International

University Math for Business

REVISION
Chapter 1: Linear Equation
1.1: Algebra
 Like terms: P, 2P, 0.3P are all multiples of P
 Distributive law:
 Factorization:
 Difference of two squares:
Ex: 17 page 20 – Remember to note down the conditions.
1.2: Further algebra

 Fractions: a: numerator, b: denominator

, : equivalent fractions
To add (or subtract) two fractions you write them as equivalent fractions with
a common denominator and add (or subtract) their numerators.
 Equations:
 Inequalities: : a lies to the left/right of b (less/greater than)
If both sides are multiplied or divided by a negative number then the sense of
the inequality is reversed.
Ex: 5 page 38
1.3: Graph of linear equation
 Linear equation: a, b: coefficients
Or: a: slope, b: intercept
─ Draw 2 axes → Find 2 coordinates → Sketch the graph.
 Simultaneous linear equations: have point of intersection.

Ex: 9 page 52.

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TA: Tran Hoang Lam - Bui Nguyen Hoang Trieu – Doan Ngoc Van Khanh
International
University Math for Business

1.4: Algebraic solution of simultaneous linear equations

Elimination method:
Step 1
─ Add/subtract a multiple of one equation to/from a multiple of the other
to eliminate x.
Step 2
─ Solve the resulting equation for y.
Step 3
─ Substitute the value of y into one of the original equations to deduce x.
Step 4
─ Check that no mistakes have been made by substituting both x and y
into the other original equation.
Ex: 4 page 65, 6 page 83 – Step by step, no calculator.
1.5: Supply and demand
 Demand function: ,
 Inverse functions:
 a, b: parameters. → P is a decreasing function of Q.
 Substitutable good: good that could be consumed instead of others.
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TA: Tran Hoang Lam - Bui Nguyen Hoang Trieu – Doan Ngoc Van Khanh
International
University Math for Business

 Complementary good: good that is used in conjunction with others.


─ Y, Ps, Pc, A, T fixed → Q and P are endogenous variables. The remaining
are exogenous.
 Inferior good: income ↗, demand ↘
 Normal good: income ↗, demand ↗
 Equilibrium point: intersection of demand and supply, Qs = Qd.
 Tax: added to supply function.
Ex: 5 page 83 – New price is from new supply function after tax.
1.6: Transposition of formulae
 Flow chart: in an order.
 Reverse flow chart: in a reverse order.
Ex: 7 page 92

Chapter 2: Non-linear equation

2.1: Quadratic function

√
 : discriminant
─ If : 2 solutions
: 1 solution
: no solution
 The graph of quadratic is always parabolic.
 Sketch the graph:
Step 1
Determine the basic shape. The graph has a U shape if a > 0, and an inverted U
shape if a < 0.
Step 2
Determine the y intercept. This is obtained by substituting x = 0 into the
function, which gives y = c.
Step 3

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TA: Tran Hoang Lam - Bui Nguyen Hoang Trieu – Doan Ngoc Van Khanh
International
University Math for Business
Determine the x intercepts (if any). These are obtained by solving the quadratic
equation
Ex: 4abc, 5abc page 129, 10 page 130
2.2: Revenue, cost and profit
 Revenue:
 Total revenue:
─ To find maximum value => Sketch the graph, find the highest point.
 Total cost = Fixed cost + Variable cost
─
 Average cost = Total cost/Quantity
─
─ AC have a graph called rectangular hyperbola (L-shaped).

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TA: Tran Hoang Lam - Bui Nguyen Hoang Trieu – Doan Ngoc Van Khanh
International
University Math for Business

Remember to notice the difference in finding maximum profit in the Profit graph and the TR – TC
graph.

 Break-even:
Ex: 5,6 page 140, 9 page 141
2.3: Indices and logarithms

 : exponential form of M to base b.
 n: index, power, exponent.
─ ,

─ : nth root of b.
─
─
─
─
─
 : production function
─ : Capital, : Labor,  (Lambda): a general number which is the scale of
K and L.
 is homogeneous if   
─ : degree of homogeneity.
─ : the function is said to display decreasing returns to scale.
─ : the function is said to display constant returns to scale.
─ : the function is said to display increasing returns to scale.
 Cobb-Douglas production function:
─
─    : this is a homogeneous function of degree
.
 If then
─
─
─
Ex: 5 page 161, 6 page 162

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TA: Tran Hoang Lam - Bui Nguyen Hoang Trieu – Doan Ngoc Van Khanh
International
University Math for Business
2.4: The exponential and natural logarithm functions
 : exponential function
 ( )
 An economic variable increase overtime but approach a fixed value is
said to displays a limited growth.
 Saturation level: when
 An economic variable keep on rising over time is said to display an
unlimited growth.
 then : natural logarithms.
Ex: 5 page 175, 4 page 176

Chapter 3: Mathematics of finance

3.1: Percentages

 Change in percentage:
─ : increase, : decrease
 Scale factor with r = percentage
increase/decrease.
 Find a value forward in time -> Multiply the scale factor.
 Find a value backward in time -> Divide by the scale factor.
 Overall percentage changes: multiply all the scale factors, then take 1 –
or – 1 depends on the overall scale factor.
 Index number: identify trends and relationships in the data. (have no
unit)
─ Index number = scale factor from base year x 100.

 Laspeyres index : base-weighted index

 Paasche index : current-weighted index
 Nominal data: original, raw data.
 Real data: the value that have been adjusted to take inflation into
account.

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TA: Tran Hoang Lam - Bui Nguyen Hoang Trieu – Doan Ngoc Van Khanh
International
University Math for Business
Ex: 4,5,6,9,11 page 197, 14 page 198, 8 page 200 – Write down the table to
solve question 8 easier.
3.2: Compound interest
 Simple interest: the amount of interest received is the same for all years.
 Compound interest: “interest on the interest”.
 Principal (P): the original sum of money.
 Future value (S): final sum.
─
 r: interest rate of a year, t: number of year
 Annually: , Semi-annually: , Quarterly: , Monthly:
, Weekly: , Daily:
 Continuous compounding: the interest is added on with increasing
frequency.
─
 Annual percentage rate (APR): the rate of interest which, when
compounded annually, produces the same yield as the nominal rate of
interest.
 Annual equivalent rate (AER): APR used for savings.
─ n: times compounded in a year
─ Continuous compounding:
Ex: 12, 15 page 213, 6 page 214, 11 page 215
3.3: Geometric series
 Geometric progression: sequence in which terms are calculated by
multiplying their predecessor by a fixed number.
 Geometric ratio: the multiplicative factor.
 Arithmetic progression: adding, not multiplying factor.
 Geometric series: Sum of consecutive terms of a geometric progression.
 Sinking fund: A fixed sum of money saved at regular intervals which is
used to fund some future financial commitment.
 with
─ : the first term.
─ : geometric ratio.
─ : number of terms.

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TA: Tran Hoang Lam - Bui Nguyen Hoang Trieu – Doan Ngoc Van Khanh
International
University Math for Business

Ex: 3 page 224, 6,8 page 225

3.4: Investment appraisal

─ P: present value, r: discount rate.

─
 Present value: The amount that is invested initially to produce a
specified future value after a given period of time.
 Net present value (NPV): he present value of a revenue flow minus the
original cost.
 Internal rate of return (IRR): the interest rate for which the net present
value is zero.
Ex: 6 page 40, 1,2,3 page 239 – Remember to compare the NPV, not PV

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TA: Tran Hoang Lam - Bui Nguyen Hoang Trieu – Doan Ngoc Van Khanh
International
University Math for Business

Chapter 4: Differentiation
4.1: The derivative of a function

 Slope =
 Tangent: A straight line which passes through a point on a curve and
which just touches the curve at this point.
 : f dashed of a: the slope of the graph of a function f at .
 Derived function:
 then or then
 Differentiation: the process of finding derived function symbolically.
Ex: 1,6 page 257
4.2: Rules of differentiation
 The constant rule: differentiate the function and multiply by the
constant.
─ Constant differentiate to zero.
 The sum rule: differentiate each function separately and add.
 The difference rule: differentiate each function separately and subtract.
 : second-order derivative.
 Convex: upward curve.
 Concave: downward curve.


─ If then so the parabola is convex.
─ If then so the parabola is concave.
Ex: 6 page 268
4.3: Marginal functions

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TA: Tran Hoang Lam - Bui Nguyen Hoang Trieu – Doan Ngoc Van Khanh
International
University Math for Business

 Marginal revenue: the derivative of total revenue with respect to

demand
─
─ : change in total revenue = marginal revenue x
change in demand.
 Monopolist: , : a single firm or a cartel is
assumed to be the only supplier of a product and has controlled over the
market. Price raises, demand falls.
─
─

 Perfect competition: : a large number of firms all selling a product,

no barriers to entry to the industry.
─

 Marginal cost: the derivative of total cost with respect to output

─

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TA: Tran Hoang Lam - Bui Nguyen Hoang Trieu – Doan Ngoc Van Khanh
International
University Math for Business
─
 Marginal product of labor: the derivative of output with respect to labor.
─
─ Law of diminishing returns: the increase in output due to a 1 unit
increase in labor will eventually decline.
 Marginal propensity to consume: : the derivative of
consumption with respect to income.
 Marginal propensity to save: : the derivative of savings with
respect to income.
─
4.4: Further rules of differentiation
 The chain rule: differentiate the outer function and multiply by the
derivative of the inner function.
─
 The product rule: multiply each function by the derivative of the other
and add.
─ If then
 The quotient rule: bottom times derivative of top, minus top times
derivative of bottom, all over bottom squared.

─ If then

Ex: 1abgf, 2c, 3c page 292, 1a, 2a, 3a, 4b page 293.

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TA: Tran Hoang Lam - Bui Nguyen Hoang Trieu – Doan Ngoc Van Khanh