CHAPTER 10

Integration
Integration can be thought of as the opposite of dierentiation but is
also a method for nding the area under a graph. It is an important
mathematical technique, which will be familiar if you have done A-level
maths. In this chapter we look at techniques for integrating standard
functions, including integration by substitution and by parts and
at economic applications including calculation of consumer surplus.

1. The Reverse of Dierentiation

If we have a function y(x), we know how to nd its derivative
dy
dx
by the process of dieren-
tiation. For example:
y(x) = 3x
2
+ 4x 1

dy
dx
= 6x + 4
Integration is the reverse process:
When you know the derivative of a function,
dy
dx
, the
process of nding the original function, y, is called
integration.
For example:
dy
dx
= 10x 3
y(x) = ?
If you think about how dierentiation works, you can probably see that the answer could be:
y = 5x
2
3x
However, there are many other possibilities; it could be y = 5x
2
3x+1, or y = 5x
2
3x20,
or . . . in fact it could be any function of the form:
y = 5x
2
3x + c
where c is a constant. We say that (5x
2
3x + c) is the integral of (10x 3) and write this
as:
The with
integral respect
of to x
_
(10x 3) dx = 5x
2
3x + c
173
174 10. INTEGRATION
c is referred to as an arbitrary constant or a constant of integration. More generally:
Integration is the reverse of dierentiation.
If f

(x) is the derivative of a function f(x), then the

integral of f

(x) is f(x) (plus an arbitrary constant):

_
f

(x)dx = f(x) + c
1.1. Integrating Powers and Polynomials
In the example above you can see that since dierentiating powers of x involves reducing the
power by 1, integrating powers of x must involve increasing the power by 1. The rule is:
Integrating Powers of x:
_
x
n
dx =
1
n + 1
x
n+1
+ c (n = 1)
It is easy to check that this rule works by dierentiating:
d
dx
_
1
n + 1
x
n+1
+ c
_
= x
n
You can also see from this that the rule doesnt work when n = 1. But it works for other
negative powers, for zero, and for non-integer powers see the examples below.
We can apply this rule to integrate polynomials. For example:
_
(4x
2
+ 6x 3)dx =
_
(4x
2
+ 6x 3x
0
)dx
= 4
1
3
x
3
+ 6
1
2
x
2
3x
1
+ c
=
4
3
x
3
+ 3x
2
3x + c
It is easy to make mistakes when integrating. You should always check your answer by dif-
ferentiating it to make sure that you obtain the original function.
Examples 1.1: Integrating Powers and Polynomials
(i) What is the integral of x
4
2x + 5?
_
(x
4
2x + 5)dx =
1
5
x
5
x
2
+ 5x + c
(ii) Integrate 2
t
5
5
.
_ _
2
t
5
5
_
dt = 2t
t
6
30
+ c
10. INTEGRATION 175
(iii) If
dy
dx
= (2 x)(4 3x), what is y?
y =
_
(2 x)(4 3x)dx
=
_
(8 10x + 3x
2
)dx = 8x 5x
2
+ x
3
+ c
(iv) Integrate 1 +
10
z
3
.
_ _
1 +
10
z
3
_
dz =
_
_
1 + 10z
3
_
dz
= z + 10
1
2
z
2
+ c
= z
5
z
2
+ c
(v) If f

(x) = 3

x what is f(x)?
f(x) =
_
3

xdx
=
_
3x
1
2
dx
= 3
2
3
x
3
2
+ c
= 2x
3
2
+ c
(vi) Integrate the function 3ax
2
+ 2tx with respect to x.
_
(3ax
2
+ 2tx)dx = ax
3
+ tx
2
+ c
(In this example there are several variables or parameters. We say with respect to x
to clarify which one is to be treated as the variable of integration. The others are then
treated as constants.)
Exercises 10.1: Integrating Powers and Polynomials
(1) (1) Find: (a)
_
8x
3
dx (b)
_
(2z z
3
+ 4)dz (c)
_
(1 + 3t
8
)dt
(d)
_
(a + bx)dx (e)
_ _
q
2
2

18
q
4
_
dq
(2) Integrate (a) 5x
1.5
(b)

4z
(3) What is the integral of z
3a1
with respect to z?
(4) If g

(p) = p

, what is g(p)?
176 10. INTEGRATION
1.2. Economic Application
Suppose we know that a rms marginal cost of producing output y is 8y + 3, and also that
the rm has a xed cost of 10. Then we can integrate the marginal cost function to nd the
rms total cost function:
C

(y) = 8y + 3
C(y) = 4y
2
+ 3y + c
As usual, integration gives us an arbitrary constant, c. But in this case, we have another
piece of information that tells us the value of c the cost of producing zero output is 10:
C(0) = 10 c = 10
C(y) = 4y
2
+ 3y + 10
1.3. More Rules for Integration
Remember the rules for dierentiating logarithmic and exponential functions (Chapter 6):
y = lnx
dy
dx
=
1
x
y = e
ax

dy
dx
= ae
ax
By reversing these we can obtain two more rules for integration:
_
1
x
dx = lnx + c
_
e
ax
dx =
1
a
e
ax
+ c
(The rst of these rules tells us how to integrate x
n
when n=1, which we couldnt do before.)
Examples 1.2:
(i)
_ _
6x +
3
x
_
dx =
_ _
6x + 3
1
x
_
dx = 3x
2
+ 3 lnx + c
(ii)
_
_
4e
2x
+ 15e
3x
_
dx = 4
1
2
e
2x
+ 15
1
3
e
3x
+ c = 2e
2x
5e
3x
+ c
Looking at the examples above you can also see that the following general rules hold. In fact
they are obvious from what you know about dierentiation, and you may have been using
them without thinking about it.
_
af(x)dx = a
_
f(x)dx
_
(f(x) g(x))dx =
_
f(x)dx
_
g(x)dx
The rules for integrating
1
x
and e
x
can be generalised. From the Chain Rule for dierentiation
we can see that, if f(x) is a function, then:
d
dx
(lnf(x)) =
f

(x)
f(x)
and
d
dx
_
e
f(x)
_
= f

(x)e
f(x)
10. INTEGRATION 177
Reversing these gives us two further rules:
_
f

(x)
f(x)
dx = lnf(x) + c
_
f

(x)e
f(x)
dx = e
f(x)
+ c
To apply these rules you have to notice that an integral can be written in one of these forms,
for some function f(x).
Examples 1.3:
(i)
_
xe
3x
2
dx We can rewrite this integral:
_
xe
3x
2
dx =
1
6
_
6xe
3x
2
dx and apply the 2
nd
rule above with f(x) = 3x
2
=
1
6
e
3x
2
+ c
(ii)
_
1
y + 4
dx Applying the 1
st
rule directly with f(y) = y + 4:
_
1
y + 4
dy = ln(y + 4) + c
(iii)
_
z + 3
z
2
+ 6z 5
dz
=
1
2
_
2z + 6
z
2
+ 6z 5
dz (f(z) = z
2
+ 6z 5)
=
1
2
ln(z
2
+ 6z 5) + c
Exercises 10.2: Integrating Simple Functions
(1) (1) Find: (a)
_
10e
3x
dx (b)
_ _
9y
2

4
y
_
dy (c)
_ _
1
z
+
1
z
2
_
dz
(d)
_
t
2
e
t
3
dt (e)
_
1
2q 7
dq
(2) If f

(t) = 1 e
6t
, what is f(t)?
(3) Integrate: 4x
2
2

x + 8x
3
.
(4) If a rm has no xed costs, and its marginal cost of producing output q is
(9q
0.8
2), nd the rms total cost function C(q).
(5) Find the integral with respect to x of x
a
+ e
ax
+ x
a
, assuming 1 < a < 1 and
a = 0.
Further Reading and Exercises
Jacques 6.1
Anthony & Biggs 25.3
178 10. INTEGRATION

2. Integrals and Areas

In economics we often use areas on graphs to measure total costs and benets: for exam-
ple to evaluate the eects of imposing a tax. Areas on graphs can be calculated using integrals.
2.1. An Economic Example
q
0
q
1
q
Marginal Cost
C

(q)
.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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The area under a rms marginal cost curve
between q
0
and q
1
represents the total cost of
increasing output from q
0
to q
1
: it adds up the
marginal costs for each unit of output between
q
0
and q
1
.
So, the area represents: C(q
1
) C(q
0
).
To calculate this area we could:
Integrate the marginal cost function C

(q) to nd the function C(q)

Evaluate C(q) at q
0
and q
1
to obtain C(q
1
) C(q
0
)
Note that C(q) will contain an arbitrary constant, but it will cancel out in C(q
1
) C(q
0
).
(The constant represents the xed costs not needed to calculate the increase in costs.)
We write this calculation as:
Area = C(q
1
) C(q
0
) =
_
q
1
q
0
C

(q)dq
2.2. Denite Integration
_
b
a
f(x)dx
represents the area under the graph of f(x) between
a and b.
It is called a denite integral.
a and b are called the limits of integration.
To calculate it, we integrate, evaluate the answer
at each of the limits, and subtract.
The type of integration that we did in the previous section is known as indenite integration.
For example,
_
(4x + 1)dx = x
2
+x+c is an indenite integral. The answer is a function of x
10. INTEGRATION 179
containing an arbitrary constant. In denite integration, in contrast, we evaluate the answer
at the limits.
Examples 2.1: Denite Integrals
(i)
_
4
1
(4x + 1)dx
This integral represents the area under the graph of the function f(x) = 4x+1 between
x = 1 and x = 4.
_
4
1
(4x + 1)dx =
_
2x
2
+ x + c

4
1
It is conventional to
use square brackets here
=
_
2 4
2
+ 4 + c
_

_
2 (1)
2
1 + c
_
= (36 + c) (1 + c)
= 35
From now on we will not bother to include the arbitrary constant in a denite integral
since it always cancels out.
(ii)
_
25
9
3

y dy
_
25
9
3

y dy =
_
25
9
3y
1
2
dy
=
_
2y
3
2
_
25
9
=
_
2 25
3
2
_

_
2 9
3
2
_
= 250 54
= 196
(iii)
_
a
1
_
3 +
2
q
_
dq where a is a parameter.
_
a
1
_
3 +
2
q
_
dq = [3q + 2 lnq]
a
1
= (3a + 2 lna) (3 1 + 2 ln1)
= (3a + 2 lna) 3
= 3a 3 + 2 lna
(iv) For a rm with marginal cost function MC = 3q
2
+ 10, nd the increase in costs if
output is increased from 2 to 6 units.
C(6) C(2) =
_
6
2
(3q
2
+ 10)dq
=
_
q
3
+ 10q

6
2
=
_
6
3
+ 60
_

_
2
3
+ 20
_
= 276 28
= 248
180 10. INTEGRATION
2.3. Economic Application: Consumer and Producer Surplus
q
0
p
0
q
p
Demand
.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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A
B
The diagram shows a market demand function. When
the market price is p
0
, the quantity sold is q
0
and
Area A represents net consumer surplus.
If the inverse demand function is p = D(q), we can
calculate Consumer Surplus by:
CS =
_
q
0
0
D(q)dq p
0
q
0
Area(A+B) Area B
q
0
p
0
q
p
Supply
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C
D
Similarly, Area C represents net producer surplus.
If the inverse supply function is p = S(q), we can
calculate Producer Surplus by:
PS = p
0
q
0

_
q
0
0
S(q)dq
Area(C+D) Area D
Exercises 10.3: Denite Integrals
(1) (1) Evaluate the denite integrals: (a)
_
4
1
(2x
2
+ 1)dx (b)
_
1
1
e
3x
dx
(2) For a market in which the inverse demand and supply functions are given by:
p
d
(q) = 24 q
2
and p
s
(q) = q + 4, nd:
(a) the market price and quantity (b) consumer surplus (c) producer surplus.
(3) Evaluate the denite integrals:
_
1
0
(x
2
3x + 2)dx,
_
2
1
(x
2
3x + 2)dx,
_
2
0
(x
2
3x + 2)dx.
Explain the answers you obtain by sketching the graph of y = x
2
3x + 2.
Further Reading and Exercises
Jacques 6.2. In particular 6.2.3 looks at investment, another economic application
of denite integrals.
Anthony & Biggs 25.1, 25.2 and 25.4
10. INTEGRATION 181
_

3. Techniques for Integrating More

Complicated Functions
The rules in sections 1.1 and 1.3 only allow us to integrate quite simple functions. They dont
tell you, for example, how to integrate xe
x
, or

3x
2
+ 1.
Whereas it is possible to use rules to dierentiate any sensible function, the same is not
true for integration. Sometimes you just have to guess what the answer might be, then check
whether you have guessed right by dierentiating. There are some functions that cannot be
integrated algebraically: the only possibility to is to use a computer to work out a numerical
approximation.
1
But when you are faced with a function that cannot be integrated by the simple rules, there
are a number of techniques that you can try one of them might work!
3.1. Integration by Substitution
Consider the integral:
_
(3x + 1)
5
dx
We know how to integrate powers of x, but not powers of (3x+1). So we can try the following
procedure:
Dene a new variable: t = 3x + 1
Dierentiate:
dt
dx
= 3 dt = 3dx dx =
1
3
dt
Use these expressions to substitute for x and dx in the integral:
_
(3x + 1)
5
dx =
_
t
5
1
3
dt
Integrate with respect to t, then substitute back to obtain the answer as a function
of x:
_
t
5
1
3
dt =
1
18
t
6
+ c
=
1
18
(3x + 1)
6
+ c
You can check, by dierentiating, that this is the integral of the original function. If you do
this, you will see that integration by substitution is a way of reversing the Chain Rule (see
Chapter 6).
Thinking about the Chain Rule, we can see that Integration by Substitution works for inte-
grals that can be written in a particular form:
1
The function e
x
2
/2
, which is important in statistics, is an example.
182 10. INTEGRATION
When an integral can be written in the form:
_
f(t)
dt
dx
dx
where t is some function of x
then it can be integrated by substituting t for x:
_
f(t)
dt
dx
dx =
_
f(t)dt
Sometimes you will be able to see immediately that an integral has the right form for using
a substitution. Sometimes it is not obvious - but you can try a substitution and see if it works.
Note that the logarithmic and exponential rules that we found at the end of section 1.3 are
a special case of the method of Integration by Substitution. The rst example below could
be done using those rules instead.
Examples 3.1: Integration by substitution
(i)
_
xe
3x
2
dx For this integral we can use the substitution t = 3x
2
:
t = 3x
2
dt = 6xdx
Substituting for x and dx:
_
xe
3x
2
dx =
_
e
3x
2
xdx
=
_
e
t 1
6
dt
=
1
6
e
t
+ c =
1
6
e
3x
2
+ c
(ii)
_
(3x
2
+ 1)
5
dx
This example looks similar to the original one we did, but unfortunately the method
does not work. Suppose we try substituting t = 3x
2
+ 1:
t = 3x
2
+ 1 dt = 6xdx
To substitute for x and dx we also need to note that x =
_
t 1
3
. Then:
_
(3x
2
+ 1)
5
dx =
_
t
5
1
6
_
t1
3
dt
Doing the substitution has made the integral more dicult, rather than less.
(iii)
_
4y
_
y
2
3
dy Here we can use a substitution t = y
2
3:
t = y
2
3 dt = 2ydy
Substituting for y and dy:
_
4y
_
y
2
3
dy =
_
2
1
_
y
2
3
2ydy
=
_
2t

1
2
dt
= 4t
1
2
+ c = 4
_
y
2
3 + c
10. INTEGRATION 183
Exercises 10.4: Integration by Substitution
(1) (1) Evaluate the following integrals using the suggested substitution:
(a)
_
x
2
(x
3
5)
4
dx t = x
3
5
(b)
_
(2z + 1)e
z(z+1)
dz t = z(z + 1)
(c)
_
3

2y + 3
dy t = 2y + 3
(d)
_
x
x
2
+ a
dx t = x
2
+ a where a is a parameter
(e)
_
1
(2q 1)
2
dq t = 2q 1
(f)
_
p + 1
3p
2
+ 6p 1
dp t = 3p
2
+ 6p 1
(2) Evaluate the following integrals by substitution or otherwise:
(a)
_
(4x 7)
6
dx (b)
_
2q
3
+ 1
q
4
+ 2q
dq (c)
_
xe
kx
2
dx (k is a parameter.)
3.2. Integration by Parts
Remember the Product Rule for dierentiation:
d
dx
_
u(x)v(x)
_
= u(x)v

(x) + u

(x)v(x)
Integrating this we get:
u(x)v(x) =
_
u(x)v

(x)dx +
_
u

(x)v(x)dx
and rearranging gives us the following formula:
Integration by Parts:
_
u

(x)v(x)dx = u(x)v(x)
_
u(x)v

(x)dx
Hence if we start with an integral that can be written in the form
_
u

(x)v(x)dx we can
evaluate it using this rule provided that we know how to evaluate
_
u(x)v

(x)dx.
Examples 3.2: Integration by Parts
(i)
_
xe
5x
dx Suppose we let v(x) = x and u

(x) = e
5x
.
u

(x) = e
5x
u(x) =
1
5
e
5x
v(x) = x v

(x) = 1
184 10. INTEGRATION
Applying the formula:
_
u

(x)v(x)dx = u(x)v(x)
_
u(x)v

(x)dx
_
xe
5x
dx =
1
5
xe
5x

_
1
5
e
5x
dx
=
1
5
xe
5x

1
25
e
5x
+ c
(Check this result by dierentiation.)
(ii)
_
(4y + 1)(y + 2)
3
dy Let v(y) = 4y + 1 and u

(y) = (y + 2)
3
:
u

(y) = (y + 2)
3
u(y) =
1
4
(y + 2)
4 (If this is not obvious to you
it could be done by substitution)
v(y) = 4y + 1 v

(y) = 4
Applying the formula:
_
u

(y)v(y)dy = u(y)v(y)
_
u(y)v

(y)dy
_
(4y + 1)(y + 2)
3
dy =
1
4
(4y + 1)(y + 2)
4

_
(y + 2)
4
dy
=
1
4
(4y + 1)(y + 2)
4

1
5
(y + 2)
5
+ c
(iii)
_
lnxdx
This is a standard function, but cannot be integrated by any of the rules we have so
far. Since we dont have a product of two functions, integration by parts does not seem
to be a promising technique. However, if we put:
u

(x) = 1 u(x) = x
v(x) = lnx v

(x) =
1
x
and apply the formula, we obtain:
_
u

(x)v(x)dx = u(x)v(x)
_
u(x)v

(x)dx
_
lnxdx = xlnx
_
x
1
x
dx
= xlnx
_
1.dx
= xlnx x + c
Again, check by dierentiating.
Exercises 10.5: Use integration by parts to nd:
(1) (1)
_
(x + 1)e
x
dx (2)
_
2y lny dy
10. INTEGRATION 185
3.3. Integration by Substitution and by Parts: Denite Integrals
3.3.1. Integration by Substitution. If we want to nd:
_
1
0
2x
x
2
+ 8
dx
we could integrate by substituting t = x
2
+8 to nd the indenite integral, and then evaluate
it at the limits. However, a quicker method is to substitute for the limits as well:
t = x
2
+ 8 dt = 2xdx
x = 0 t = 8
x = 1 t = 9
Hence:
_
1
0
2x
x
2
+ 8
dx =
_
1
0
1
x
2
+ 8
2xdx
=
_
9
8
1
t
dt
= [lnt]
9
8
= ln9 ln8 = ln1.125
3.3.2. Integration by Parts. Similarly, the method of integration by parts can be modied
slightly to deal with denite integrals. The formula becomes:
_
b
a
u

(x)v(x)dx =
_
u(x)v(x)
_
b
a

_
b
a
u(x)v

(x)dx
Consider, for example:
_
1
0
(1 x)e
x
dx
We can integrate by parts using:
u

(x) = e
x
u(x) = e
x
v(x) = 1 x v

(x) = 1
Applying the formula:
_
1
0
(1 x)e
x
dx =
_
(1 x)e
x
_
1
0
+
_
1
0
e
x
dx
= 1 +
_
e
x

1
0
= e 2
Exercises 10.6: Denite Integrals
(1) (1) Integrate by substitution: (a)
_
2
0
(2x + 1)
3
dx (b)
_
1
1
e
1+3y
dy
(2) Integrate by parts:
_
1
0
4ze
2z
dz
Further Reading and Exercises
Anthony & Biggs 26.1, 26.2 and 26.3
186 10. INTEGRATION

4. Integrals and Sums

50 120
q
Marginal Cost
C

(q)
.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Suppose a rm with marginal cost curve C

(q) in-
creases its output from 50 units to 120. The total
increase in cost is given by the integral of the mar-
ginal cost curve:
C(120) C(50) =
_
120
50
C

(q)dq
We can think of this as the sum of all the marginal
costs of the units of output between 50 and 120, so:
_
120
50
C

(q)dq C

(51) + C

(52) + + C

(120)
So we can see that:
_
120
50
C

(q)dq
100

q=51
C

(q)
These two expressions are only approximately equal because we have a continuous marginal
cost curve, allowing for fractions of units of output.
In general, we can think of integrals as representing the equivalent of a sum, used when we
are dealing with continuous functions.
4.1. Economic Application: The Present Value of an Income Flow
Remember from Chapter 3 that when interest is compounded continously at annual rate i,
the present value of an amount A received in t years time is given by:
Ae
it
Suppose you receive an annual income of y for T years, and that, just as interest is com-
pounded continuously, your income is paid continuously. This means that in a short time
period length t, you will receive yt. For example, in a day (t =
1
365
) you would get
1
365
y.
In an innitesimally small time period dt your income will be:
ydt
which has present value:
ye
it
dt
Then the present value of the whole of your income stream is given by the sum over the
whole period:
V =
_
T
0
ye
it
dt
We can calculate the present value in this way even if the income stream is not constant
that is, if y = y(t).
10. INTEGRATION 187
Examples 4.1: The Present Value of an Income Flow
(i) An investment will yield a constant continuous income of 1000 per year for 8 years.
What is its present value if the interest rate is 2%?
V =
_
8
0
1000e
0.02t
dt
= 1000
_

1
0.02
e
0.02t
_
8
0
= 50000(e
0.16
+ 1) = 7393
(ii) A worker entering the labour market expects his annual earnings, y, to grow continu-
ously according to the formula y(t) = 12000e
0.03t
where t is length of time that he
has been working, measured in years. He expects to work for 40 years. If the interest
rate is i = 0.05, what is the present value of his expected lifetime earnings?
V =
_
40
0
y(t)e
it
dt
=
_
40
0
12000e
0.03t
e
0.05t
dt
= 12000
_
40
0
e
0.02t
dt
= 12000
_

1
0.02
e
0.02t
_
40
0
= 600000
_
e
0.02t

40
0
= 600000
_
e
0.8
+ 1
_
= 330403
Exercises 10.7: The present value of an income ow
(1) (1) What is the present value of a constant stream of income of 200 per year for 5
years, paid continuously, if the interest rate is 5%?
(2) A worker earns a constant continuous wage of w per period. Find the present
value, V , of his earnings if he works for T periods and the interest rate is r. What
is the limiting value of V as T ?
Further Reading and Exercises
Jacques 6.2.4.
Anthony & Biggs 25.1, 25.2 and 25.4
188 10. INTEGRATION
Solutions to Exercises in Chapter 10
Exercises 10.1:
(1) (a) 2x
4
+ c
(b) z
2

1
4
z
4
+ 4z + c
(c) t
3
7
t
7
+ c
(d) ax +
1
2
bx
2
+ c
(e)
q
3
6
+
6
q
3
+ c
(2) (a) 2x
2.5
+ c
(b)
4
3
z
3/2
+ c
(3)
1
3a
z
3a
+ c
(4)

+1
p
+1
+ c
Exercises 10.2:
(1) (a)
10
3
e
3x
+ c
(b) 3y
3
4 lny + c
(c) lnz
1
z
+ c
(d)
1
3
e
t
3
+ c
(e)
1
2
ln(2q 7) + c
(2) f(t) = t
1
6
e
6t
+ c
(3)
4
3
x
3

4
3
x
3/2
4x
2
+ c
(4) C(q) = 5q
1.8
2q
(5)
1
a+1
x
a+1
+
1
a
e
ax
+
1
1a
x
1a
+ c
Exercises 10.3:
(1) (a)
_
2
3
x
3
+ x

4
1
= 45
(b)
_
1
3
e
3x

1
1
=
1
3
(e
3
e
3
) = 6.68
(2) (a) q = 4, p = 8
(b)
_
24q
1
3
q
3

4
0
32 = 42
2
3
(c) 32
_
1
2
q
2
+ 4q

4
0
= 8
(3)
_
1
3
x
3

3
2
x
2
+ 2x

1
0
=
5
6
_
1
3
x
3

3
2
x
2
+ 2x

2
1
=
1
6
_
1
3
x
3

3
2
x
2
+ 2x

2
0
=
2
3
Between x = 1 and x = 2 the graph is be-
low the x-axis. So the area between the
graph and the axis here is negative.
Exercises 10.4:
(1) (a) dt = 3x
2
dx
_
t
4 1
3
dt =
1
15
t
5
+ c =
1
15
(x
3
5)
5
+ c
(b) dt = (2z + 1)dz
_
e
t
dt = e
t
+ c = e
z(z+1)
+ c
(c) dt = 2dy
_
3
2t
1
2
dt = 3t
1
2
+ c = 3

2y + 3 + c
(d) dt = 2xdx
_
1
2t
dt =
1
2
lnt + c =
1
2
ln(x
2
+ a) + c
(e) dt = 2dq
_
1
2t
2
dt =
1
2t
+ c =
1
4q2
+ c
(f) dt = (6p + 6)dp = 6(p + 1)dp
_
1
t
1
6
dt =
1
6
lnt + c
=
1
6
ln(3p
2
+ 6p 1) + c
(2) (a) t = 4x 7, dt = 4dx
1
28
(4x 7)
7
+ c
(b) t = q
4
+ 2q, dt = (4q
3
+ 2)dq
1
2
ln(q
4
+ 2q) + c
(c) t = kx
2
, dt = 2kxdx

1
2k
e
kx
2
+ c
Exercises 10.5:
(1) u

= e
x
, v = x + 1
xe
x
+ c
(2) u

= 2y, v = lny
y
2
lny
1
2
y
2
+ c
Exercises 10.6:
(1) (a) t = 2x + 1
1
8
_
t
4

5
1
= 78
(b) t = 1+3y
1
3
_
e
t

4
2
=
1
3
_
e
4
e
2
_
(2) u

= e
2z
, v = 4z
_
2ze
2z

1
0
+
_
e
2z

1
0
= 1 3/e
2
Exercises 10.7:
(1)
_
5
0
200e
0.05t
dt = 200
_

1
0.5
e
0.05t

5
0
= 4000(1 e
0.25
) = 884.80
(2) V =
_
T
0
we
rt
dt
= w
_

1
r
e
rt

T
0
=
w
r
_
1 e
rT
_
V
w
r
as T
2
This Version of Workbook Chapter 10: September 24, 2010
10. INTEGRATION 189
_

Worksheet 10: Integration, and

Further Optimisation Problems
Integration
(1) Evaluate the following integrals:
(a)
_
(x 3)(x + 1)dx (b)
_
1
0
e
5y
dy (c)
_
2z + 3
z
2
dz
(2) Evaluate the following integrals, using a substitution if necessary:
(a)
_
(3x + 1)
9
dx (b)
_
y 3
y
2
6y + 1
dy (c)
_
1
0
z
3

z
2
+ 1
dz
(3) A competitive rm has inverse supply function p = q
2
+ 1 and xed costs F = 20.
Find its total cost function.
(4) An investment will yield a continuous prot ow (t) per year for T years. Prot
at time t is given by:
(t) = a + bt
where a and b are constants. If the interest rate is r, nd the present value of the
investment. (Hint: you can use integration by parts.)
(5) The inverse demand and supply functions in a competitive market are given by:
p
d
(q) =
72
1 + q
and p
s
(q) = 2 + q
(a) Find the equilibrium price and quantity, and consumer surplus.
(b) The government imposes a tax t = 5 on each unit sold. Calculate the new
equilibrium quantity, tax revenue, and the deadweight loss of the tax.
Further Problems
(1) An incumbent monopoly rm Alpha faces the following market demand curve:
Q = 96 P,
where Q is the quantity sold per day, and P is the market price. Alpha can produce
output at a constant marginal cost of 6, and has no xed costs.
(a) What is the price Alpha is charging? How much prot is it making per day?
(b) Another rm, Beta, is tempted to enter the market given the high prots that
the incumbent, Alpha, is making. Beta knows that Alpha has a cost advantage:
if it enters, its marginal costs will be twice as high as Alphas, though there will
be no xed costs of entry. If Beta does enter the market, is expects Alpha to act
as a Stackelberg leader (i.e. Beta maximizes its prots taking Alphas output
as given; Alpha maximizes its prots taking into account that Beta will react
in this way). Show that under these assumptions, Beta will nd it protable to
enter, despite the cost disadvantage. How much prot would each rm earn?
(c) For a linear demand curve of the form Q = abP, show that consumers surplus
is given by the expression CS =
1
2b
Q
2
. Evaluate the benet to consumers of
increased competition in the market once Beta has entered.
190 10. INTEGRATION
(2) A monopolist knows that to sell x units of output she must charge a price of P (x),
where P

(x) < 0 and P

(x) < 0 for all x. The monopolists cost of producing x is

C (x) = A + ax
2
, where A and a are both positive numbers. Let x

be the rms
prot-maximizing output. Write down the rst- and second-order conditions that
x

must satisfy. Show that x

is a decreasing function of a. How does x

vary with A?
(3) An Oxford economic forecasting rm has the following cost function for producing
reports:
C (y) = 4y
2
+ 16
where y is the number of reports.
(a) What are its average and marginal cost functions?
(b) At what number of reports is its average cost minimized?
(c) Initially the market for economic forecasts in Oxford is extremely competitive
and the going price for a report is 15. Should the rm continue to produce
reports? Why or why not?
(d) Suppose the price rises to 20. How many reports will the rm supply? Illus-
trate diagrammatically and comment on your answer.
(e) Suddenly all competitor forecasting rms go out of business. The demand for
reports is such that p = 36 6y, where p is the price of a report. How many
reports will the Oxford rm produce? What prot will it earn?
(4) The telecommunications industry on planet Mercury has an inverse demand curve
given by P = 100 Q. The marginal cost of a unit of output is 40 and xed costs
are 900. Competition in this industry is as in the Cournot model. There is free entry
into and exit from the market.
(a) How many rms survive in equilibrium?
(b) Due to technical advance, xed costs fall to 400 from 900. What happens to the
number of rms in the industry?
(c) What is the eect on price of the fall in xed costs? Explain your answer.
(5) Students at St. Gordons College spend all their time in the college bar drinking
and talking on their mobile phones. Their utility functions are all the same and are
given by U = DM O
2
, where D is the amount of drink they consume, M is the
amount of time they talk on their mobile phones and O is the amount of time each
other student spends on the phone, over which they have no control. Both drink
and mobile phone usage cost 1 per unit, and each students income is 100.
(a) How much time does each student spend on the phone and how much does each
drink?
(b) What is the utility level of each student?
(c) The fellows at the college suggest that mobile phone usage should be taxed at
50 pence per unit, the proceeds from the tax being used to subsidize the cost
of fellows wine at high table. Are the students better o if they accept this
proposal?
(d) The economics students at the college suggest that the optimal tax rate is twice
as large. Are they right? What other changes might the students propose to
improve their welfare?