INTEGRATION

The static model, we find the values of the endogenous variables that satisfy some
specified equilibrium conditions. In this context, the optimization models provide to find
the choice of variables that maximize or minimize a specific objective function with the
first-order condition serving as the equilibrium condition. The dynamic model provides
the delineation of the time path of some variables on the basis of a known pattern of
change (say, a given instantaneous rate of change).

Here, we suppose that the population size H is known to change over time at the rate
dH
 t 1 2
dt
then we try to find the relevant time path (s) of population H  H (t ) can yield the
above rate of change. In that situation, the relevant method is known as integration or
integral calculus. Generally, in economics two types of integration, such as (i) Indefinite
Integration and (ii) Definite Integration are used.

Integration may be either :

 a process of summation, or
 a process of which is the inverse of differentiation and which accordingly
be called anti-differentiation.

Different types of integration:

 Decomposition
 Integration by Substitution
 Integration by parts
 Integration by successive reductions.

Formulae for Indefinite Integration

𝑥 𝑛 +1
1. 𝑥 𝑛 𝑑𝑥 = , 𝑛 ≠ −1
𝑛 +1
𝑑𝑥 1
2. = − , 𝑛≠1
𝑥𝑛 𝑛−1 𝑥 𝑛 −1
3. 𝑑𝑥 = 𝑥
𝑑𝑥
4. =2 𝑥
𝑥
𝑑𝑥
5. = log 𝑥
𝑥
𝑚𝑥 𝑒 𝑚𝑥
6. 𝑒 𝑑𝑥 = 𝑚
7. 𝑒 𝑥 𝑑𝑥 = 𝑒 𝑥
𝑎𝑥
8. 𝑎 𝑥 𝑑𝑥 =
log 𝑎
𝑓′ 𝑥
9. 𝑑𝑥 = log 𝑓 𝑥
𝑓 𝑥

1
 𝑑𝑥 1 𝑥−𝑎
10. = 2a log 𝑥+𝑎 , 𝑥 > 𝑎
𝑥 2 −𝑎 2
𝑑𝑥 1 𝑎 +𝑥
11. = 2a log 𝑎 −𝑥 , 𝑥 < 𝑎
𝑎 2 −𝑥 2
𝑑𝑥
12. = log 𝑥 + 𝑥 2 + 𝑎2
𝑥 2 +𝑎 2
𝑑𝑥
13. = log 𝑥 + 𝑥 2 − 𝑎2
𝑥 2 −𝑎 2
𝑑𝑢
14. 𝑢 𝑣 𝑑𝑥 = 𝑢 𝑣𝑑𝑥 − 𝑣𝑑𝑥 𝑑𝑥
𝑑𝑥
15. 𝑓1 𝑥 + 𝑓2 𝑥 + 𝑓3 𝑥 + ⋯ 𝑑𝑥 = 𝑓1 𝑥 𝑑𝑥 + 𝑓2 𝑥 𝑑𝑥 + ⋯
4 2+𝑥 +42 −𝑥 42+𝑥 4 2−𝑥
16. 𝑑𝑥 = 𝑑𝑥 + 𝑑𝑥
2𝑥 2𝑥 2𝑥

Example # 1:
The marginal cost function of a firm is C (Q)  2e 0.2Q , and the fixed cost is Ct  90 .
Find the total-cost function C (Q) .


To find the total-cost function C (Q) , we integrate C (Q) with respect to Q .
1 0.2 Q
C (Q)   2e 0.2Q dQ  2e  c  10 e 0.2 Q  c
0.2
Now, we consider Q  0 , total cost C will consist solely of Ct . Setting Q  0 in the
above equation then we have
10 e 0  c  90
which imply that c  90  10  80 . Hence, the total-cost function is defined as
C (Q)  10 e 0.2 Q  80 .

Example # 2:

The marginal propensity to save (MPS) is the function of income which is defined as
1
S (Y )  0.3  0.1 Y 2.

If the aggregate savings S is nil then the income Y is 81. Find the saving function S (Y )
.
To find the saving function S (Y ) , we integrate S (Y ) with respect to Y .

S (Y )    0.3  0.1 Y 2  dY  0.3 Y  0.2 Y 1 2  c .

1

 
The specific value of the constant c can be found from the fact that S  0 when Y  81.
Therefore, substituting the value of S  0 and Y  81in the above equation then we
have
0  0.3 81  0.2 9  c  c   22.5

2
then the desired saving function is explained as
S (Y )  0.3 Y  0.2 Y 1 2  22.5

Investment and Capital Formation

Capital formation is the process of adding to a given stock of capital. Regarding this
process as continuous over time, we may express capital stock as a function of time,
K t  , and use the derivative dK dt to denote the rate of capital formation. But the
capital formation at rate t is identical with the rate of net investment flow at time t ,
denoted by I (t ) . Thus capital stock K and net investment I are related by the
following two equations :
dK dK
dt
 I (t ) K (t )   I (t ) dt   dt
dt   dK
and
The first part of the above equation explains an identity; it shows the synonymity
between net investment and the increment of capital. Since I (t ) is the derivative of
K (t ) , it stands to reason that K (t ) is the integral or antiderivative of I (t ) , as shown in
the second equation.

Sometimes the concept of gross investment is used together with that of net investment in
a model. Denoting gross investment by I g and net investment by I , we can relate them
to each other by the equation,
Ig  I   K
where  represents the rate of depreciation of capital and  K , the rate of replacement
investment.

Example # 3:
Suppose that the net investment flow is described by the equation I (t )  3 t
12
and that
the initial capital stock, at time t  0 , is K (0) . What is the time path of capital K?

By integrating I (t ) with respect to t , we obtain

K (t )   I (t ) dt   3 t 1 2 dt  2 t 3 2  c
Next, letting t  0 in the leftmost and rightmost expressions, we find K (0)  c .
Therefore, the time path of K is
K (t )  2 t 3 2  K (0) .

3
Example # 4:
3
𝐼 = 𝑥 2 𝑒 𝑥 𝑑𝑥
1
I=3 𝑒 𝑧 𝑑𝑧 ; [Putting 𝑧 = 𝑥 3 ] Put
1 𝑧 = 𝑥3
= 3 𝑒𝑧 + 𝑐 𝑑𝑧
1 3 = 3𝑥 2
=3 𝑒 𝑥 + 𝑐 𝑑𝑥
𝑑𝑧
= 𝑥 2 𝑑𝑥
3

Example # 5:
𝑥2
𝐼= 𝑑𝑥
𝑎𝑥 +𝑏 𝑛
1 𝑧−𝑏 2 1 𝑧−𝑏 2 1 𝑧 2 −2𝑏𝑧 +𝑏 2 Put Again,
I=𝑎 𝑑𝑧 =𝑎 3 𝑑𝑧 =𝑎 3 𝑑𝑧
𝑎2𝑧 𝑛 𝑧𝑛 𝑧𝑛 𝑧 = 𝑎𝑥 + 𝑏 𝑧 = 𝑎𝑥 + 𝑏
1 1 2𝑏 𝑏2
= 𝑎3 − 𝑧 𝑛 −1 + 𝑧 𝑛 𝑑𝑧 𝑑𝑧 𝑎𝑥 = 𝑧 − 𝑏
𝑧 𝑛 −2 =𝑎
1 1 1 1 𝑑𝑥 𝑧−𝑏
= 𝑎3 𝑑𝑧 − 2𝑏 𝑑𝑧 + 𝑏2 𝑑𝑧 𝑑𝑧 𝑥=
𝑧 𝑛 −2 𝑧 𝑛 −1 𝑧𝑛 𝑎
1 −𝑛+2 −𝑛+1 2 = 𝑑𝑥
= 𝑎3 𝑧 𝑑𝑧 − 2𝑏 𝑧 𝑑𝑧 + 𝑏 𝑧 −𝑛 𝑑𝑧 𝑎
1 𝑧 −𝑛 +3 2𝑏𝑧 −𝑛 +2 𝑏 2 𝑧 −𝑛 +1
= 𝑎3 − + +𝑐
−𝑛 +3 −𝑛 +2 −𝑛 +1
2𝑏 1 𝑏2
= 𝑎3 − 𝑎3 − 𝑎3 +𝑐
𝑛−2 𝑧 𝑛 −2 𝑛 −3 𝑧 𝑛 −3 𝑛−1 𝑧 𝑛 −1

Integration by Parts

Example # 6:
𝑑 log 𝑥 𝑥2 1 1
I= x log x dx = log 𝑥 𝑥 𝑑𝑥 − 𝑥 𝑑𝑥 𝑑𝑥 = log 𝑥. − . 𝑥 2 𝑑𝑥
𝑑𝑥 2 𝑥 2
𝑥2 1 1 1 2
= log 𝑥 − 2 𝑥 𝑑𝑥 = 𝑥 2 log 𝑥 − 𝑥 +𝑐
2 2 4

Example # 7:
𝑑 𝑥2 𝑥 2 𝑒 𝑎𝑥 2
𝐼= 𝑥 2 𝑒 𝑎𝑥 𝑑𝑥 = 𝑥 2 𝑒 𝑎𝑥 𝑑𝑥 − 𝑒 𝑎𝑥 𝑑𝑥 𝑑𝑥 = − 𝑥𝑒 𝑎𝑥 𝑑𝑥
𝑑𝑥 𝑎 𝑎
𝑥 2 𝑒 𝑎𝑥 2 𝑑𝑥
= − 𝑎 𝑥 𝑒 𝑎𝑥 𝑑𝑥 − 𝑒 𝑎𝑥
𝑑𝑥 𝑑𝑥
𝑎 𝑑𝑥
𝑥 2 𝑒 𝑎𝑥 2𝑥 2
= − 𝑒 𝑎𝑥 + 𝑎 2 𝑒 𝑎𝑥 𝑑𝑥
𝑎 𝑎2
𝑥 2 𝑒 𝑎𝑥 2𝑥 2
= − 𝑒 𝑎𝑥 + 𝑎 3 𝑒 𝑎𝑥 + 𝑐
𝑎 𝑎2
𝑒 𝑎𝑥 2 2𝑥 2
= 𝑥 − 𝑎 + 𝑎2 + 𝑐
𝑎

4
Home Works (integrate the following functions)
𝑥 3 𝑒 𝑥 , 𝑥 log 𝑥 , 𝑥 2 log 𝑥 2 , 𝑥 log 𝑥 2

Definite Integral
An integral may be regarded as the limit of a certain addition process and may be
graphically interpreted as the area enclosed by a curve or a set of curves. This kind of
integral is known as a definite integral.

Example # 8:
Given the curve y  2 x , what is the area under the curve between x  0 , and x  3 ?
Y

y  2x

O 3 X
The area (A) under the curve is given by that expression, whose derivative dA dx is
equal to y i.e., y  2 x . Therefore, the area A is expressed as
3
A   2 x dx .
0
This integral, which shows the limiting values of x x  0 and x  3 is a definite
integral and the rule for the evaluation of a definite integral is given by
b

 f ( x) dx  F (b)  F (a) ,
a
where a and b are numbers and F is that function whose derivative is f.
In the above case

 
3 3

A   (2 x) dx  x 2
 (32 )  (0 2 )  9
0 0
The area under the curve y  2 x between the origin and x  3 is 9 square units.

5
Properties of Definite Integrals
b

 f ( x) dx  F (b)  F (a)
1. a

b b

 f ( x) dx   f ( z ) dz
2. a a
b a

 f ( x) dx    f ( x) dx
3. a b
b c b

 f ( x) dx   f ( x) dx   f ( x) dx
4. a a c
a a

 f ( x) dx  2  f ( x) dx
5. a 0

The concept of definite integral, to find the amount of capital formation during the
interval of time a, b is defined as
b b

 f (t ) dt  K (t )  K (b)  K (a)
a a
This also represents an area under the I (t ) curve. To explain the distinction between
K (t ) and I (t ) , let us we define capital K as a stock concept, whereas investment I as
a flow concept. That is, K (t ) tells us the amount of K existing at each point of time,
I (t ) gives us the information about the rate of (net) investment per year (or per period of
time) which is prevailing at each point of time. Thus, in order to calculate the amount of
net investment undertaken (capital accumulation), we must first specify the length of the
interval involved. This fact can also be seen when we rewrite the identify dK / dt  I (t )
as dK  I (t ) dt , which states that dK , the increment in K , is based not only on I (t ) ,
the rate of flow, but also on dt , the time that elapsed.

6
Example # 9:
If net investment is a constant flow at I (t )  1,000 (dollars per year), what will be the
total net investment (capital formation) during a year, from t  0 to t  1?

To find the amount of capital formation during a year, we have

1 1

 I (t ) dt  1,000 dt  1,000 t 0  1,000

1

0 0
The same answer will emerge if, instead, the year involved is from t  1 to t  2 .

Example # 10:
If I (t )  3 t 1 2 (thousands of dollars per year) is a nonconstant flow, what will be the
capital formation during the time interval 1, 4 , that is, during the second, third, and
fourth years?

To find the amount of capital formation during these years, we have


4
4
3 t dt  2 t 3 2 1  16  2 14
12

1
In this context, the amount of capital accumulation during the time interval 0, t , for
any investment rate I (t ) , we have
t

 I (t ) dt  K (t )0  K (t )  K (0)
t

0
That is, the preceding equation yields the following expression for the time path K (t ) :
t
K (t )  K (0)   I (t ) dt
0
The amount of K at any time t is the initial capital plus the total capital accumulation
that has occurred since.

Example # 11:
3
2𝑥𝑑𝑥
𝐼= 2
1 1+𝑥
2
Let 1 + 𝑥 = z ∴ 2𝑥 𝑑𝑥 = 𝑑𝑧 for 𝑥 = 1 𝑡ℎ𝑒𝑛 𝑧 = 2 and 𝑥 = 3 𝑡ℎ𝑒𝑛 𝑧 = 10 .
3 2𝑥𝑑𝑥 10 𝑑𝑧 10
Therefore, 1 1+𝑥 2
= 2 𝑧
= ln 𝑧 2 = ln 10 − ln 2 = ln 5 + ln 2 − ln 2 = ln 5 .

7
Applications of integration in economics and business :
𝑑𝐶
If 𝐶 is the cost of producing an output 𝑥 then marginal cost function, 𝑀𝐶 = 𝑑𝑥 . Using
integration as reverse process of differentiation we obtain,
Cost function, 𝐶 = 𝑀𝐶 𝑑𝑥 + 𝑘
where 𝑘 is the constant of integration which can be evaluated if the fixed cost is known.
If the fixed cost is not known, then 𝑘 = 0.
𝐶
Average cost function, 𝐴𝐶 = 𝑥 , 𝑥 ≠ 0

Example # 12:
The marginal cost function of manufacturing 𝑥 units of a commodity is 6 + 10𝑥 − 6𝑥 2 .
Find the total cost and average cost, given that the total cost of producing 1 unit is Tk.15.

Solution:
Given that, 𝑀𝐶 = 6 + 10𝑥 − 6𝑥 2 then the total cost is stated as
𝐶= 𝑀𝐶 𝑑𝑥 + 𝑘
= 6 + 10𝑥 − 6𝑥 2 𝑑𝑥 + 𝑘
10𝑥 2 6𝑥 3
= 6𝑥 + 2 − 3 + 𝑘
= 6𝑥 + 5𝑥 2 − 2𝑥 3 + 𝑘 --------- (1)
Putting the given value 𝑥 = 1 𝑎𝑛𝑑 𝐶 = 15 in the equation (1), we have
⟹ 15 = 6 + 5 − 2 + 𝑘
⟹ 𝑘=6
∴ Total cost function, 𝐶 = 6𝑥 + 5𝑥 2 − 2𝑥 3 + 6
𝐶
Average cost function, 𝐴𝐶 = 𝑥 , 𝑥 ≠ 0
6
= 6 + 5𝑥 − 2𝑥 2 + 𝑥
Example # 13:
The marginal cost function of manufacturing 𝑥 units of a commodity is 3 − 2𝑥 − 𝑥 2 . If
the fixed cost is Tk.200, find the total cost and average cost function.

Solution:
Given that, 𝑀𝐶 = 3 − 2𝑥 − 𝑥 2 then the total cost function is stated as
𝐶= 𝑀𝐶 𝑑𝑥 + 𝑘
𝑥3
= 3 − 2𝑥 − 𝑥 2 𝑑𝑥 + 𝑘 = 3𝑥 − 𝑥 2 − +𝑘
3
Given fixed cost 𝑘 = 200 then
𝑥3
C = 3𝑥 − 𝑥 2 − + 200
3
𝐶
𝐴𝐶 = , 𝑥 ≠0
𝑥
𝑥2 200
=3−𝑥− +
3 𝑥

𝑑𝑅
 𝑀𝑅 = 𝑑𝑥 , where 𝑅 indicates total revenue function, 𝑥 indicates total output and
𝑀𝑅 indicates marginal revenue. Therefore,
8
 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑓𝑢𝑛𝑐𝑡𝑖𝑜𝑛, 𝑅 = 𝑀𝑅 𝑑𝑥 + 𝑘 ; where 𝑘 indicates constant term,
which can be evaluated under given conditions.
𝑅
 𝐷𝑒𝑚𝑎𝑛𝑑 𝑓𝑢𝑛𝑐𝑡𝑖𝑜𝑛, 𝑝 = 𝑥 , 𝑥 ≠ 0

Example # 14:
If the marginal revenue for a commodity is 𝑀𝑅 = 9 − 6𝑥 2 + 2𝑥 , find the total revenue
and demand function.

Solution:
Given that, 𝑀𝑅 = 9 − 6𝑥 2 + 2𝑥 then the revenue function is stated as
𝑅 = 𝑀𝑅 𝑑𝑥 + 𝑘
= 9 − 6𝑥 2 + 2𝑥 𝑑𝑥 + 𝑘 = 9𝑥 − 2𝑥 3 + 𝑥 2 + 𝑘
Since 𝑅 = 0 𝑤ℎ𝑒𝑛 𝑥 = 0, 𝑘 = 0
∴ 𝑅 = 9𝑥 − 2𝑥 3 + 𝑥 2
𝑅
𝑝 = , 𝑥 ≠ 0 ⟹ 𝑝 = 9 − 2𝑥 2 + 𝑥
𝑥

Example # 15:
𝑒𝑥
If the marginal revenue for a commodity is 𝑀𝑅 = 100 + 𝑥 + 𝑥 2 , find the revenue
function.

Solution:
𝑒𝑥
Given that, 𝑀𝑅 = 100 + 𝑥 + 𝑥 2 then the revenue function is stated as
𝑅 = 𝑀𝑅 𝑑𝑥 + 𝑘
𝑒𝑥 𝑒𝑥 𝑥2 𝑥3
= + 𝑥 + 𝑥 2 𝑑𝑥 + 𝑘 = 100 + 2 + 3 + 𝑘
100
when no product is sold, revenue is zero, that is, 𝑥 = 0 𝑡ℎ𝑒𝑛 𝑅 = 0 . Therefore,
𝑒0 1
0 = 100 + 0 + 0 + 𝑘 ∴ 𝑘 = − 100
𝑒𝑥 𝑥2 𝑥3 1
∴ Revenue, 𝑅 = + + −
100 2 3 100

𝑝 𝑑𝑥 𝑑𝑝 𝑑𝑥 1
 We know that, Elasticity of demand 𝜂𝑑 = − ⟹ − =
𝑥 𝑑𝑝 𝑝 𝑥 𝜂𝑑
Integrating both sides
𝑑𝑝 1 𝑑𝑥
− 𝑝 = 𝜂𝑑 𝑥
This equation yields the demand function ′𝑝′ as a function of ′𝑥′.
The revenue function can be found out by using the relation, 𝑅 = 𝑝𝑥.

9
Example # 16:
𝑥−5
The elasticity of demand with respect to price 𝑝 for a commodity is 𝑥 , 𝑥 > 5 when
the demand is ′𝑥′. Find the demand function if the price is 2 when demand is 7. Also find
the revenue function.

Solution:
𝑥−5
Given that, 𝐸𝑙𝑎𝑠𝑡𝑖𝑐𝑖𝑡𝑦 𝑜𝑓 𝑑𝑒𝑚𝑎𝑛𝑑, 𝜂𝑑 = 𝑥
𝑝 𝑑𝑥 𝑥−5 𝑑𝑥 𝑑𝑝
That is, − 𝑥 = ⟹ = −
𝑑𝑝 𝑥 𝑥−5 𝑝
Integrating both sides,
𝑑𝑥 𝑑𝑝
= − + log 𝑘
𝑥−5 𝑝
⟹ log 𝑥 − 5 = − log 𝑝 + log 𝑘
⟹ log 𝑥 − 5 + log 𝑝 = log 𝑘
⟹ log 𝑝 𝑥 − 5 = log 𝑘
⟹ 𝑝 𝑥−5 = 𝑘
𝑘
∴ 𝑝 = 𝑥−5
when 𝑝 = 2 𝑎𝑛𝑑 𝑥 = 7 𝑡ℎ𝑒𝑛 𝑘 = 4 . Therefore, the demand function is obtained as
4
𝑝 = 𝑥−5 .
4𝑥
Revenue, 𝑅 = 𝑝𝑥 𝑜𝑟 𝑅 = , 𝑥>5
𝑥−5

Example # 17:
The elasticity of demand with respect to price 𝑝 for a commodity is a constant and is
equal to 2. Find the demand function and hence the total revenue function, given that
when the price is 1, the demand is 4.

Solution:
Given that, 𝐸𝑙𝑎𝑠𝑡𝑖𝑐𝑖𝑡𝑦 𝑜𝑓 𝑑𝑒𝑚𝑎𝑛𝑑, 𝜂𝑑 = 2
𝑝 𝑑𝑥 𝑑𝑥 𝑑𝑝
That is, − 𝑥 𝑑𝑝 = 2 ⟹ 𝑥 = −2 𝑝
Integrating both sides,
𝑑𝑥 𝑑𝑝
= −2 + log 𝑘
𝑥 𝑝
⟹ log 𝑥 = − 2 log 𝑝 + log 𝑘
⟹ log 𝑥 + log 𝑝2 = log 𝑘
⟹ 𝑝2 𝑥 = 𝑘 ------ (1)
Given, when 𝑥 = 4, 𝑝 = 1 then from (1) we get 𝑘 = 4.
4
Therefore, from (1) we have 𝑥𝑝2 = 4 𝑜𝑟 𝑝2 =
𝑥
2
∴ Demand function, 𝑝 = ; then the revenue function is defined as 𝑅 = 𝑝𝑥 = 2 𝑥 .
𝑥

10
Example # 18:
The marginal cost and marginal revenue with respect to a commodity of a firm are given
by 𝐶 ′ 𝑥 = 4 + 0.08𝑥 and 𝑅′ 𝑥 = 12. Find the total profit, given that the total cost at
zero output is zero.

Solution:
Given that, 𝑀𝐶 = 4 + 0.08𝑥
𝐶 𝑥 = 𝑀𝐶 𝑑𝑥 + 𝑘1
= 4 + 0.08𝑥 𝑑𝑥 + 𝑘1
𝑥2
= 4𝑥 + 0.08 2 + 𝑘1
= 4𝑥 + 0.04𝑥 2 + 𝑘1 ------ (1)
But given when 𝑥 = 0 𝑎𝑛𝑑 𝐶 = 0 then from the equation (1) we have
0 = 0 + 0 + 𝑘1
∴ 𝑘1 = 0
∴ 𝐶 𝑥 = 4𝑥 + 0.04𝑥 2 ------- (2)
Given that, 𝑀𝑅 = 12.
∴ 𝑅 𝑥 = 𝑀𝑅 𝑑𝑥 + 𝑘2
= 12 𝑑𝑥 + 𝑘2
= 12𝑥 + 𝑘2
𝑅𝑒𝑣𝑒𝑛𝑢𝑒 = 0 𝑤ℎ𝑒𝑛 𝑥 = 0 . ∴ 𝑘2 = 0
∴ 𝑅 𝑥 = 12𝑥 ---------------- (3)
From the equations (3) and (2); the total profit function is defined as
𝑃 𝑥 = 𝑅 𝑥 − 𝐶 𝑥 = 12𝑥 − 4𝑥 − 0.04𝑥 2 = 8𝑥 − 0.04𝑥 2

Example # 19:
The marginal revenue function (in thousand taka) of a commodity is 7 + 𝑒 −0.05𝑥 where 𝑥
is the number of units sold. Find the total revenue from the sale of 100 units 𝑒 −5 =
0.0067

Solution:
Given that, marginal revenue 𝑅′ 𝑥 = 7 + 𝑒 −0.05𝑥
∴ Total revenue from sale of 100 units is
100
100 𝑒 −0.05𝑥 100
𝑅= 0
7 + 𝑒 −0.05𝑥 𝑑𝑥 = 7𝑥 + = 700 − 𝑒 −5 − 1
−0.05 0 5
= 700 − 20 0.0067 − 1 = 700 + 20 − 0.134 = 720 − 0.134 𝑡ℎ𝑜𝑢𝑠𝑎𝑛𝑑𝑠
= 719.866 × 1000
𝑅𝑒𝑣𝑒𝑛𝑢𝑒, 𝑅 = 𝑇𝑘. 719,866.

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Example # 20:
𝑥
The marginal cost 𝐶 ′ 𝑥 and marginal revenue 𝑅′ 𝑥 are given by 𝐶 ′ 𝑥 = 20 + 20 and
𝑅′ 𝑥 = 30 . The fixed cost is Tk.200. Determine the maximum profit.

Solution:
𝑥
Given that, 𝐶 ′ 𝑥 = 20 + 20
𝑥 𝑥2
∴ 𝐶 𝑥 = 𝐶 ′ 𝑥 𝑑𝑥 + 𝑘1 = 20 + 20 𝑑𝑥 + 𝑘1 = 20𝑥 + 40 + 𝑘1
When quantity produced is zero, the fixed cost is Tk.200.
i.e., when 𝑥 = 0 𝑎𝑛𝑑 𝐶 = 200 then 𝑘1 = 200
𝑥2
Then the cost function is 𝐶 𝑥 = 20𝑥 + 40 + 200
The revenue, 𝑅′ 𝑥 = 30
∴ 𝑅 𝑥 = 𝑅′ 𝑥 𝑑𝑥 + 𝑘2 = 30 𝑑𝑥 + 𝑘2 = 30𝑥 + 𝑘2
When no product is sold, 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 = 0
i.e., when 𝑥 = 0 𝑡ℎ𝑒𝑛 𝑅 = 0
∴ Revenue, 𝑅 𝑥 = 30𝑥
𝑥2 𝑥2
Profit, 𝑃 = 𝑇𝑜𝑡𝑎𝑙 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 − 𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 = 30𝑥 − 20𝑥 − 40 − 200 = 10𝑥 − 40 − 200
𝑑𝑃 𝑥 𝑑𝑃 𝑑2 𝑃 1
= 10 − 20 ; 𝑑𝑥 = 0 ⟹ 𝑥 = 200 and 𝑑 𝑥 2 = − 20 < 0
𝑑𝑥
∴ Profit is maximum when 𝑥 = 200
40000
∴ Maximum profit is 𝑃 = 2000 − 40 − 200
∴ 𝑃𝑟𝑜𝑓𝑖𝑡 = 𝑇𝑘. 800

Example # 21:
A company determines that the marginal cost of producing 𝑥 units is 𝐶 ′ 𝑥 = 10.6𝑥 .
The fixed cost is Tk.50. The selling price per unit is Tk.5 . Find (i) total cost function; (ii)
total revenue function; and (iii) profit function.

Solution:
Given that, 𝐶 ′ 𝑥 = 10.6𝑥
𝑥2
∴ 𝐶 𝑥 = 𝐶 ′ 𝑥 𝑑𝑥 + 𝑘 = 10.6𝑥 𝑑𝑥 + 𝑘 = 10.6 2 + 𝑘 = 5.3𝑥 2 + 𝑘
Given fixed cost is Tk.50, i.e., when 𝑥 = 0 𝑡ℎ𝑒𝑛 𝐶 = 50 and 𝑘 = 50.
Hence cost function, 𝐶 = 5.3𝑥 2 + 50

(ii) 𝑇𝑜𝑡𝑎𝑙 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 = 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠 𝑠𝑜𝑙𝑑 × 𝑃𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡

Let 𝑥 be the number of units sold. Given that selling price pr unit is Tk.5 .
∴ 𝑅𝑒𝑣𝑒𝑛𝑢𝑒, 𝑅 𝑥 = 5𝑥

(iii) 𝑃𝑟𝑜𝑓𝑖𝑡, 𝑃 = 𝑇𝑜𝑡𝑎𝑙 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 − 𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 = 5𝑥 − 5.3𝑥 2 + 50

= 5𝑥 − 5.3𝑥 2 − 50

12
Example # 22:
375
The marginal cost at a production level of 𝑥 units is given by 𝐶 ′ 𝑥 = 85 + 𝑥 2 . Find
the cost of producing 10 incremental units after 15 units have been produced.

Solution:
375
Given that, 𝐶 ′ 𝑥 = 85 + 𝑥 2 ∴ 𝐶 𝑥 = 𝐶 ′ 𝑥 𝑑𝑥 + 𝑘
The cost of producing 10 incremental units after 15 units have been produced
25 25 375 375 25
= 𝐶 ′ 𝑥 𝑑𝑥 = 85 + 𝑑𝑥 = 85𝑥 − = 𝑇𝑘. 860
15 15 𝑥2 𝑥 15
∴ 𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑐𝑜𝑠𝑡 = 𝑇𝑘. 860

13