MIDTERMS

BREAK EVEN ANALYSIS TYPES OF FUNCTIONS Properties of a Linear Function

AND THEIR GRAPHS
The graph of a linear function is a straight line.
Types of Functions and Graphs
The equation of a linear function can be written in the
Here are the commonly used types of functions form:
which will be introduced in this module, together with
𝒚 = 𝒎𝒙 + 𝒃 and 𝒚 − 𝒚𝟎 = 𝒎(𝒙 − 𝒙𝟎 )
their properties and applications in business and
economics.
Where:
A. Linear Functions
B. Quadratic Functions 𝒎 is the slope (rate of rise or drop) and 𝒃 is
C. Polynomial and Rational Functions a constant.
D. Exponential Functions
E. Logarithmic Functions
F. Piecewise-defined Function Slope of a line. The slope of any line passing
Linear Functions through the points (𝒙𝟏 , 𝒚𝟏 ) and (𝒙𝟐 , 𝒚𝟐 ) is
given by the formula:
In many practical situations, the rate at which one
quantity changes with respect to another is constant. ∆𝒚 𝒚𝟐 − 𝒚𝟏
𝒔𝒍𝒐𝒑𝒆 = 𝒎 = =
∆𝒙 𝒙𝟐 − 𝒙𝟏
Example:
Practical Application
A manufacturer’s total cost consist of a fixed
overhead of $200 plus production costs of $50 per Since the beginning of the year, the price of a bottle
unit. Express the total cost as a function of the soda at a local discount supermarket has been rising
number of units produced and draw the graph. at a constant rate of 2 cents per month. By
November first, the price had reached $1.56 per
Solution: bottle. Express the price of soda as a function of time
Let: and determine the price at the beginning of the year.

C(x) be the function Solution:

x be the unit of a product Using 𝒚 − 𝒚𝟎 = 𝒎(𝒙 − 𝒙𝟎 );

fixed overhead = $200 Where:

production costs = $50 per unit m = 0.02 → 2 cents

𝒙𝟎 = 10 → November 1st
∴ C(x) = 200 + 50x
𝒚𝟎 = 1.56
y – dependent variable
Table of values
x – independent variable

Substitution of gathered data:

On November 1st,
Graph:
x = 10
Thus;
y – 1.56 = 0.02(x – 10)
y = 0.02x – 0.2 + 1.56
y = p(x) = 0.02x + 1.36
p(0) = 0.02(0) + 1.36
p(0) = 1.36
Problem Involving Supply and Demand
At a price of $9.00 per box of oranges, the supply is
320,000 boxes and the demand is 200,000 boxes. At
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a price of $8.50 per box, the supply is 270,000 boxes 𝟎. 𝟎𝟏𝒙 + 𝟎. 𝟎𝟎𝟓𝒙 = 𝟏𝟎 − 𝟓. 𝟖
and the demand is 300,000 boxes. 𝟎. 𝟎𝟏𝟓𝒙 = 𝟒. 𝟐
A. Find a price-supply equation of the form 𝒑 = x = 280
𝒎𝒙+𝒃 where 𝒑 is the price in dollars and is
Thus: y = – 0.005(280) + 10
the corresponding supply in thousands of
boxes. y = 8.6
B. Find a price-demand equation of the form The Equilibrium point is at (280, 8.6)
𝒑=𝒎𝒙+𝒃 where 𝒑 is the price in dollars and
𝒙 is the corresponding demand in thousands
of boxes. Graph:
C. Graph the price-supply and price-demand Demand: 𝒚 = −𝟎. 𝟎𝟎𝟓𝒙 + 𝟏𝟎
equations in the same coordinate system 𝑫𝑷𝟏 (𝟐𝟎𝟎, 𝟗), 𝑫𝑷𝟐 (𝟑𝟎𝟎, 𝟖. 𝟓)
and find their point of intersection.
Supply: 𝒚 = 𝟎. 𝟎𝟏𝒙 + 𝟓. 𝟖
Demand function, 𝑫(𝒙) for the commodity is the 𝑺𝑷𝟏 (𝟑𝟐𝟎, 𝟗), 𝑺𝑷𝟐 (𝟐𝟕𝟎, 𝟖. 𝟓)
price 𝒑 = 𝑫(𝒙) that must be charged for each unit of
the commodity if 𝑥 units are to be sold.

Supply function, 𝑺(𝒙) for the commodity is the unit

price 𝒑 = 𝑺(𝒙) at which the producers are willing to
supply 𝑥 units to the market.

Solution:
Let y = p – dependent variable
x = in thousands Supply – Demand
For Supply function:
𝑺𝑷𝟏 (𝟑𝟐𝟎, 𝟗), 𝑺𝑷𝟐 (𝟐𝟕𝟎, 𝟖. 𝟓)
∆𝒚 𝟗 − 𝟖. 𝟓
𝒎𝒔 = =
∆𝒙 𝟑𝟐𝟎 − 𝟐𝟕𝟎
𝒎𝒔 = 𝟎. 𝟎𝟏
𝒚 − 𝒚𝟏 = 𝒎(𝒙 − 𝒙𝟏 )
𝒚 − 𝟗 = 𝟎. 𝟎𝟏(𝒙 − 𝟑𝟐𝟎)
𝒚 − 𝟗 = 𝟎. 𝟎𝟏𝒙 − 𝟑. 𝟐
𝒚 = 𝟎. 𝟎𝟏𝒙 + 𝟓. 𝟖 → supply price function

For Demand function:

𝑫𝑷𝟏 (𝟐𝟎𝟎, 𝟗), 𝑫𝑷𝟐 (𝟑𝟎𝟎, 𝟖. 𝟓)
∆𝒚 𝟗 − 𝟖. 𝟓
𝒎𝑫 = =
∆𝒙 𝟐𝟎𝟎 − 𝟑𝟎𝟎
𝒎𝑫 = −𝟎. 𝟎𝟎𝟓
𝒚 − 𝒚𝟏 = 𝒎(𝒙 − 𝒙𝟏 )
𝒚 − 𝟗 = −𝟎. 𝟎𝟎𝟓(𝒙 − 𝟐𝟎𝟎)
𝒚 − 𝟗 = −𝟎. 𝟎𝟎𝟓𝒙 + 𝟏
𝒚 = −𝟎. 𝟎𝟎𝟓𝒙 + 𝟏𝟎 → demand price function

Break Even Point

𝒚 = 𝟎. 𝟎𝟏𝒙 + 𝟓. 𝟖 → supply price function
𝒚 = −𝟎. 𝟎𝟎𝟓𝒙 + 𝟏𝟎 → demand price function
∴ 𝟎. 𝟎𝟏𝒙 + 𝟓. 𝟖 = −𝟎. 𝟎𝟎𝟓𝒙 + 𝟏𝟎
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BREAK EVEN ANALYSIS: FUNCTIONS AND • Supply function, 𝑺(𝒙) for the commodity is
THEIR GRAPHS the unit price 𝒑 = 𝑺(𝒙) at which the producers
are willing to supply 𝑥 units to the market.
Functions and Graphs • Revenue function, 𝑹(𝒙) obtained from
selling 𝑥 units of the commodity is given by:
A function is a correspondence between two sets
variables. It is a relation in which, for each value of R(x) = (number of items sold) x (price per
the first value of the ordered pairs, there is exactly item)
one value of the second component. R(x) = x ∙ p(x)
Examples:
• Cost function, 𝑪(𝒙) is the cost of producing
• Each person corresponds an annual income. 𝑥 units of commodity.
Therefore, income is function of a person’s • Profit function, 𝑷(𝒙) is the profit obtained
skills. from selling 𝑥 units of the commodity and is
• Each item in the supermarket corresponds to given by:
a certain price. Therefore, price is a function
of an item’s quality. P(x) = revenue - cost

In a relation, there are set of values which depends = R(x) - C(x)

on the other set of values.
=xp(x) - C(x)
The set of values of the independent variable is
Practice Problems
called the domain; the set of values of the
dependent variable is called the range. 1. In each case, find the R(x) and P(x)
functions. And find the values of x for which
Example:
production is profitable.
1. The salary of a certain employee depends on the
number of hours he has worked for the company in a. 𝑫(𝒙) = −𝟎. 𝟎𝟐𝒙 + 𝟐𝟗
a span of 2 weeks.
𝑪(𝒙) = 𝟏. 𝟒𝟑𝒙𝟐 + 𝟏𝟖. 𝟑𝒙 + 𝟏𝟓. 𝟔
I.V.? →____________________
b. 𝑫(𝒙) = −𝟎. 𝟓𝒙 + 𝟑𝟗
D.V.? → ___________________
If a function is specified by an equation and 𝑪(𝒙) = 𝟏. 𝟓𝒙𝟐 + 𝟗. 𝟐𝒙 + 𝟔𝟕
the domain is not indicated, then we assume that the
domain is the set of all real-numbers for 𝒙 that
produce real values for 𝒚.
Example:
If f(x) = y
And y = x² + 2x + 3
Then f(x) = x² + 2x + 3
Compute the indicated values of a given function.
Solution:
1. 𝒇(𝒙) = 𝟑𝒙 + 𝟓
⚫ 𝒇(𝟎) = _________________ a. 𝑫(𝒙) = −𝟎. 𝟎𝟐𝒙 + 𝟐𝟗, 𝑪(𝒙) = 𝟏. 𝟒𝟑𝒙𝟐 +
⚫ 𝒇(−𝟏) = _________________ 𝟏𝟖. 𝟑𝒙 + 𝟏𝟓. 𝟔
⚫ 𝒇(𝟐) = __________________
2. 𝒇(𝒙) = 𝟑𝒙𝟐 + 𝟓𝒙 − 𝟐 p(x) = D(x) = – 0.02x + 29
⚫ 𝒇(−𝟐) = _________________ R(x) = x p(x) = x (– 0.02x + 29)
⚫ 𝒇(𝟓) = __________________
R(x) = – 0.02x² + 29x

Applications of Functions in Economics

P(x) = R(x) – C(x)
Here are the several functions associated with the
marketing of a particular commodity: P(x) = – 0.02x² + 29x – (1.43x² + 18.3x + 15.6)
P(x) = – 1.45x² + 10.7x – 15.6
• Demand function, 𝑫(𝒙) for the commodity is
the price 𝒑 =𝑫(𝒙) that must be charged for −𝟏𝟎. 𝟕 ± √𝟏𝟎. 𝟕𝟐 − 𝟒(−𝟏. 𝟒𝟓)(−𝟏𝟓. 𝟔)
each unit of the commodity if 𝑥 units are to be 𝒙=
𝟐(−𝟏. 𝟒𝟓)
sold.
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x = 2, x = 5.38 a. What are the revenue and profit functions,

D = {2 < x < 5.38} R(x) and P(x), for this production process?
b. For what values of 𝑥 is production of the
coffee makers profitable?
b. 𝑫(𝒙) = −𝟎. 𝟓𝟎𝒙 + 𝟑𝟗, 𝑪(𝒙) = 𝟏. 𝟓𝒙𝟐 +
Solution:
𝟗. 𝟐𝒙 + 𝟔𝟕
𝑹(𝒙) = 𝒙 ∙ 𝒑(𝒙)
= 𝒙(−𝟎. 𝟐𝟕𝒙 + 𝟓𝟏)
p(x) = D(x) = – 0.50x + 39
𝑹(𝒙) = −𝟎. 𝟐𝟕𝒙𝟐 + 𝟓𝟏𝒙
R(x) = x p(x) = x (– 0.5x + 39)
R(x) = – 0.5x² + 39x
𝑷(𝒙) = 𝒓𝒆𝒗𝒆𝒏𝒖𝒆 − 𝒄𝒐𝒔𝒕
P(x) = R(x) – C(x) = 𝑹(𝒙) − 𝑪(𝒙)
P(x) = – 0.5x² + 39x – (1.5x² + 9.2x + 67) = − 𝟎. 𝟐𝟕𝒙𝟐 + 𝟓𝟏𝒙 − (𝟐. 𝟐𝟑𝒙𝟐 + 𝟑. 𝟓𝒙 + 𝟖𝟓)
P(x) = – 2x² + 29.8x – 67 𝑷(𝒙) = −𝟐. 𝟓𝒙𝟐 + 𝟒𝟕. 𝟓𝒙 − 𝟖𝟓

−𝟐𝟗. 𝟖 ± √𝟐𝟗. 𝟖𝟐 − 𝟒(−𝟐)(−𝟔𝟕)

𝒙= If P(x) = 0 → Break Even
𝟐(−𝟐)
𝟎 = −𝟐. 𝟓𝒙𝟐 + 𝟒𝟕. 𝟓𝒙 − 𝟖𝟓
x = 2.76, x = 12.14
D = {2.76 < x < 12.14} The above function resulted to a quadratic equation:

2. Suppose the total cost in dollars of manufacturing

𝒒 units of a certain commodity is given by the
function

𝑪(𝒒) = 𝒒𝟑 − 𝟑𝟎𝒒𝟐 + 𝟓𝟎𝟎𝒒 + 𝟐𝟎𝟎

a. Compute the cost of manufacturing 10

units of commodity.
b. Compute the cost of manufacturing the Where:
10th unit of commodity.
• a = – 2.5
Solution:
• b = 47.5
a. C(q) = q³ – 30q² + 500q + 200 • c = – 85
C(10) = 10³ – 30(10²) + 500(10) + 200
−𝒃 ± √𝒃𝟐 − 𝟒𝒂𝒄
C(10) = 3200 𝒙=
𝟐𝒂
−𝟒𝟕. 𝟓 ± √𝟒𝟕. 𝟓𝟐 − 𝟒(−𝟐. 𝟓)(−𝟖𝟓)
b. C(9) = 9³ – 30(9²) + 500(9) + 200 𝒙=
𝟐(−𝟐. 𝟓)
C(9) = 2999 The two values of x are;
∴ the cost of manufacturing the 10th 𝒙𝟏 = 𝟐, 𝒙𝟐 = 𝟏𝟕
unit is;
∴ 𝒕𝒉𝒆 𝑫𝒐𝒎𝒂𝒊𝒏 𝒂𝒓𝒆 𝒗𝒂𝒍𝒖𝒆𝒔 𝒐𝒇 𝒙 𝒃𝒆𝒕𝒘𝒆𝒆𝒏 𝟐 𝒂𝒏𝒅 𝟏𝟕𝒔𝒉𝒂𝒍𝒍
C(10) – C(9) = 3200 – 2999
𝒎𝒂𝒌𝒆 𝒕𝒉𝒆 𝒑𝒓𝒐𝒅𝒖𝒄𝒕𝒊𝒐𝒏 𝒑𝒓𝒐𝒇𝒊𝒕𝒂𝒃𝒍𝒆:
C(10) – C(9) = 201
D = {2 < 𝒙 < 𝟏𝟕}
3. Market research indicates that consumers will
buy 𝑥 thousand units of a particular kind of coffee Price - Demand and Revenue Modeling
maker when the unit price is
Example:
𝒑(𝒙) = −𝟎. 𝟐𝟕𝒙 + 𝟓𝟏 (dollars)
A manufacturer of a popular digital camera
The cost of producing the 𝑥 thousand units is
wholesales the camera to retail outlets throughout
the United States. Using statistical methods, the
𝑪(𝒙) = 𝟐. 𝟐𝟑𝒙𝟐 + 𝟑. 𝟓𝒙 + 𝟖𝟓 (thousand dollars) financial department in the company produced the
price-demand data in the table below, where 𝑝 is the
 MIDTERMS

wholesale price per camera at which 𝑥 million B. The company revenue function is;
cameras are sold.
R(x) = x p(x)

R(x) = x (94.8 – 5x)

R(x) = 94.8x – 5x²

0 = 94.8x – 5x² = x(94.8 – 5x)

(x – 0)(x – 94.8/5)

D = {0 ≤ x ≤ 18.96}
Using special analytical techniques, an analyst
obtained the following price-demand function to
model the data in the table shown above. C.

Revenue Table
𝒑(𝒙) = 𝟗𝟒. 𝟖 − 𝟓𝒙 𝟏 ≤ 𝒙 ≤ 𝟏𝟓

And the cost function is;

C(x) = 14.97x+75.21

Accomplish the following:

A. Plot the data in Table 1 then sketch the graph

of the price-demand function.
B. What is the company’s revenue function for
this camera? What is its domain?
C. Complete the Revenue table below by
computing revenues to the nearest million D.
dollars.
D. Plot the data in Revenue table then sketch a
graph of the revenue function using this
points.
E. How will you describe the graph of the
revenue table?
F. What is the company’s profit function?
Determine its set of domain.

A.

E.

How will you describe the drawn graph?

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The Profit function and its Set of Domain

𝑷(𝒙) = 𝒙𝒑(𝒙) − 𝑪(𝒙)
P(x) = 94.8x – 5x² – (14.97x + 75.21)
P(x) = – 5x² + 79.83x – 75.21
If P(x) = 0; R(x) = C(x) → Break Even
0 = – 5x² + 79.83x – 75.21 → Use the QF
x=1 x = 15
D = {1 < x < 15}

Graph of the Profit Function