Answers to Second Internals

11 November 2024

Answers to 1 mark questions

1. Distinguish between convex and concave functions.
A function f (x) is said to be convex if its second derivative f ′′ (x) ≥ 0
for all x in its domain. Graphically, a convex function curves upward,
and the line segment between any two points on the graph lies above
or on the graph itself.
In contrast, a function is concave if f ′′ (x) ≤ 0 for all x in its domain.
Graphically, a concave function curves downward, with the line segment
between any two points on the graph lying below or on the graph.
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2. Given the function f (x) = 2x x−1
+3x−5
, determine if f (x) has a
removable discontinuity and how it can be addressed.
To identify if there is a removable discontinuity, factor the numerator:

(2x + 5)(x − 1)
f (x) = .
x−1
Since the term x − 1 in the denominator cancels with a factor in the
numerator, there is a removable discontinuity at x = 1. Thus, f (x) has
a removable discontinuity when x = 1.

3. Find the marginal cost, given the average cost function

100
AC = + 2.
Q

1
  
The total cost T C is given by T C = AC · Q = 100
Q
+ 2 Q = 100 + 2Q.
The marginal cost M C is the derivative of T C with respect to Q:
d
MC = (100 + 2Q) = 2.
dQ
4. State the main conditions for a function to be differentiable
at a point.
A function f (x) is differentiable at a point x = a if:
• f (x) is continuous at x = a,
• The left-hand derivative and the right-hand derivative at x = a
are equal.
x+2
5. Calculate the limit of x−2
as x approaches 2 from the right.

x+2
lim+ = +∞.
x→2 x−2
6. Is the function f (x) = |x − 1| differentiable at x = 1?
No, the function f (x) = |x−1| is not differentiable at x = 1 because the
left-hand derivative and right-hand derivative at x = 1 are not equal.
7. Can one function have two parts where the function is increas-
ing in one part and decreasing in the other part?
Yes, a function can have intervals where it is increasing in one part
and decreasing in another. For example, a quadratic function f (x) =
−x2 + 1 increases on (−∞, 0] and decreases on [0, ∞).
8. What are break-even points, in the context of a profit func-
tion?
In the context of a profit function Π(Q) = T R(Q) − T C(Q), break-
even points are the values of Q where the profit is zero, i.e., where
total revenue equals total cost.
9. A firm’s total revenue is given by T R(Q) = 150Q − 2Q2 . Find
the average revenue function AR(Q).
The average revenue function AR(Q) is given by
T R(Q) 150Q − 2Q2
AR(Q) = = = 150 − 2Q.
Q Q

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Answers to 3 mark questions
1. What are the conditions for unconstrained optimization for
functions in a single variable? What is the difference between
stationary points and inflections points? Illustrate with dia-
grams.
In single-variable calculus, unconstrained optimization involves finding
the maximum or minimum values of a function without external con-
straints on the variable. Here are the conditions and concepts involved:

(a) First Derivative Condition (Stationary Points): - A necessary con-

dition for f (x) to have a local maximum or minimum at x = c is
that the first derivative of the function is zero at that point:

f ′ (c) = 0

- Points where f ′ (x) = 0 are called stationary points because the

function’s slope is zero, indicating a horizontal tangent line.
(b) Second Derivative Condition: - To determine whether a stationary
point is a local maximum, minimum, or neither, we look at the
second derivative, f ′′ (x):
- If f ′′ (c) > 0, the function is concave up at x = c, suggesting a
local minimum.
- If f ′′ (c) < 0, the function is concave down at x = c, indicating a
local maximum.
- If f ′′ (c) = 0, the test is inconclusive. The point might be an
inflection point or require further analysis using higher derivatives
or examining function behavior around x = c.

Stationary Points vs. Inflection Points

(a) Stationary Points: - Stationary points are points where the first
derivative f ′ (x) = 0. These points are candidates for local max-
ima, minima, or saddle points (points where the function changes
curvature but is not at an extremum). - To determine whether a
stationary point is a maximum, minimum, or saddle, we usually
examine the second derivative.

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 (b) Inflection Points: An inflection point is a point on the graph of
f (x) where the concavity of the function changes — from concave
to convex, or vice versa. At an inflection point, the second deriva-
tive f ′′ (x) is typically zero or undefined, but unlike stationary
points, inflection points are not necessarily locations of maxima
or minima.

2. Find the first and second derivatives of h(x) = f (x) ÷ g(x),

where f (x) = x2 and g(x) = ex+1 .
f (x)
To find the first and second derivatives of the function h(x) = g(x)
where f (x) = x2 and g(x) = ex+1 , let’s proceed as follows.
1. First Derivative h′ (x)
Using the quotient rule:

′ f ′ (x) · g(x) − f (x) · g ′ (x)

h (x) =
[g(x)]2

Step 1: Calculate f ′ (x) and g ′ (x) - f (x) = x2 implies f ′ (x) = 2x. -

g(x) = ex+1 implies g ′ (x) = ex+1 (by the chain rule, since the derivative
of x + 1 is 1).
Step 2: Substitute into the Quotient Rule

(2x) · ex+1 − (x2 ) · ex+1

h′ (x) =
(ex+1 )2

Step 3: Simplify Factor out ex+1 in the numerator:

ex+1 (2x − x2 )
h′ (x) =
e2(x+1)
Since ex+1 in the numerator and e2(x+1) in the denominator simplify to
ex+1 in the denominator, we get:

2x − x2
h′ (x) =
ex+1

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2. Second Derivative h′′ (x)
2x−x2
To find h′′ (x), we differentiate h′ (x) = ex+1
again with respect to x.
Using the quotient rule again for h′ (x) = u(x)
v(x)
, where u(x) = 2x − x2
and v(x) = ex+1 :

u′ (x) · v(x) − u(x) · v ′ (x)

h′′ (x) =
[v(x)]2

Step 1: Calculate u′ (x) and v ′ (x) - u(x) = 2x−x2 implies u′ (x) = 2−2x.
- v(x) = ex+1 implies v ′ (x) = ex+1 .
Step 2: Substitute into the Quotient Rule

(2 − 2x) · ex+1 − (2x − x2 ) · ex+1

h′′ (x) =
(ex+1 )2

Step 3: Simplify Factor out ex+1 in the numerator:

ex+1 [(2 − 2x) − (2x − x2 )]

h′′ (x) =
e2(x+1)
This simplifies further to:

2 − 2x − 2x + x2
h′′ (x) =
ex+1
x2 − 4x + 2
h′′ (x) =
ex+1
x2
Final Answer The first and second derivatives of h(x) = ex+1
are:

2x − x2
h′ (x) =
ex+1
x2 − 4x + 2
h′′ (x) =
ex+1

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Answers to 5 mark questions
1. The prevailing market price for a good is 30. The total cost
function is
1
T C = 100 + 44Q − 5Q2 + Q3 .
2
What is the level of output that maximizes the profit?
To determine the output level that maximizes profit, we need to follow
these steps:

(a) Define the Profit Function: Since the prevailing market price is
P = 30, the total revenue T R for a perfectly competitive firm is:

T R = P · Q = 30Q.

The total cost function is given as:

1
T C = 100 + 44Q − 5Q2 + Q3 .
2
The profit function Π(Q) is the difference between total revenue
and total cost:
 
2 1 3
Π(Q) = T R − T C = 30Q − 100 + 44Q − 5Q + Q .
2

Simplifying the profit function:

1
Π(Q) = 30Q − 100 − 44Q + 5Q2 − Q3 .
2
1
Π(Q) = − Q3 + 5Q2 − 14Q − 100.
2
(b) Find the First Derivative of Π(Q): To find the level of output that
maximizes profit, we take the first derivative of Π(Q) with respect
to Q and set it to zero:
 
′ d 1 3 2
Π (Q) = − Q + 5Q − 14Q − 100 .
dQ 2
3
Π′ (Q) = − Q2 + 10Q − 14.
2
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 Set Π′ (Q) = 0 to find the critical points:
3
− Q2 + 10Q − 14 = 0.
2
Multiply through by −2 to clear the fraction:
3Q2 − 20Q + 28 = 0.
(c) Solve the Quadratic Equation for Q: Using the quadratic formula,
where a = 3, b = −20, and c = 28:
p
−(−20) ± (−20)2 − 4 · 3 · 28
Q= .
2·3
√
20 ± 400 − 336
Q= .
6
√
20 ± 64
Q= .
6
20 ± 8
Q= .
6
This gives two solutions:
28 14
Q= = ≈ 4.67.
6 3
12
Q= = 2.
6
(d) Verify Maximum by Second Derivative Test: Calculate the second
derivative of Π(Q) to determine the nature of these critical points:
 
′′ d 3 2
Π (Q) = − Q + 10Q − 14 .
dQ 2
Π′′ (Q) = −3Q + 10.
- For Q = 4.67:
Π′′ (4.67) = −3(4.67) + 10 = −14.01 + 10 = −4.01 < 0.
Since Π′′ (4.67) < 0, this is a maximum point.
- For Q = 2:
Π′′ (2) = −3(2) + 10 = −6 + 10 = 4 > 0.
Since Π′′ (2) > 0, this is a minimum point.

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 (e) Conclusion: The output level that maximizes profit is:

Q ≈ 4.67.

2. Maximize the profit for a firm, given that its total revenue
function is
T R = 4000Q − 33Q2
and its total cost function is

T C = 2Q3 − 3Q2 + 400Q + 5000,

assuming Q > 0.

(a) Define the Profit Function:

Π(Q) = T R(Q)−T C(Q) = (4000Q−33Q2 )−(2Q3 −3Q2 +400Q+5000).

Expanding and simplifying:

Π(Q) = 4000Q − 33Q2 − 2Q3 + 3Q2 − 400Q − 5000.

Π(Q) = −2Q3 − 30Q2 + 3600Q − 5000.

(b) Find the First Derivative of Π(Q):
d
Π′ (Q) = (−2Q3 − 30Q2 + 3600Q − 5000).
dQ
Π′ (Q) = −6Q2 − 60Q + 3600.
Set Π′ (Q) = 0:
−6Q2 − 60Q + 3600 = 0.
Divide by −6:
Q2 + 10Q − 600 = 0.
(c) Solve for Q: Using the quadratic formula:
p
−10 ± 102 − 4 · 1 · (−600)
Q= .
2·1
√
−10 ± 2500
Q= .
2
8
 −10 ± 50
Q= .
2
This gives two solutions:

Q = 20 and Q = −30 (not feasible as Q > 0).

(d) Verify Maximum with Second Derivative:

Π′′ (Q) = −12Q − 60.

At Q = 20:

Π′′ (20) = −12(20) − 60 = −300 < 0,

confirming a maximum.
(e) Calculate Maximum Profit:

Π(20) = −2(20)3 − 30(20)2 + 3600(20) − 5000.

= 39000.
Final Answer: The maximum profit is 39000 when Q = 20.