;NORTH SOUTH UNIVERSITY

Assignment No. 02
Course No.: BUS 135
Course Title: Applied Business Mathematics
Submission Deadline: 2nd June, 2020

Section: 04 Student ID: 1712541030 Student

Name: Sumiya Akther.

Important Note:
1. Please ensure your Student ID, Student Name and Section on the top of your assignment.
2. Try to explain briefly with figure (if needed) in the assignment.
3. Plagiarism is strictly prohibited.
4. Deadline of submission is fixed and will not be changed!
5. MS-Word file must be uploaded. Only for special case pdf file may be acceptable!

Assignment Task:
Part A
1. Write down the significance of this course Applied Business Mathematics in your
discipline.
ANS:
Mathematics is a common language for all the students throughout the world. Mathematics
improves student’s problem solving skills, improve patients. Applied mathematics helps the
business student to calculate the profit, salary, select the price of the product and calculate the
production cost. Applied business mathematics plays a vital role in all fact of the business worlds.
Applied business mathematics interprets all the raw information and comes to a logical conclusion.
Today business world is full of challenges so for making a right decision you need to a good logical
information. For business students who are planning to take economics as major applied
mathematics is essential for them. Not only economics major applied business mathematics is
important for all the business students as it encourages students to learn regular calculus, linear
algebra and many other higher math terms. Applied business mathematics is need for all type of
people as applied mathematics is used to calculate the tax. The importance of these terms is that
all these teams are real analysis.
In my case the importance of this course is that I learn many new things. I never heard about the
term called calculus, different, integral, linear algebra, derivatives these all were totally unknown
to me. But now I can solve it all. My fear of math went away through this course.

2. Briefly discus “Online education” the advantages, limitations, challenges and

recommendations based on your experience.

ANS:

Advantages

1. Online education system improve technological skill

2. Through online education students can take free courses from different universities
Best of luck!
 3. Students waste a lot of time on the streets due to heavy traffic jams on our roads. So
students can save time through online education.
4. Many times educational institutions are closed due to political problems. If we accept
online education, the closure will not disrupt education.
5. There are many handicap students in our countries who are very meritorious. But due to
transportation problems they can’t go to school, college or university. Online education
ensures equal opportunity to them.
6. Those who are introverted can easily participate in online classes.
Limitation and challenges
1. Many villages do not have good internet connection yet. Online education causes a lot of
suffering for the students of those villages.
2. Many students can’t buy internet all the time as the price of internet packages is high.
3. Not all students in our country have all the devices to take online education. Many do not
have the ability to buy such products.
Recommendation:
1. All village need to have good internet connection
2. Uninterrupted power supply should be provided everywhere
3. Budget friendly internet packages for students need to be arranged.

Part B
1. The total cost function of a firm is given by 𝐶 (𝑞 ) = 0.04𝑞 3 − 0.9𝑞 2 + 10𝑞 + 10. Find the
average cost (AC), Marginal cost (MC), Slope of (AC), Slope of (MC) and the Value of 𝑞
at which average variable cost is minimum.

ANS

Given, C=0.04 𝑞 3 -0.9𝑞 2 +10q=10

Average cost:
𝐶
AC=𝑄

0.04𝑞3 −0.9𝑞2 +10q+10

= 𝑞

10
=0.04𝑞 2 − 0.9𝑞 + 10 + (AC)
𝑞

Marginal Cost
𝑑𝑐
MC=𝑑𝑞

Best of luck!
 𝑑
= 𝑑𝑞 (0.04𝑞 3 -0.09𝑞 2 +10q+10)

=0.12𝑞 2 -0.18q+10

Slope of AC
𝑑
Slope of AC = 𝑑𝑞 (AC)

𝑑 10
= (0.04𝑞2-0.9q+10+ )
𝑑𝑞 𝑞

=0.08q-0.9-10𝑞 −1

Slope of mc

𝑑
Slope of MC = 𝑑𝑞
(MC)

𝑑
= (0.12𝑞 2-1.8q+10)
𝑑𝑞

= 0.24q-1.8

Value of q

Here,

Total cost is (c) =0.04𝑞 3 -0.9𝑞 2 +10q+10

Variable cost =0.04𝑞 3 -0.9𝑞 2 +10q, Fixed cost=10

𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡
Average valuable cost = 𝑞

0.04𝑞3 −0.9𝑞2 +10𝑞

= 𝑞

= 0.04𝑞 2 -0.09q+10

→ To identify the minimum cost 1st derivative must equal to 0.2nd derivative must be greater
than 0
𝑑 𝑑
∴ 𝑑𝑞(AVC) = (0.04𝑞 2 -0.09q+10)
𝑑𝑞

=0.08q-0.9

∴0.08q-0.9=0

Best of luck!
 0.08𝑞=0.9
0.9
q = 0.08

=11.25

𝑑2 𝑑
(AVC) = 𝑑𝑞 (0.8q-0.9)
𝑑𝑞2

= 0.08

∴ 0.08 > 0

At value of q=11.25 average variable cost is minimum.

2. An organization needs to produce 36000 units of a thing for every year.. It costs Tk. 250
to make the factory ready for a product run of the item regardless of units x produced in a
run. The cost of material per unit made is Tk. 5 and it costs 50 paisa per year for each unit
𝑥
for storing on the average inventory ( 2 ) in hand. Determine the total cost 𝐶 and find the
economic lot size, i.e., value of 𝑥 for which 𝐶 is minimum.

ANS

Total cost = FC+VC

250×36000 𝑥
C = (5×36000) + + 0.50× ( 2)
𝑥

90,00,000 1 𝑥
=1, 80, 0000 + +2×2
𝑥

90,00,000 𝑥
=1, 80,000 + +4
𝑥

For maximum, or minimum

𝑑𝑐
=0
𝑑𝑥

90,00,000 𝑥
Here C= 1, 80,000 + +4
𝑥

𝑑𝑐 1
→ -90, 00,000 𝑥 −2 + 4 = 0
𝑑𝑥

1
-90, 00,000 𝑥 −2 + 4 = 0

Best of luck!
 90,00,000 1
→- =-4
𝑥2

90,00,000 1
→ =4
𝑥2

→ 𝑥 2 =36000000

X= √36000000

∴ x = 6000

𝑑2
For minimum value >0
𝑑𝑥 2

𝑑2 𝑐
= 18000000 𝑥 −3
𝑑𝑥 2

18000000
= 𝑥3

18000000
= (6000)3

=0.000083

𝑑2 𝑐
= 0.000083 which is less than 0.
𝑑𝑥 2

𝑑2 𝑐
>0
𝑑𝑥 2

Required economic lot size = 6000 units

Cost function is minimum at x = 6000

3. In monopolistic competition producers must determine the price that will maximize the
profit. Assume that a producer offers two different brands of a product for which the
demand function are 𝑄1 = 14 − 0.25𝑃1 ; 𝑄1 = 24 − 0.5𝑃2 and the joint cost function
is 𝑇𝐶 = 𝑄12 + 𝑄22 + 5𝑄1 𝑄2 . Determine the profit and profit maximizing level of output.

ANS:
Here,

𝑄1 =14 - 0.25𝑃1 …………. (1)

Best of luck!
𝑄2 =24 - 0.5𝑃2 …………… (2)

TC=𝑄12 + 𝑄22 +5𝑄1 𝑄2

From (1) and (2)

𝑄1 = 14 – 0.25𝑃1

→ 0.25𝑃1 = 14 - 𝑄1
14 1
→ 𝑃1 = .25 - Q
.25

∴ 𝑃1 = 56 - 4 𝑄1

𝑄2 =24 - 0.5𝑃2

→ 0.5 𝑃2 = 24 - 𝑄2
24 1
→ 𝑃2 = - .5 𝑄2
.5

→ 𝑃2 = 48 – 2 𝑄2

𝜋 =𝑃1 𝑄1 +𝑃2 𝑄2 -(𝑄12 +5𝑄1 𝑄2 +𝑄22 )

= (56–4Q)𝑄1 +(48–2𝑄2 )𝑄2 -𝑄12 – 5𝑄1 𝑄2 -𝑄22

= 56𝑄1 -4𝑄12 +48𝑄2 -2𝑄22 − 𝑄12 -5𝑄1 𝑄2 --𝑄22

=56𝑄1 -5𝑄12 +48𝑄2 -3𝑄22 -5𝑄1 𝑄2 …………………….. (3)

From …… (3)

𝜋1 =56𝑄1 -5𝑄12 -5𝑄1 𝑄2

𝜋1 =56-10𝑄1 -5𝑄2 -0 ………… (4)

𝜋2 =48𝑄2 -3𝑄22 -5𝑄1 𝑄2

𝜋2 =48-6𝑄2 -5𝑄1 ……………. (5)

From (4) and (5)

56-10𝑄1 -5𝑄2 =0

→10𝑄1 +5𝑄2 =56

Best of luck!
→10𝑄1 =56-5𝑄2
56 5
→ 𝑄1 =10 - 10 𝑄2

𝑄1 =5.6 – 0.5𝑄2

∴ 𝑄1 =5.6-0.5𝑄2 ……………….. (6)

48-6𝑄2 -5𝑄1 =0

→48=6𝑄2 +5𝑄1

→6𝑄2 +5𝑄1 =48

→6𝑄2 +5(5.6-0.5𝑄2 ) =48

→6𝑄2 +28-2.5𝑄2 =48

→6𝑄2 -2.5𝑄2 =48-28

→3.5𝑄2 =20
20
𝑄2 =3.5 ∴ 𝑄2 =5.7

𝑄2 =5.7 →(6)

𝑄2 =5.6-0.5×5.7

= 5.6-2.85

= 2.75

For maximum value

𝜋11 . 𝜋22 <0, 𝜋11 . 𝜋22 > (𝜋12 )2

Here

𝜋11 = −10, 𝜋22 = -6, 𝜋12 =-5=𝜋21

𝜋11 , 𝜋22 both are less than 0

𝜋11 . 𝜋22 >(𝜋12 )2

→-10x-6>(−5)2

Best of luck!
→60>25

Profit maximizing level output Q=2.75, Q=5.7

For determined the profit first need to calculate 𝑃1 𝑃2

𝑃1 =56-4𝑄1 𝑃2 =48-2𝑄2

=56-4×2.75 =48-2×5.7

=45 =36.6

𝜋=45(2.75) +36.6(5.7)-(2.75)2-5(2.75) (5.7)-(5.7)2

=213.94

Profit is 213.94

4. Minimize costs for a firm with the cost function 𝐶 = 5𝑥 2 + 2𝑥𝑦 + 3𝑦 2 + 800 subject to
the production quota 𝑥 + 𝑦 = 39. Also estimate additional cost if the production quota is
increased to 40.
ANS:
c=5𝑥 +2xy+3𝑦 2 +800
2

x+y=39

39-x-y=0

C=5𝑥 2 +2xy+3𝑦 2 +800+λ (39-x-y)

= 5𝑥 2 +2xy+3𝑦 2 +800+39 λ -x λ - λ y)

Here

Cx=10x+2y- λ =0…………. (1)

Cy=2x+6y- λ =0………………. (2)

C λ =39-x-y=0…………………. (3)

From (1)

10x+2y- λ =0

→10x+2y= λ …………… (4)

Best of luck!
(4) →(2)

2x+6y-10x-2y=0

→2x-10x=2y-6y

→-8x=-4y

→4y=8x
8𝑥
→ 𝑦= 4

Y=2x……………….. (5)

Y=2x →(3)

39-x-y=0

→-x-y=-39

→-x-2x=-39

→-3x=-39
−39
→x= −3

X=13

X=13→ (5)

Y=2 x13

Y=26

From (4)

10X+2y= λ

→10x13+2 x26= λ

→130+52= λ

→ λ=182

Cost=5𝑥 2 +2xy+3𝑦 2 +800

Best of luck!
 =5 x(13)2+2 x13 x26+3 x(26)2+800

=4349

X=13, y=26, λ=182, cost 4349

If the production quota increase to 40 the additional cost will be 182.

5. The marginal cost of production of a firm is given as 𝐶′ (𝑞) = 5 + 0.13𝑞. Further, the
marginal revenue is 𝑅′ (𝑞) = 18. Also it is given that 𝐶(0) = 𝑇𝑘. 120. Compute the total
profits.
ANS:
for maximum profit, margined cost = marginal cost

C’ (q) =R’ (q)

Here,

C’ (q) =5+0.13p

R’ (q) =18

C’ (q) =R’ (q)

5+0.13q=18

→0.13q=18-5

→0.13q=13
13
→q=.13

q=100

∫ 𝑅′(q) dq=∫ 18𝑑𝑞

=18q+K1 [K1is constant. K1=0]

∴R (q) =18q

C (q) ∫ 𝑐 ′ (𝑞 )𝑑𝑞 = ∫(5 + 0.013𝑞)𝑑𝑞

0.13
=5q+ +𝑞 2 +𝑘2 [𝑘2 is constant]
2

C=TK120 we get

Best of luck!
 0.13
C (0) =5×0+ ×0+𝑘2 =120
2

0.13
Cq=5q+ 𝑞 2 +120
2

=5q+0.065𝑞 2 +120

Profit = P (q) =R (q)-C (q)

=18q-5q-0.065𝑞 2 -120

=13q-0.065𝑞 2 -120

=13×100-0.065(100)2-120[q-100]

=1300-650-120

=530

Total profit 530

Best of luck!