INSTITUTE OF ACCOUNTANCY ARUSHA

Introduction to Business Mathematics and Statistics

ODBM -I, ODPLM-I & ODMC- I 2024/2025
Lecture Notes: Functions and Calculus
A. Functions
In many practical situations, the value of one quantity may depend on the value of a second. For example, the
consumer demand for beef may depend on the current market price; the amount of air pollution in a certain area
may depend on the number of cars on the road, the amount of sold products/goods depends on the number of
available customers. Such relationships can often be represented mathematically as functions. A function
consists of two sets and a rule that associates elements in one set with elements in the other.

Meaning of a function: In a mathematical context, a function is a relationship between variables. It relates an

input or a set of input to a unique output. For example, if we take a function which takes an input and squares it
to give the output, then 4 is the output if we input 2. We can think of a function as a machine which takes the
input, processes it and gives an output. In an algebraic function, one variable depends on or is influenced by
other variables. If x is input into a function, then its output is denoted f(x) read as ‘ef of x’.

The function can either be One to One function or Many to one function. It is said One to One function if every
element in one set is connected to a distinct element in another set. It is also called an Injective function. Here
every element of the domain has a distinct image or co-domain element for the given function. The function is
also said to be many to one function if more than one element of the first set is connected to the same element
in the second set. For example,

Domain and Range: The domain of a function is the set of all numbers that can be substituted into the function
(x-values). That is, A function's input is called the domain, while the range of a function is the set of all the
numbers that are obtained when the values of the x-values are substituted to the function.
Example 1: Find the domain and range of the function f(x) = 5x + 3
Solution: Given that f(x) = 5x + 3
Domain = (All real numbers of x)
For range: Make x the subject of the formula
f(x) = 5x + 3. Let y = f(x), then y = 5x + 3
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y− 3 = 5x
𝑦−3
x= . Therefore, Range = (All real numbers of y)
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Discuss the following questions in a group of two students

1. Find the domain and range of the following functions
(i) 𝑦 = 𝑥+3𝑥2 (ii) 𝑦 = 2𝑥+ 9 (iii) f(x) = x2
2. If f(x)=x2 + 2x-1 find the value of f(1)
3. Given f(x) = -x2 +6x -11 find the value of (a) f(2) (b) f(x-1)
B. Calculus
Calculus is the most important part to study in the field of business. The present and potential managers of the
contemporary world make extensive uses of this mathematical technique for making productive decisions.
Calculus is inevitably indispensable to measure the degree of changes relating to different managerial issues.
Calculus makes it possible for the executives/managers to determine the relationship of different variables to
have sound decisions. Calculus is concerned with dynamic situations, such as how fast production levels are
increasing, or how rapidly interest is growing. It deals with the rate of changes in a dependent variable with
respect to the corresponding change in independent variables.
Definition: Calculus is a branch of mathematics that dealing with the study of rate of change of functions. It is
divided into two parts: - differential calculus and integral calculus.
Differential calculus: Suppose we have a function y = f(x) the rate of change of f(x) with respect to x is called
dy
the derivative of y. The derivative of y = f(x) with respect to x is denoted by . The process of finding out the
dx

derivatives of a continuous function is called Differentiation.

Rules for calculating derivatives
(i) The Power Rule
The derivative of xn, reduce the exponent n of x by 1 and multiply your new power of x by the original exponent.
d(f(x)
Let f(x) = xn , then = n x(n-1)
dx

Example 2: Differentiate f(x) = 15x3 with respect to x

dy d(f(x)
Solution: Given f(x) = 15x3 and we want to find or
dx dx
d(f(x) d(f(x) d
Recall = n x(n-1), Therefore, = dx( (15x3)
dx dx

= 3x15x3-1 = 45x2
dy
Questions: Find in each of the following functions: (a) F(x) = x-2 (b) F(x) = √x
dx

(ii) The Constant Rule

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 dc
The derivative of a constant is zero. Let f(x) = c then =0
dx

Example 3: Find the derivative of 25

Solution: Let f(x) = 25
d(f(x) d(25)
=
dx dx
d(25)
=0
dx

𝑑𝑦
Try: Find in each of the following (a) f(x) = 100 (b) f(x) = -58
𝑑𝑥

(iii) The Sum and the Difference rules

The derivative of a sum is the sum of the separate derivatives. If f(x) and g(x) are differentiable, then the sum
d(S(x) d d
S(x) = f (x) + g(x). Therefore, = (f(x)) + (g(x))
dx dx dx

Similarly, the derivative of the difference is the difference of the separate derivatives.

Example 5: Find the derivative of 2x5 – 3x-7

d(S(x) d d
Solution: Recall = dx (f(x)) + (g(x))
dx dx
d d d
Therefore, (2x5 – 3x-7) = dx( (2x5) + (-3x-7)
dx( dx(
d d
= 2 dx( (x5) + (-3) dx( ( x-7)

= 2x5x x5-1 + (-3) (-7) x-7-1

= 10 x4 + 21 x-8

Questions
i. Differentiate 5x3 – 4x2 + 12x – 8 with respect to x
𝑑(11x4 – x−3) 𝑑𝑦
ii. Find (iii) Find given that y = 2x2 + 5x + 25
𝑑𝑥 𝑑𝑥

(iv) The Product Rule

The derivative of the product fg is f times the derivative of g plus g times the derivative of f. Let the product
d(f(x).g(x)) d d
of the two functions are f(x).g(x). Then, = f(x). dx (g(x)) + g(x). (f(x))
dx dx

Example 6: Differentiate (x - 1)(3x - 2) with respect to x

Solution: P(x) = (x - 1)(3x - 2) has two functions; (x - 1) and (3x - 2).
𝑑(𝑓(𝑥).𝑔(𝑥)) 𝑑 𝑑
Recall: = f(x). 𝑑𝑥 (𝑔(𝑥)) + g(x). (𝑓(𝑥))
𝑑𝑥 𝑑𝑥
𝑑(𝑥−1)(3𝑥−2) 𝑑 𝑑
Therefore, = (x - 1). 𝑑𝑥 (3𝑥 − 2) + (3x - 2). (𝑥 − 1))
𝑑𝑥 𝑑𝑥

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 = (x -1) . 3 + (3x – 2).1
= 3x - 3 + 3x – 2
= 6x – 5
(v) The Quotient Rule

f(x)
If f (x) and g(x) are differentiable functions, then the derivative of the quotient Q(x) = is given by:
g(x)
d g(x).derivative of f(x) − f(x).derivative of g(x)
Q(x) = where g(x) ≠ 0
dx Square of (g(x))

𝑥 2 −5𝑥 +7
Example 7: Differentiate the following function 2𝑥

Solution: The given function requires us to use the quotient rule, i.e
d g(x).derivative of f(x) − f(x).derivative of g(x)
(Q(x)) =
dx Square of (g(x))

d d
Here, f(x) = x2 - 5x + 7 and g(x) = 2x , therefore, (fx) = 2x – 5 and g(x) = 2
dx dx
2x (2x−5)− (x2 −5x+7)(2)
It follows that, the derivative = Square of (2x)

4x2 −10x− 2x2 +10x−14

= 4x2
2x2 − 14 1 7
= = -
4x2 2 2x2
𝟏 𝟕
= 𝟐 − 𝐱𝟐

Example 8: Find the second derivative of the function f (x) = 5x3 - x2 + 3x + 7.

Solution: We should differentiate two times to get the second derivative.
The first derivative: f (x) = 5x3 - x2 + 3x + 7
d(f(x))
= 15x2 - 2x + 3
dx
d2 y
The second derivative: = 30x - 2
dx2
d2 y
Questions: (a) Find the second derivative of y = x2(3x + 1). (b) Find dx2 given that y = 4x2 + 6x + 5.

Integral calculus (Integration): It exists in two types; indefinite integration and definite integration. Indefinite
integration deals with the inverse operation of differentiation, i.e., anti-derivative. Definite integration is the limit
of a special type of addition process of infinite small parts of a region. So, it may be expressed as the area
enclosed by a set of curves. Integral calculus has a great use in business problems. For example, with a given
marginal cost function it would be possible to find cost function.

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 d
Meaning of Integration: If F(x) is any differentiable function of x such that (F(x)) = f(x) then F(x) is called an
dx

anti-derivative or an indefinite integral or simply an integral of f(x). Symbolically, we write this as F(x) = ∫ f(x)
and is read as ‘F(x) is the integral of f(x) with respect to x’. Here, the function f(x) is known as integrand. The
process of finding the integral of a given function is called integration and the given function is the integrand.
Rules of Integration

[𝟏] ∫ 𝑘𝑑𝑥 = 𝑘𝑥 + 𝑐

𝑥 𝑛+1
[2] ∫ 𝑥 𝑛 𝑑𝑥 = + 𝑐 where 𝑛 ≠ −1
𝑛+1

Example 9 (a) Integrate y = 5 with respect to x (b) Evaluate ∫(6x2 + x - 2)

Questions: (a) Find the integral of y = 5 with respect to x (b) Integrate y = 8x3

Definite integral: A definite integral is an integral which has limits within which the integral is to be evaluated.
The limits are indicated on the integral sign. Let f(x) be a continuous function on the interval [a, b] and F(x) is an
b
anti-derivative for f(x) on [a, b] then ∫a f(x) = F(b) - F(a) is called the definite integral of f(x) from a to b.
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Example10: Evaluate ∫2 (x 3 ) dx
Solution

Question: Evaluate the integral of y = 2x3 + 4 between x = 0 and x = 2.

Applications of Calculus
(a) Maximum and Minimum points of a Function: If we draw the graph of a quadratic function, we are able
to determine either maximum or minimum point from the particular graph. If the graph of quadratic function
coefficient of x2 of the quadratic function (f(x) = ax2 + bx + c) is greater than zero (That is, a >0) we get the
minimum point. And when this coefficient is less than zero (a < 0) we can determine the maximum point.
The maximum or minimum point is called the turning point quadratic functions always have either of the
points and not both.
Procedures to calculate maximum or minimum value of a function
First (1st): Compute the first derivative and equate the obtained function to zero.
Second (2nd): Solve the obtained equation to get the exact value(s) (the values are called Critical numbers).
Third (3rd): Obtain the corresponding values of y or f(x) by substituting value(s) of x in the original function before
computing first derivative. The combination of the critical value and the obtained values after substitution to the
original function (a, f(a)) are called turning point or a critical point

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Fourth (4th): Differentiate for the second time. If the second derivative is greater than zero (positive), the
particular point becomes a minimum point and when the second derivative is less than zero (negative) then
the point is maximum point. Also, if the second differentiation gives the value of zero then we get point of
inflexion

Example 11: Find the critical points of f(x) = x3 – 6x2 + 9x + 2.

Solution: Differentiate the given function and equate to zero. i.e f '(x) = 0
f '(x) = 3x2 – 12x + 9 by factorizing it we get,
= 3(x2 – 4x + 3)
= 3(x – 1)(x – 3)
Let’s equate factors to zero to get critical numbers (values)
3(x – 1)(x – 3) = 0. Solve it to obtain the value of “x”
(x – 1) = 0 or (x – 3) = 0
x = 1 or x = 3
The critical numbers are x = 1 and x = 3
Substituting these critical numbers to the original function we get the corresponding values of y or f(x).
f(x) = x3 – 6x2 + 9x + 2 when x = 1
f(1) = (1)3 – 6(1)2 + 9(1) + 2 = 6
The point is (x , f(x)) =(1,6)
f(x) = x3 – 6x2 + 9x + 2 when x = 3
f(3) = (3)3 – 6(3)2 + 9(3) + 2
= 27 – 54 + 27 + 2 = 2
The point is (x, f(x)) = (3,2)
Therefore, the critical numbers are x = 1 and x= 3. So, the critical points are (1, 6) and (3, 2).

(b) Marginal analysis: Before we discuss marginal analysis, we should first discuss the important economic
concepts, i.e cost, revenue and profit. Thereafter, we discuss the use the derivative to explore rates of
change involving economic quantities. In economics the use of the derivative to approximate the change in
a quantity that results from a 1-unit increase in production is called marginal analysis.
Cost is the money we have to spend to produce our items. This includes fixed and variable costs.
The Fixed Cost (FC) is the amount of money we have to spend regardless of how many items we
produce. FC can include things like rent, purchase costs of machinery, and salaries for office staff. We
have to pay the fixed costs even if we don’t produce anything.

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 Variable Cost (VC) for q items is the amount of money we spend to actually produce them. VC includes
things like the materials we use, the electricity to run the machinery, these costs vary according to how
many items are produced.

Revenue is the amount of money we take in from selling the goods or products. Revenue is Price × Quantity.

The Profit (P) for q items is R(x) – C(x), the difference between total revenue and total costs

Marginal Cost: If C(x) is the total cost of producing x units of a commodity, then the marginal cost of producing
x0 units is the derivative C’(x0), which approximates the additional cost C(x0 + 1) - C(x0) incurred when the level
of production is increased by 1 unit, from x0 to x0 + 1. Marginal cost [MC(x)] of producing x units [C(x)] equals
to derivative of C(x).That is, MC(x) = C’(x).

Suppose R(x) is the revenue generated when x units of a particular commodity are produced, and P(x) is the
corresponding profit. When x = x0 units are being produced, then; the marginal revenue is R’(x0). It
approximates R(x0 + 1) - R(x0), the additional revenue generated by producing one more unit. i.e MR(x) = TR’(x).
The marginal profit is P’(x0). It approximates P(x0 + 1) - P(x0), the additional profit obtained by producing one
more unit. i.e MP(x) = P’(x)

Example 12: A manufacturer estimates that when x units of a particular commodity are produced, the total cost
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will be C(x) = 8 x2 + 3x + 98 dollars, and furthermore, that all x units will be sold when the price is
1
p(x) = 3 (75 - x) dollars per unit.

a. Find the marginal cost (b) The marginal revenue.

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Solution: (a) We find the derivative of cost function, then the marginal cost is C’(x) = 4 x + 3.
1
(b) Since x units of the commodity are sold at a price of p(x) = 3 (75 - x) dollars per unit,

the total revenue is R(x) = (number of units sold) (price per unit)
= xp(x)
1 1
= x (3 (75 - x)) = 25x - 3x2
2
The marginal revenue is R’(x) = 25 - 3x

Example 13: A company determines that the marginal cost of producing the x th unit of a product is given by
C’(x) = X3 + 2x. Find the total-cost function, C assuming that C(x) is in dollars and that fixed costs are $7000.
Solution:
X4
∫(x3 + 2x)dx = 4
+ x2 + C but C = $7000.
X4
Thus, the total-cost function = + x2 + 7000.
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