National University of Computer &

Emerging Sciences
MT-1002: Business Mathematics-I
Sections: FT01 A B C D
Solution of Homework 05

Instructor A & B: Adnan Ashraf

Email: [email protected]

Instructor C & D: Dr. Imran Shahzad

Email: [email protected]
October 30, 2024

Topics:
First and Second Derivative Test with Application in Revenue
Maximization, Profit Maximization and Cost Minimization

Question 1
Given f (x) = −x3 + 6x2 − 12x + 10,

(A) Find the critical numbers of f .

To find the critical numbers, we need to compute the first derivative
f ′ (x) and set it equal to zero.

f (x) = −x3 + 6x2 − 12x + 10

d
f ′ (x) = (−x3 + 6x2 − 12x + 10) = −3x2 + 12x − 12
dx
Setting f ′ (x) = 0:

1
 −3x2 + 12x − 12 = 0

Divide by −3 to simplify:

x2 − 4x + 4 = 0

This factors as:

(x − 2)2 = 0

So, x = 2 is the only critical number.

(B) Find the increasing intervals, decreasing intervals, local max-

ima, and local minima of f using the first derivative test.
To determine the intervals of increase and decrease, we create a sign
chart for f ′ (x) around x = 2.

f ′ (x) = −3x2 + 12x − 12 = −3(x − 2)2

Since (x − 2)2 ≥ 0, we know that f ′ (x) ≤ 0 for all x, meaning f (x) is

never increasing.
For x < 2: f ′ (x) < 0 (indicating a decreasing interval).
For x > 2: f ′ (x) < 0 (also indicating a decreasing interval).

Since f (x) changes from decreasing to decreasing at x = 2, there is no

local maximum or minimum. Thus, x = 2 is a point of inflection.
Conclusion:

• Critical number: x = 2
• Intervals of increase: None
• Intervals of decrease: (−∞, ∞)
• Local maxima: None
• Local minima: None

2
Question 2
Given f (x) = x4 + 4x3 ,

(A) Find the critical numbers of f .

To find the critical numbers, we need to compute the first derivative
f ′ (x) and set it equal to zero.

f (x) = x4 + 4x3
d 4
f ′ (x) = (x + 4x3 ) = 4x3 + 12x2
dx
Setting f ′ (x) = 0:

4x3 + 12x2 = 0

Factor out 4x2 :

4x2 (x + 3) = 0

This gives x = 0 and x = −3 as the critical numbers.

(B) Find the increasing intervals, decreasing intervals, local max-

ima, and local minima of f using the first derivative test.
To determine the intervals of increase and decrease, we create a sign
chart for f ′ (x) around x = −3 and x = 0.

For x < −3: Choose x = −4, then f ′ (−4) = 4(−4)3 + 12(−4)2 =

−64 + 192 = 128 > 0, so f (x) is increasing on (−∞, −3).
For −3 < x < 0: Choose x = −1, then f ′ (−1) = 4(−1)3 + 12(−1)2 =
−4 + 12 = 8 > 0, so f (x) is increasing on (−3, 0).
For x > 0: Choose x = 1, then f ′ (1) = 4(1)3 +12(1)2 = 4+12 = 16 > 0,
so f (x) is increasing on (0, ∞).

Since f ′ (x) does not change sign at x = −3 and x = 0, there are no

local maxima or minima.
Conclusion:

• Critical numbers: x = −3, 0

3
 • Intervals of increase: (−∞, ∞)
• Intervals of decrease: None
• Local maxima: None
• Local minima: None

(C) Find the inflection points of f .

To find the inflection points, we need the second derivative f ′′ (x) and
find where it changes sign.

d
f ′′ (x) = (4x3 + 12x2 ) = 12x2 + 24x
dx
Setting f ′′ (x) = 0:

12x(x + 2) = 0

This gives x = 0 and x = −2. We’ll examine these points in the sign
chart for f ′′ (x) to determine concavity and inflection points.

(D) Find the concave upward intervals, concave downward inter-

vals, and verify the local maxima and minima using the second
derivative test.
We create a sign chart for f ′′ (x) around x = −2 and x = 0.

For x < −2: Choose x = −3, then f ′′ (−3) = 12(−3)2 + 24(−3) =

108 − 72 = 36 > 0, so f (x) is concave up on (−∞, −2).
For −2 < x < 0: Choose x = −1, then f ′′ (−1) = 12(−1)2 + 24(−1) =
12 − 24 = −12 < 0, so f (x) is concave down on (−2, 0).
For x > 0: Choose x = 1, then f ′′ (1) = 12(1)2 + 24(1) = 12 + 24 =
36 > 0, so f (x) is concave up on (0, ∞).

Thus, x = −2 and x = 0 are points of inflection.

Conclusion:

• Inflection points: x = −2, 0

• Concave upward intervals: (−∞, −2) ∪ (0, ∞)
• Concave downward interval: (−2, 0)

4
Question 3
An office supply company sells x heavy-duty paper shredders per
year at p dollars per shredder. The price–demand equation for
these shredders is
x
p = 300 −
30
(A) What price should the company charge for the shredders to
maximize revenue?
To maximize revenue, we first express the revenue R as a function of x.
Revenue R is given by the product of price p and quantity x:
 x
R(x) = p · x = 300 − x
30
x2
R(x) = 300x −
30
Now, we differentiate R(x) with respect to x and set R′ (x) = 0 to find
the critical points.
2x x
R′ (x) = 300 − = 300 −
30 15
Setting R′ (x) = 0:
x
300 − =0
15
x = 4500
Next, we apply the second derivative test to confirm that x = 4500 gives
a maximum. We differentiate R′ (x) to find R′′ (x):
1
R′′ (x) = −
15
′′ 1
Since R (x) = − 15 < 0, the second derivative is negative, indicating that
R(x) is concave down at x = 4500. Thus, x = 4500 indeed gives a maximum.
Now, we substitute x = 4500 back into the price-demand equation to find
the corresponding price p.
4500
p = 300 − = 300 − 150 = 150
30
Thus, the company should charge $150 per shredder to maximize rev-
enue.
(B) What is the maximum revenue?

5
 To find the maximum revenue, substitute x = 4500 into the revenue
function R(x).

45002
R(4500) = 300(4500) −
30
20250000
= 1350000 −
30
= 1350000 − 675000 = 675000
Therefore, the maximum revenue is $675,000.

Question 4
A walnut grower estimates from past records that if 20 trees are
planted per acre, then each tree will average 60 pounds of nuts
per year. If, for each additional tree planted per acre, the average
yield per tree drops by 4 pounds, then:

1. How many trees should be planted to maximize the yield per

acre?

2. What is the maximum yield?

Solution:
Let x represent the number of additional trees planted per acre beyond
20. Then, the total number of trees planted per acre is 20 + x. The yield
per tree decreases by 4 pounds for each additional tree, so the yield per tree
becomes 60 − 4x.
The total yield per acre, Y (x), is the product of the number of trees and
the yield per tree:
Y (x) = (20 + x)(60 − 4x)
Expanding Y (x):

Y (x) = 1200 − 80x + 60x − 4x2

Y (x) = −4x2 − 20x + 1200

Finding the Domain:
Since the yield per tree decreases by 4 pounds for each additional tree,
we need to ensure that the yield per tree is non-negative:

60 − 4x ≥ 0

6
 4x ≤ 60
x ≤ 15
Additionally, x ≥ 0 since we cannot plant a negative number of trees.
Thus, the domain for x is 0 ≤ x ≤ 15.
Finding the Maximum Yield:
To find the maximum yield within the domain, we take the derivative of
Y (x) with respect to x and set it equal to zero.

Y ′ (x) = −8x − 20
Setting Y ′ (x) = 0:
−8x = 20
20
x = − = −2.5
8
Since x = −2.5 does not lie within the domain [0, 15], we evaluate the
yield at the endpoints of the domain, x = 0 and x = 15.
Case 1: x = 0
Y (0) = (20 + 0)(60 − 4 · 0) = 20 · 60 = 1200
Case 2: x = 15
Y (15) = (20 + 15)(60 − 4 · 15) = 35 · 0 = 0
Thus, the maximum yield is achieved when x = 0, which corresponds
to planting 20 trees per acre, yielding a maximum of 1200 pounds per
acre.

Question 5
A multimedia company anticipates that there will be a demand for
20,000 copies of a certain DVD during the next year. It costs the
company $0.40 to store a DVD for one year. Each time it must
make additional DVDs, it costs $250 to set up the equipment. How
many DVDs should the company make during each production run
to minimize its total storage and setup costs?
Solution:
Let, x represent the number of DVDs produced in each production run. y
represent the number of production runs needed per year. Since the company
needs to meet a demand of 20,000 DVDs per year, we have:
20000
y=
x
7
 The total cost, C(x), includes both storage and setup costs.

1. Setup cost per year: Each production run costs $250 to set up, and
there are y = 20000
x
runs per year. Therefore, the setup cost per year is:
20000 5000000
Setup Cost = 250 · =
x x

2. Storage cost per year: On average, x2 DVDs are in storage at any

given time (assuming constant production and usage). The storage cost
per DVD is $0.40 per year, so the total storage cost is:
x
Storage Cost = 0.40 · = 0.20x
2

The total cost function C(x) is the sum of the setup and storage costs:
5000000
C(x) = + 0.20x
x
To minimize the total cost, we differentiate C(x) with respect to x and
set C ′ (x) = 0.
5000000
C ′ (x) = − + 0.20
x2
Setting C ′ (x) = 0:
5000000
− + 0.20 = 0
x2
5000000
= 0.20
x2
5000000
x2 = = 25000000
0.20
√
x = 25000000 = 5000
To confirm that this value of x minimizes the cost, we compute the second
derivative C ′′ (x):
10000000
C ′′ (x) =
x3
Since C ′′ (x) > 0 for x > 0, the function C(x) is concave up at x = 5000,
indicating a minimum at this point.
Calculating the Minimum Cost:
Substituting x = 5000 into the cost function C(x) to find the minimum
cost:

8
 5000000
C(5000) = + 0.20 · 5000
5000
= 1000 + 1000 = 2000
Using x = 5000 in the formula for y:
20000
y= =4
5000
Thus, the minimum cost is $2000 when the company produces 5,000
DVDs per production run and the company should run 4 production
runs per year.

Question 6
A company manufactures and sells x smartphones per week. The
weekly price–demand equation is given by p = 500 − 0.5x.

1. What price should the company charge for the phones to max-
imize weekly revenue?
2. How many phones should be produced to maximize the weekly
revenue?
3. What is the maximum weekly revenue?

Solution:
To find the maximum weekly revenue, we start by determining the revenue
function R(x), which is the product of the price per smartphone p and the
quantity x:
R(x) = p · x = (500 − 0.5x)x
Expanding this gives:
R(x) = 500x − 0.5x2
Next, we find the first derivative of R(x) and set it equal to zero to find
the critical points:
R′ (x) = 500 − x
Setting R′ (x) = 0:
500 − x = 0 =⇒ x = 500
To confirm that this critical point maximizes the revenue, we calculate
the second derivative:
R′′ (x) = −1

9
 Since R′′ (x) < 0, the revenue function is concave down, indicating that
x = 500 is indeed a maximum.
Now, substituting x = 500 back into the price–demand equation to find
the price:
p = 500 − 0.5(500) = 500 − 250 = 250
Finally, we calculate the maximum weekly revenue:

R(500) = 500(250) − 0.5(500)2

= 125000 − 125000 = 125000

Thus, the company should charge $250 per smartphone, produce 500
smartphones per week, and the maximum weekly revenue is $125,000.

Question 7
A company manufactures and sells x digital cameras per week. The
weekly price–demand equation is given by p = 400 − 0.4x, and the
cost equation is C(x) = 2000 + 160x.

1. What is the maximum weekly profit?

2. How much should the company charge for the cameras?

3. How many cameras should be produced to realize the maxi-

mum weekly profit?

Solution: The revenue R(x) is the product of the price per camera p
and the quantity x:

R(x) = p · x = (400 − 0.4x)x = 400x − 0.4x2

The profit P (x) is given by the revenue minus the cost:

P (x) = R(x) − C(x) = (400x − 0.4x2 ) − (2000 + 160x)

Simplifying this, we get:

P (x) = 400x − 0.4x2 − 2000 − 160x = −0.4x2 + 240x − 2000

To find the maximum profit, we take the derivative of the profit function
and set it equal to zero:

P ′ (x) = −0.8x + 240

10
Setting P ′ (x) = 0:
240
−0.8x + 240 = 0 =⇒ 0.8x = 240 =⇒ x = = 300
0.8
We calculate the second derivative:
P ′′ (x) = −0.8
Since P ′′ (x) < 0, the function is concave down, confirming that x = 300 is a
maximum.
Substituting x = 300 back into the profit function:
P (300) = −0.4(300)2 + 240(300) − 2000
= −0.4(90000) + 72000 − 2000
= −36000 + 72000 − 2000 = 34000
Now substituting x = 300 into the price-demand equation to find the
selling price:
p = 400 − 0.4(300) = 400 − 120 = 280
Thus, the maximum weekly profit is $34,000. The company should
charge $280 per camera and produce 300 cameras per week to realize this
maximum profit.

Question 8
A company manufactures and sells x television sets per month.
The monthly cost and price–demand equations are given by
C(x) = 72000 + 60x
x
p = 200 − for 0 ≤ x ≤ 9000
30
(A) Find the maximum revenue.
(B) Find the maximum profit, the production level that will re-
alize the maximum profit, and the price the company should
charge for each television set.
(C) If the government decides to tax the company $5 for each set
it produces, how many sets should the company manufacture
each month to maximize its profit? What is the maximum
profit? What should the company charge for each set?
Solution:

11
(A) Maximum Revenue
The revenue R(x) is given by the product of the price p and the quantity x:
 x x2
R(x) = p · x = 200 − x = 200x −
30 30
To find the maximum revenue, we take the derivative R′ (x) and set it
equal to zero:
2x x
R′ (x) = 200 − = 200 −
30 15
′
Setting R (x) = 0:
x x
200 − = 0 =⇒ = 200 =⇒ x = 3000
15 15
Calculating the second derivative:
2 1
R′′ (x) = − =−
30 15
Since R′′ (x) < 0, the revenue function is concave down, confirming that
x = 3000 gives a maximum revenue.
Now we calculate the maximum revenue:
(3000)2
R(3000) = 200(3000) −
30
9000000
= 600000 − = 600000 − 300000 = 300000
30
Thus, the maximum revenue is $300,000.

(B) Maximum Profit

The profit P (x) is given by the revenue minus the cost:
x2
 
P (x) = R(x) − C(x) = 200x − − (72000 + 60x)
30
x2
= 200x − − 72000 − 60x
30
x2
=− + 140x − 72000
30
To maximize profit, we take the derivative P ′ (x) and set it equal to zero:
2x x
P ′ (x) = − + 140 = − + 140
30 15
12
Setting P ′ (x) = 0:
x x
− + 140 = 0 =⇒ = 140 =⇒ x = 2100
15 15
Calculating the second derivative:
2 1
P ′′ (x) = − =−
30 15
Since P ′′ (x) < 0, the profit function is concave down, confirming that x =
2100 gives a maximum profit.
Next, we calculate the maximum profit:

(2100)2
P (2100) = − + 140(2100) − 72000
30
4410000
=− + 294000 − 72000
30
= −147000 + 294000 − 72000 = 75000
The price per television set when x = 2100:
2100
p = 200 − = 200 − 70 = 130
30
Thus, the maximum profit is $75,000, with a production level of 2,100
televisions and a price of $130.

(C) Impact of $5 Tax

With the tax, the cost equation becomes:

C(x) = 72000 + 60x + 5x = 72000 + 65x

Now, the new profit function is:

x2
 
P (x) = R(x) − C(x) = 200x − − (72000 + 65x)
30

x2
=− + 135x − 72000
30
Setting the derivative equal to zero:
2x x
P ′ (x) = − + 135 = − + 135
30 15
13
Setting P ′ (x) = 0:
x x
− + 135 = 0 =⇒ = 135 =⇒ x = 2025
15 15
Calculating the second derivative:
2 1
P ′′ (x) = − =−
30 15
Since P ′′ (x) < 0, the profit function is concave down, confirming that x =
2025 gives a maximum profit.
Calculating the new maximum profit:

(2025)2
P (2025) = − + 135(2025) − 72000
30
4100625
=− + 273375 − 72000
30
= −136687.5 + 273375 − 72000 = 60187.5
The price per television set when x = 2025:
2025
p = 200 − = 200 − 67.5 = 132.5
30
Thus, with the tax, the company should manufacture 2,025 televisions
each month to maximize profit, resulting in a maximum profit of approxi-
mately $60,187.50, and the price should be $132.50 per television set.

Question 9
A publishing company sells 50,000 copies of a certain book each
year. It costs the company $1 to store a book for one year. Each
time it prints additional copies, it costs the company $1,000 to set
up the presses.

1. How many books should the company produce during each

printing to minimize its total storage and setup costs?

2. What is the minimum cost?

14
 Solution:
Let, x represent the number of books produced in each printing, and y
represent the number of printing runs needed per year. Since the company
needs to meet a demand of 50,000 books per year, we have:
50000
y=
x
The total cost, C(x), includes both storage and setup costs.

1. Setup cost per year: Each printing run costs $1,000 to set up, and
there are y = 50000
x
runs per year. Therefore, the setup cost per year is:

50000 50000000
Setup Cost = 1000 · =
x x

2. Storage cost per year: On average, x2 books are in storage at any

given time (assuming constant production and usage). The storage cost
per book is $1 per year, so the total storage cost is:
x
Storage Cost = 1 · = 0.5x
2

The total cost function C(x) is the sum of the setup and storage costs:
50000000
C(x) = + 0.5x
x
To minimize the total cost, we first find the first derivative of C(x) with
respect to x and set it equal to zero.
50000000
C ′ (x) = − + 0.5
x2
Setting C ′ (x) = 0:
50000000
− + 0.5 = 0
x2
50000000
= 0.5
x2
50000000
x2 = = 100000000
0.5
√
x = 100000000 = 10000
To confirm that this value of x minimizes the cost, we compute the second
derivative C ′′ (x):

15
 100000000
C ′′ (x) =
x3
Since C ′′ (x) > 0 for x > 0, the function C(x) is concave up at x = 10000,
indicating a minimum at this point.
Calculating the Minimum Cost:
Substituting x = 10000 into the cost function C(x) to find the minimum
cost:
50000000
C(10000) = + 0.5 · 10000
10000
= 5000 + 5000 = 10000
Using x = 10000 in the formula for y:
50000
y= =5
10000
Therefore, the minimum cost is $10,000 when the company produces
10,000 books per printing and the company should run 5 printing runs
per year.

Question 10
A tool company has a uniform annual demand for 9,000 premium
chainsaws. It costs $5 to store a chainsaw for a year and $2,500 to
set up the plant for the manufacture of the premium model.

1. How many chainsaws should be manufactured in each produc-

tion run to minimize the total storage and setup costs?

2. What is the minimum cost?

Solution:
Let, x represent the number of chainsaws produced in each production
run, and y represent the number of production runs needed per year. Since
the company needs to meet a demand of 9,000 chainsaws per year, we have:
9000
y=
x
The total cost, C(x), includes both storage and setup costs.

16
 1. Setup cost per year: Each production run costs $2,500 to set up,
and there are y = 9000
x
runs per year. Therefore, the setup cost per
year is:
9000 22500000
Setup Cost = 2500 · =
x x
2. Storage cost per year: On average, x2 chainsaws are in storage at
any given time (assuming constant production and usage). The storage
cost per chainsaw is $5 per year, so the total storage cost is:
x
Storage Cost = 5 · = 2.5x
2

The total cost function C(x) is the sum of the setup and storage costs:
22500000
C(x) = + 2.5x
x
To minimize the total cost, we first find the first derivative of C(x) with
respect to x and set it equal to zero.
22500000
C ′ (x) = − + 2.5
x2
Setting C ′ (x) = 0:
22500000
− + 2.5 = 0
x2
22500000
= 2.5
x2
22500000
x2 = = 9000000
2.5
√
x = 9000000 = 3000
To confirm that this value of x minimizes the cost, we compute the second
derivative C ′′ (x):
45000000
C ′′ (x) =
x3
Since C ′′ (x) > 0 for x > 0, the function C(x) is concave up at x = 3000,
indicating a minimum at this point.
Calculating the Minimum Cost:
Substituting x = 3000 into the cost function C(x) to find the minimum
cost:

17
 22500000
C(3000) = + 2.5 · 3000
3000
= 7500 + 7500 = 15000
Using x = 3000 in the formula for y:
9000
y= =3
3000
Therefore, the minimum cost is $15,000 when the company produces
3,000 chainsaws per production run, and the company should run 3
production runs per year.

18