝑇𝐶
 Total revenue: 𝑇𝑅 = 𝑃𝑄
─ To find maximum value => Sketch the graph, find the highest point.
 Total cost = Fixed cost + Variable cost
─ 𝑇𝐶 = 𝐹𝐶 + (𝑉𝐶)𝑄
 Average cost = Total cost/Quantity
𝑇𝐶 𝐹𝐶
─ 𝐴𝐶 = = + 𝑉𝐶
𝑄 𝑄
─ AC have a graph called rectangular hyperbola (L-shaped).

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Remember to notice the difference in finding maximum profit in the Profit graph and the TR – TC graph.

 Break-even: 𝜋 = 0 ↔ 𝑇𝑅 = 𝑇𝐶
Ex: 5,6 page 140, 9 page 141
2.3: Indices and logarithms
 𝑀 = 𝑏𝑛
 𝑏 𝑛 : exponential form of M to base b.
 n: index, power, exponent.
1
─ 𝑏 0 = 1, 𝑏 −𝑛 =
𝑏𝑛
1
─ 𝑏 : nth root of b.
𝑛
𝑛 1 1
─ 𝑏 =
𝑞 (𝑏𝑛 )𝑞= (𝑏 )𝑛 𝑞

─ 𝑏 𝑛 × 𝑏 𝑚 = 𝑏 𝑚+𝑛
─ 𝑏 𝑛 ÷ 𝑏 𝑚 = 𝑏 𝑚−𝑛
─ (𝑏 𝑚 )𝑛 = 𝑏 𝑚𝑛
─ (𝑎𝑏)𝑛 = 𝑎𝑛 𝑏 𝑛
 𝑄 = 𝑓(𝐾, 𝐿) : production function
─ 𝐾: Capital, 𝐿: Labor,  (Lambda): a general number which is the scale of K
and L.
 𝑄 = 𝑓(𝐾, 𝐿) is homogeneous if 𝑓(𝐾, 𝐿) = 𝑛 𝑓(𝐾, 𝐿)
─ 𝑛: degree of homogeneity.
─ 𝑛 < 1: the function is said to display decreasing return to scale.
─ 𝑛 = 1: the function is said to display constant return to scale.
─ 𝑛 > 1: the function is said to display increasing return to scale.

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University Math for Business

 Cobb-Douglas production function:

─ 𝑓(𝐾, 𝐿) = 𝐴𝐾 𝛼 𝐿𝛽
─ 𝑓(𝐾, 𝐿) = 𝛼+𝛽 𝑓(𝐾, 𝐿) : this is a homogeneous function of degree
𝛼 + 𝛽.
 If 𝑀 = 𝑏 𝑛 then log 𝑏 𝑀 = 𝑛
─ log 𝑏 (𝑥 × 𝑦) = log 𝑏 𝑥 +log 𝑏 𝑦
─ log 𝑏 (𝑥 ÷ 𝑦) = log 𝑏 𝑥 −log 𝑏 𝑦
─ log 𝑏 𝑥 𝑚 = 𝑚 log 𝑏 𝑥
Ex: 5 page 161, 6 page 162
2.4: The exponential and natural logarithm functions
 𝑓(𝑥) = 𝑒 𝑥 : exponential function
1 𝑛
 𝑒 = lim (1 + )
𝑛→∞ 𝑛
 An economic variable increase overtime but approach a fixed value is said
to displays a limited growth.
 Saturation level: 𝑒 𝑥 = 0 when 𝑥 → ∞
 An economic variable keep on rising over time is said to display an
unlimited growth.
 𝑀 = 𝑒 𝑛 then log 𝑒 𝑀 = 𝑛 = ln 𝑀: natural logarithms.
Ex: 5 page 175, 4 page 176

Chapter 3: Mathematics of finance

3.1: Percentages
𝑛𝑒𝑤 𝑣𝑎𝑙𝑢𝑒−𝑜𝑙𝑑 𝑣𝑎𝑙𝑢𝑒
 Change in percentage: × 100 = 𝑋%
𝑜𝑙𝑑 𝑣𝑎𝑙𝑢𝑒
─ 𝑋 > 0: increase, 𝑋 < 0: decrease
𝑛𝑒𝑤 𝑣𝑎𝑙𝑢𝑒 𝑟
 Scale factor = =1± with r = percentage
𝑜𝑙𝑑 𝑣𝑎𝑙𝑢𝑒 100
increase/decrease.
 Find a value forward in time -> Multiply the scale factor.
 Find a value backward in time -> Divide by the scale factor.
 Overall percentage changes: multiply all the scale factors.
 Index number: identify trends and relationships in the data. (have no
unit)

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─ Index number = scale factor from base year x 100.

𝑁𝑢𝑚𝑏𝑒𝑟 2014 × 𝑃𝑟𝑖𝑐𝑒 2014

 Laspeyres index = : base-weighted index
𝑁𝑢𝑚𝑏𝑒𝑟 2014 ×𝑃𝑟𝑖𝑐𝑒 2015
𝑁𝑢𝑚𝑏𝑒𝑟 2014 × 𝑃𝑟𝑖𝑐𝑒 2014
 Paasche index = : current-weighted index
𝑁𝑢𝑚𝑏𝑒𝑟 2015 ×𝑃𝑟𝑖𝑐𝑒 2015
 Nominal data: original, raw data.
 Real data: the value that have been adjusted to take inflation into
account.
Ex: 4,5,6,9,11 page 197, 14 page 198, 8 page 200 – Write down the table to solve
question 8 easier.
3.2: Compound interest
 Simple interest: the amount of interest received is the same for all years.
 Compound interest: “interest on the interest”.
 Principal (P): the original sum of money.
 Future value (S): final sum.
𝑟
─ 𝑆 = 𝑃(1 + )𝑘×𝑡
𝑘×100
 r: interest rate of a year, t: number of year
 Annually: 𝑘 = 1, Semi-annually: 𝑘 = 2, Quarterly: 𝑘 = 4, Monthly:
𝑘 = 12, Weekly: 𝑘 = 52, Daily: 𝑘 = 365
 Continuous compounding: the interest is added on with increasing
frequency.
𝑟𝑡
─ 𝑆 = 𝑃𝑒 100
 Annual percentage rate (APR): the rate of interest which, when
compounded annually, produces the same yield as the nominal rate of
interest.
 Annual equivalent rate (AER): APR used for savings.
𝑟
─ 𝐴𝑃𝑅 = 100(1 + )𝑛 − 100 n: times compounded in a year
100𝑛
─ Continuous compounding: 𝐴𝑃𝑅 = 𝑒 𝑟 − 1
Ex: 12, 15 page 213, 6 page 214, 11 page 215
3.3: Geometric series

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 International
University Math for Business

 Geometric progression: sequence in which terms are calculated by

multiplying their predecessor by a fixed number.
 Geometric ratio: the multiplicative factor.
 Arithmetic progression: adding, not multiplying factor.
 Geometric series: Sum of consecutive terms of a geometric progression.
 Sinking fund: A fixed sum of money saved at regular intervals which is
used to fund some future financial commitment.
𝑟 𝑛 −1
 𝑎( ) with (𝑟 ≠ 1)
𝑟−1
─ 𝑎: the first term.
─ 𝑟: geometric ratio.
─ 𝑛: number of terms.

Ex: 3 page 224, 6,8 page 225

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3.4: Investment appraisal
𝑟
─ 𝑃 = 𝑆(1 + )−𝑘×𝑡 P: present value, r: discount rate.
𝑘×100
𝑟𝑡
─ 𝑃 = 𝑆𝑒 −100
 Present value: The amount that is invested initially to produce a specified
future value after a given period of time.
 Net present value (NPV): he present value of a revenue flow minus the
original cost.
 If NPV > 0 => should invest
 If NPV1 > NPV2 => invest 1
 Internal rate of return (IRR) The interest rate for which the net present
value is zero.
𝑟
 𝑆 = 𝑃(1 + )𝑘×𝑡
𝑘×100
 r = internal rate of return
Ex: 6 page 40, 1,2,3 page 239 – Remember to compare the NPV, not PV

Chapter 4: Differentiation (Ms. Vân class only)

4.1: The derivative of a function
∆𝑦
 Slope =
∆𝑥
 Tangent: A straight line which passes through a point on a curve and
which just touches the curve at this point.
 𝑓 ′ (𝑎): f dashed of a: the slope of the graph of a function f at 𝑥 = 𝑎.
𝑑𝑦
 Derived function:
𝑑𝑥
𝑑𝑦
 𝑓(𝑥) = 𝑥 then 𝑓
𝑛 ′ (𝑥)
= 𝑛𝑥 𝑛−1 or 𝑦 = 𝑥 𝑛 then = 𝑛𝑥 𝑛−1
𝑑𝑥
 Differentiation: the process of finding derived function symbolically.
Ex: 1,6 page 257
4.2: Rules of differentiation
 The constant rule: differentiate the function and multiply by the constant.
─ Constant differentiate to zero.
 The sum rule: differentiate each function separately and add.
 The difference rule: differentiate each function separately and subtract.
𝑑2𝑦
 𝑓 ′′ (𝑥) 𝑜𝑟 : second-order derivative.
𝑑𝑥 2
 Convex: upward curve.

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University Math for Business
 Concave: downward curve.

 𝑓(𝑥) = 𝑎𝑥 2 + 𝑏𝑥 + 𝑐
─ If 𝑎 > 0 then 𝑓′′(𝑥) > 0 so the parabola is convex.
─ If 𝑎 < 0 then 𝑓 ′′ (𝑥) < 0 so the parabola is concave.
Ex: 6 page 268

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