MATH 201 – Spring 2019

Lecture 2: Application of Integration

Assoc. Prof. W. S. Emam

Outline

o Marginal Cost
o Net Earning From Industrial Equipment
o Net Excess Profit
o Consumers’ Demand
Marginal Cost

Problem
A manufacturer estimates that the marginal cost of producing q units of a certain
commodity is 𝐶 ′ 𝑞 = 3𝑞 2 − 24𝑞 + 48 dollars per unit. If the cost of producing 10 units is
5,000 dollars, what is the cost of producing 30 units?

Solution
𝐶(𝑞) is found by getting the antiderivative of 𝐶 ′ 𝑞
𝐶 𝑞 = 𝑞 3 − 12𝑞 2 + 48𝑞 + 𝑘
Since the cost of producing 10 units is 5,000 dollars, we have
𝐶 10 = 5000 = 103 − 12 ∙ 102 + 48 ∙ 10 + 𝑘
so 𝐾 = 4720.
Then the cost of producing 30 units is
𝐶 30 = 303 − 12 ∙ 302 + 48 ∙ 30 + 4720 = $22360
Net Earning From Industrial Equipment

The net earnings generated by an industrial machine over a period of time is

the difference between the total revenue generated by the machine and the
total cost of operating and servicing the machine.

Problem
• Suppose that when it is t years old, a
particular industrial machine generates
revenue at the rate 𝑹′ 𝒕 = 𝟓, 𝟎𝟎𝟎
− 𝟐𝟎𝒕𝟐 dollars per year and that
operating and servicing costs related to
the machine accumulate at the rate
𝑪′ 𝒕 = 𝟐, 𝟎𝟎𝟎 + 𝟏𝟎𝒕𝟐 dollars per
year.
• (a) How many years pass before the
profitability of the machine begins to
decline?
• (b) Compute the net earnings
generated by the machine over the
time period determined in part (a).
Net Earning From Industrial Equipment

Solution
(a) The profit associated with the (b) The net earnings NE over the
machine after t years of operation is time period 0 ≤ 𝑡 ≤ 10 is
𝑷 𝒕 = 𝑹 𝒕 − 𝑪(𝒕) 𝟏𝟎

𝐍𝐄 = 𝑷′ 𝒕 𝒅𝒕
The rate of profitability is 𝟎
𝟏𝟎
𝑷′ 𝒕 = 𝟑, 𝟎𝟎𝟎 − 𝟑𝟎𝒕𝟐
= (𝟑, 𝟎𝟎𝟎 − 𝟑𝟎𝒕𝟐 )𝒅𝒕
The profitability begins to decline
𝟎
when 𝑷′ 𝒕 = 𝟎 i.e. = $𝟐𝟎, 𝟎𝟎𝟎
𝟑, 𝟎𝟎𝟎 − 𝟑𝟎𝒕𝟐 = 𝟎
𝒕𝟐 = 𝟏𝟎𝟎
𝒕 = 𝟏𝟎 years
Net Excess Profit

Suppose two investment plans will generate profit P1 and P2, after t years from
now at the rates 𝑃1′ (𝑡) and 𝑃2′ (𝑡). The net excess profit of plan 2 over plan 1 over
the time period 0 ≤ 𝑡 ≤ 𝑁 is
𝑵

𝑵𝑬 = [𝑷′𝟐 (𝒕) − 𝑷′𝟏 (𝒕)]𝒅𝒕

𝟎

Problem
• Suppose that t years from now, one
investment will be generating profit at the
rate of 𝑃1′ 𝑡 = 50 + 𝑡 2 hundred dollars
per year, while a second investment will be
generating profit at the rate of 𝑃2′ 𝑡 = 200
+ 5𝑡 hundred dollars per year.
• (a) For how many years does the rate of
profitability of the second investment
exceed that of the first?
• (b) Com Compute the net excess profit for
the time period determined in part (a).
Net Excess Profit

Solution
(a) The rate of profitability of the (b) The net excess profit NE over the
second investment exceeds that time period 0 ≤ 𝑡 ≤ 15 is
of the first until 𝟏𝟓

𝐍𝐄 = [𝑷′𝟐 (𝒕) − 𝑷′𝟏 (𝒕)]𝒅𝒕

𝑷′𝟏 𝒕 = 𝑷′𝟐 𝒕
𝟎
𝟓𝟎 + 𝒕𝟐 = 𝟐𝟎𝟎 + 𝟓𝒕
𝟏𝟓
𝒕𝟐 − 𝟓𝒕 − 𝟏𝟓𝟎 = 𝟎
= [ 𝟐𝟎𝟎 + 𝟓𝒕 − (𝟓𝟎 + 𝒕𝟐 )𝒅𝒕
𝒕 − 𝟏𝟓 𝒕 + 𝟏𝟎 = 𝟎 𝟎
= $𝟏𝟔𝟖, 𝟕𝟓𝟎
𝒕 = 𝟏𝟓 years
Consumers’ Demand

The consumers’ demand function 𝐷(𝑞) can be thought of as the rate of change of
the total amount 𝐴(𝑞) that consumers are willing to spend for 𝑞 units; that is,
𝑑𝐴
𝐷 𝑞 = . Integrating, we find the total amount that consumers are willing to pay
𝑑𝑞
for 𝑞0 units of the commodity. Economists call 𝐴(𝑞) the total willingness to spend.

Problem
The manager of a shoe store determines that the price p (dollars) for each pair of a popular
brand of sports sneakers is changing at the rate of
−300𝑞
𝐷 𝑞 = 3
2
𝑞 + 9 2
when 𝑞 (hundred) pairs are demanded by consumer.
When the price is $ 75 per pair, 400 pairs (𝑞 = 4) are
demanded by consumers.

(a) Find the demand (price) function 𝑝(𝑞).

(b) At what price will 500 pairs of sneakers be demanded?
(c) At what price will no sneakers be demanded?
(d) How many pairs will be demanded at a price of 90 dollars per pair?
Consumers’ Demand

Solution (c) No units are demanded, 𝑞 = 0, when

(a) The demand (price) function is the price is
300
𝑃 𝑞 = 𝑃′ 𝑞 𝑑𝑞 𝑃 0 = + 15 = $𝟏𝟏𝟓
2
0 + 9
−300𝑞
= 3 𝑑𝑞 (d) The price is $90 per pair, 𝑝 = 90,
𝑞2 + 9 2 when
300
𝑃 𝑞 = + 15
𝑞2 + 9 300
$90 = + 15
(b) When 500 pairs of sneakers are 𝑞2 + 9
demanded, 𝑞 = 5, the corresponding
price is 𝒒 ≈2.65 pair
300
𝑃 500 = + 15 ≈ $𝟔𝟔. 𝟓
2
5 + 9