ASSIGNMENT : 2

FUNCTIONS

SELF PRACTICE PROBLEMS D

Q1. The market supply function of an item is of the form, q=a+bp, where p represents
the market price/unit of the item. It is observed that 1000 units of the item can be sold
at a price of Rs.5 per unit and 1200 units at a price of Rs. 4.50 per unit. Determine
values of a and b and interpret your answer.
Solution:
Supply function is given by q=a+bp
No. of units produced q1=1000
Market price, p1=5
Supply function is given by 1000=a+5b ..........(i)
Again, no. of units produced q2=1200
Market price, p2=4.5
Supply function is given by 1200=a+4.5b .........(ii)
(i)-(ii) => 0.5b= -200
=> b=-200/0.5 = -400
Putting value of b in (i), we get
1000 = a-5x400
=>1000 =a-2000
=>a=3000

Q2. A retailer sells an item costing Rs. 5 for Rs. 8.50 and another costing Rs. 0.5 for
Rs. 0.75. If this represents retailers purchase and sell price policy, then assuming
linear relationship between cost and sell price, find the function which determines the
selling price of an item.
Solution:
Cost price of an item, CP1=5
Selling price of the item, SP1=8.5

Cost price of another item, CP2=0.5

Selling price of another item, SP2=0.75
Since the relationship between cost and sell price is linear
Hence, SP=a+bCP, where a,b are constants
Therefore, SP1=a+bCP1
=>8.5=a+5b ....................(i)
And,

SP2=a+bCP2
=>0.75=a+0.5b ................(ii)

(i)-(ii) => 7.25=4.5b

=>b=7.25/4.5 = 1.61
Putting value of b in (i), we get,
8.5=a+5x1.61
=>a=8.5- 8.05 =0.45
Hence, SP=0.45+1.61CP

Q4. The ABC company is producing a product at a fixed cost of Rs.500 and variable
cost of Rs. 2 per unit.
(a) If the demand function is given by q=-100p+1000 where p represents the market
price and q represents the quantity demanded, then find the total cost function in terms
of p.
(b) What is the price which the company should charge so as to realize a total profit of
Rs. 2500.
Solution:
Fixed cost, FC=Rs.500
Variable cost, VC=Rs.2 per unit = 2xq where q= quantity demanded
= 2x (-100p+1000)
(a) Total Cost, TC=FC + VC

TC= 500 + 2x(-100p+1000)

TC=2500-200p
(b) Total Revenue, TR=pxq, where p=market price
TR=px(-100p+1000)
Profit= TR-TC
= px(-100p+1000) {500+ 2x(-100p+1000)}
=-100p2 + 1000p -2500 + 200p
= -100p2 + 1200p-2500
Hence P= -1200+{12002 -4x(-100)x(-2500)} /2x(-100)
= -1200+{1440000-1000000} /-200
= (-1200 +663.32)/-200
= -536.68/-200
=2.6834

Q6. The total cost curve of the number of copies of a particular photograph is linear.
The total cost of 5 and 8 copies of a photograph are Rs. 80 and Rs. 116 respectively.
Find the equation of the total cost line in terms of number of copies and the total cost
for 10 copies of the photograph.
Solution:
Let C= total cost
x=no. of copies
Since cost and no. of copies of a photograph is linear,
Therefore, C=a+bx
80=a+5b .............(i)
116= a+8b ...........(ii)

(ii)-(i) => 36=3b

b=12
Putting the value of b in (i), we get
80=a+60
=>a=20
Therefore, equation of total cost line, C=20+12x
Now, cost for 10 copies, C=20+12x10
=>C=140

Q7. A man has Rs.10000 to deposit and expects to leave the deposit for 10 years. Two
options are available: 5% interest payable biannually and 4.5% interest payable
quarterly. Which option should be choose?
Solution:
Principal, p=10000
Since, rate, r1=5% biannually
Time, t1 = 2xn, where n=no. of years
t1= 2x10=20 years
Amount, A1=P(1+r1/100)2n
A1=10000(1+5/100)20
=10000x2.6533
=26533
Again, Rate, r2 =4.5% quarterly
Hence, t2= 4xn =4x10=40
Amount, A2= 10000(1+4.5/100)40
=10000x5.81636

=58163.6
Since A2 > A1 the interest received in the second option is more. So second option, i.e,
4.5% interest payable quarterly should be chosen.

Q8.Production cost (in 100s rs) of an item is expressed by the equation : C=120-80 e 0.04x
, where x is the number of units of output. When number of units produced are
100, what is the total amount of fixed cost and what proportion of production costs are
fixed for 100 units output?

Solution:
Production cost, C = 120 80e-0.04x
when no. of units produced is 100
C = 120 80e-0.04 100
= 120 80e-4
= 120 80 0.018
= 120 - 1.44
= 118.56

For fixed cost, for x = 0

C = 120 80e-0
= 120 80
= 40
Since fixed cost does not vary with no. of units produced, therefore fixed cost is Rs.
4000.
Here , total cost = 118.56
Out of which fixed cost = 40

Now, Z% of 118.56 = 40
=> Z = 40 100/118.56
=> Z = 33.738%
Therefore, for 100 units 33.738% are fixed production costs.

Q9. If the monthly total revenue(in Rs.) for a particular firm is given by:
R = 100(0.01)0.05p , where p is the expenditure incurred on advertising and promotion
(a) What is the monthly total promotion?
(b) What is the total promotion when Rs. 25 is spent on advertising and
promotion?

Solution:
Total revenue, R = 100(0.01)0.05p , where p is the expenditure incurred on advertising
and promotion.
(a)

R = 100(0.01)0.050
R = 100

(b)

When Rs 25 is spent on promotion,

R = 100(0.01)0.0525
= 100(0.01)1.25
= 0.316

10.At a charity performance at the local cinema, it is known that the attendance at the
uniform charge of Rs. p will be x= (a/p) b , where a, b are constants. It is found that
the cinema which has 3000 seats, is half filled when Rs. 12 is charged but only 1/6 th of
the seats are empty when Rs. 9 is charged per seat.
(1) find a and b
(2) find the charge that fills the show. Show that this charge provides the highest
benefit to charity, assuming that all proceeds go to charity.

Solution:
Given, x= (a/p) b , where x- attendance; p ticket price
(1) When cinema is half-filled,i.e. x= 1500
1500 = (a/12) b
18000 = a 12b ...................(i)

When 1/6th seats are empty, ie 5/6th are filled

30005/6 = (a/9) b
22500 = a 9b ..................(ii)
(i)

- (ii) :

4500 = - 3b
b= 1500

a = 18000 + 121500
= 36000
Hence , x = 36000/p - 1500

(2) when show is filled,

3000 = 36000/p 1500
p=8
therefore, for shoe to be filled, the ticket should be priced at Rs.8
highest charity = Rs. 8 3000
= Rs. 24000

Self practice problems E

Q1. Find the point of equilibrium for the following demand-supply equations : Q=5-3P
and Q=4P+12
Solution:
QD=5-3P
QS=4P+12
At the point of equilibrium,
QD=QS
5-3P = 4P+12
=>7P = -7
=> P = -1.

Hence from the solution we can conclude that the point of equilibrium cannot be reached
as price cannot be negative.

Q2. Find the equilibrium price (P) and quantity (Q) , if the demand law is 2Q+P-10 = 0
and supply law is P2-8Q-4 = 0.
Solution:
2Q+P-10 = 0
=> 2Q = 10 P
=> Q = 5-P/2................................................(i)

P2-8Q-4 = 0
=>8Q=P2-4

=>Q=(P2-4)/8...............................................(ii)
Now from (i) and (ii)
5-P/2=(P2-4)/8
=>P2-4=40-4P
=>P2+4P-44=0
Hence solutions are (-4(16+126))/2
Now neglecting negative value we get
(-4+(16+126))/2=(-4+13.8)/2
=9.8/2=4.9

Q3.The propensity (S) to save money and level of investment is given by S=0.4x1000,I=0.2x, where x is the income .find the equilibrium income at which S=I.
Solution:
Given x=income
S=propensity
Given equations...
S=0.4x-1000
I=0.2x
At the equilibrium income at which S=I
0.4x-1000=0.2x
=>x=5000

Q4.Define break even point .for a manufacturer of dry cells,the daily cost of production
C for x cells is given by, C(x)=Rs.2.05x+Rs.550

If the price of a cell is Rs.3,determine the minimum number of cells that must be
produced and sold daily to ensure no loss.
Solution:
Given cost of production
C(x)=2.05x+550
revenue function will be
R(x)=3x
again at break even point
C(x)=R(x)
=>2.05x+550=3x
=>x=550*100/95
=>x=579

Q6.A book publisher finds that the production cost of a book is Rs.30 and the fixed cost
per year amounts to Rs.25000.If each book is sold at the rate of Rs.50,find.
(i)the cost function.
(ii)the revenue function
(iii)the minimum number of books to be sold per year in order that there is no loss.
Solution:
Given. the production cost of a book is Rs.30
the fixed cost per year amounts to Rs.25000
each book is sold at the rate of Rs.50
hence(i) cost function
C(x)=30x+25000
(ii)revenue function

R(x)=50x
(iii)let min no of books to be sold in order that there is no loss is x
now at that point we have
C(x)=R(x)
=>30x+25000=50x
=>x=1250

Q7.The daily cost of production C for x units of an assembly is given by:

C(x)=Rs.12.5x+6400
(i)if each unit is sold for Rs. 25,determine the minimum number of units that should
be produced and sold to ensure no loss.
(ii)if the selling price is reduced by Rs.2.5 per unit, what would be the break even
point?
(iii)if it is known that 500 units can be sold daily,what price per unit should be charged
to ensure guarantee no loss?
Solution:
quantity of production=x
(i)here cost of production C(x)=25x
hence a/c to question
12.5x+6400=25x
=>6400=12.5x
=>x=512
(ii)new selling price=25-2.5=22.5
now at break even point

12.5x+6400=22.5x
=>10x=6400
=>x=640
(iii)let p is the selling price
now a/c to question
500p=12.5*500+6400
=>500p=12650
=>p=25.3 Rs.

Q8.A company sells x tins of talcum powder each day at Rs.10 per tin.The cost of
manufacturing is Rs. 6 per tin and the distributor charges Rs. 1per tin.besides these the
daily overhead cost comes to Rs.600. Determine the profit function.What is the profit if
500 tins are manufactured and sold a day?How do you interpret the situation if the
company manufactures and sells 100 tins a day?What is the break even point?
Solution:
let cost function=C(x)
revenue function=R(x)
profit function=P(x)
no of qnty produced=x
from the question

C(x)=600+7x
R(X)=10x

hence P(x)

=R(x)-C(x)
=10x-7x-600=3x-600

given x=500
hence P(x)=3*500-600=900//

again if x=100
P(x)=3*100-600=-300
this implies the company incurring Rs.300 loss a day
now at break even point
P(x)=0
=>3x-600=0
=>x=200

Q10.At the charity performance at the local cinema hall it is known that the attendence
at a uniform charge of Rs.p will be x=(a/p)-b,where a and b are constants.It is found that
the cinema hall which has 3000 seats ,is half filled when Rs. 12 is charged but only one
sixth of the seats are empty when Rs. 9 is charged per seat
(i) Find the constant a and b
(ii)Find the charge that fills the show ,show that this charge provides the highest
benefits to charity , assuming that all proceeds go to charity.
Solution:
the given equation

x=(a/p)-b

where a and b are constants

x is no of seats
p is the price
(i)from the 1ST conditions
1500=a/12-b

=>18000=a-12b=>a=18000+12b.........................................................(i)
from the 2nd conditions
2500=a/9-b
=>22500=a-9b
=>3b=4500
=>b=1500
hence a=18000+12*1500
a=36000
(ii)from the question
x=(a/p)-b
putting respective values
3000=36000/p-1500
=>3000p+1500p=36000
=>p=36000/4500
=>p=8
hence for highest benefit
8*3000=24000

11.A television manufacturing finds that the total cost for producing television sets
follows a quadratic function given by : C(n)=250n2+3250n+10000,where n denotes the
no of television sets produced .each product can be marketed for Rs.6500.Determine the
break even point.
Solution:
Given eqn of cost of production is
C(n)=250n2+3250n+10000
(where n denotes the no of television sets produced)
from question C(n)=6500n

=>250n2+3250n+10000=6500n
=>n2-13n+40=0
=>(n-8)(n-5)=0
hence n= 8 or 5