Lecture 4

Functions and their graphs (II)

1
Learning outcomes
• Sketch graphs of a linear and quadratic functions.
• Apply linear functions to linear depreciation, cost,
revenue and profit functions and break-even analysis.
• Apply quadratic functions to demand and supply curves
and market equilibrium quantities.
• Understand the use of functions in mathematical
modelling.

2
Graph of a linear function
• A linear function is defined by f(x) = mx + b, where m is
the slope and b is the y-intercept .

• The graph of a linear function is a straight line. Thus,

we only require two points to sketch the graph.

3
Example 4.1
• Sketch the graph of f(x) = –2x + 1.

When x = 0,
y = f(0) = 1 (y-intercept)

When y = f(x) = 0,
–2x + 1 = 0
 x = 0.5 (x-intercept)
4
Graph of a quadratic function
• A quadratic function is defined by f(x) = ax2 + bx + c,
where a, b and c are constants, a ≠ 0.

• The graph of a quadratic function is a parabola, i.e. it is

either a  shape or a  shape.

5
Properties of a quadratic function
• The domain of f is the set of all real numbers.
• The graph of f is a parabola.
• If a > 0, the parabola opens upwards, i.e.  shape.
• If a < 0, the parabola opens downwards, i.e.  shape.
 b  b 
 , f 
• The vertex of the parabola is at the point  2a  2a  


• The parabola is symmetrical about the line x = –b/2a.

• The y-intercept is the value of c. The x-intercepts (if
6
any) can be found by solving the equation f(x) = 0.
Example 4.2
• Sketch the graph of f(x) = –2x2 + 3x – 1.
Observe that a = –2, b = 3 and c = –1.

Since a = –2 < 0, the parabola opens downwards, i.e. the

shape is .
Vertex: b 3 3
x   
2a 2  2  4
 3 1
2 Vertex  , 
 3  3  3 1  4 8
y  f    2    3    1 
 4  4  4 8 7
Example 4.2
• Sketch the graph of f(x) = –2x2 + 3x – 1.
Intercepts:
y-intercept: y  f 0   2 0   3 0   1  1
2

x-intercept: f  x  0   2 x  3x  1 0
2

 3  32  4  2  1 1
x 1 or
2  2  2
8
Example 4.2
• Sketch the graph of f(x) = –2x2 + 3x – 1.

9
Intersection of two graphs
• At times, the solution of certain practical problems requires
finding the point of intersection of two graphs.
• Solving these problems algebraically usually requires us to
solve a system of equations.

• Suppose two linear functions f(x) = m1x + b1 and g(x) = m2x

+ b2 intersect at a point P(x0, y0).

10
Intersection of two graphs

• At the intersection point P, the coordinates satisfy both

functions f and g, i.e. f(x0) = g(x0).
• Obtain x0 by solving the simultaneous equations m1x0 +
b1 = m2x0 + b2. Correspondingly, y0 = f(x0) or g(x0). 11
Example 4.3
• Find the point of intersection of the graphs of f(x) = x + 1
and g(x) = –2x + 7.
x  1  2 x  7
3 x 6
x 2
f 2  2  1 3

point of intersection = (2, 3)

12
Exercise
• Try Discussion questions Q1 and 2.

13
Linear depreciation
• Certain assets such as furniture, machines, buildings
and vehicles owned by businesses depreciate in value
over time
• Firms are legally allowed to incorporate depreciation
into their tax returns.
• Linear depreciation is often used for this purpose.

14
Example 4.4
• A computer system has an original value of $20,000
and is to be depreciated linearly over 10 years. The
scrap value of the system is estimated to be at $1,000.
• (a) Find an expression giving the book value of the
computer system at the end of year t.
• (b) What is the book value of the computer system at
the end of the third year?
• (c) What is the rate of depreciation of the computer
system?
15
Example 4.4
(a) Let V(t) be the book value of the computer system
at the end of year t. Since the system depreciates
linearly, V(t) is a linear function.
The original value of the system is $20,000 i.e.
t = 0, V(0) = 20,000.
The value of the system is $1,000 after 10 years, i.e.
t = 10, V(10) = 1,000.
We can sketch the graph of V(t) against t. The required
expression is the equation of the graph.
16
Example 4.4
1000  20000
m  1900
10  0
Using the point-slope form
of an equation of line,
V  20000  1900 t  0 
V  1900t  20000
Thus
V(t) = –1,900t + 20,000
17
Example 4.4
(b) The book value at the end of the third year (t = 3) is
given by V(3).
V 3  1900 3  20000
$14,300
(c) Rate of depreciation is given by slope of graph.

Rate of depreciation = $1,900 per year

18
Cost, Revenue and Profit functions
• In any form of business, the owner or chief executive
officer must constantly keep track of their operating
costs and revenue.
• The management must also have the means to
measure the profits realised on a constant basis.
• The total cost function, the revenue function and the
profit function can be used as a tool for this purpose.

19
Total cost function
• Suppose x denotes the number of units of a product
manufactured or sold. The total cost function gives the
total cost of manufacturing x units of the product.
• Two types of costs
• Fixed costs, e.g. rental fees, utility fees and insurance
• Variable costs, e.g. raw materials
• If a firm has a fixed cost of F dollars and a production
cost of c dollars per unit, the total cost function C(x) is
given by
C  x  cx  F
20
Revenue function
• The revenue function gives the total revenue realised
from the sale of x units of the product.
• If the firm has a selling price of s dollars per unit, the
total revenue function R(x) is given by
R  x  sx

21
Profit function
• The profit function gives the total profit realised from
manufacturing and selling x units of the product.
• It is usually measured by the difference between the
total revenue and the total cost. Hence, the total profit
function P(x), is given by
P  x  R  x   C  x 
sx  cx  F
s  c  x  F
22
Example 4.5
• Fanz Pte Ltd manufactures electric fans at a production
cost of $25 per unit. It has a monthly fixed cost of
$20,000 and sells its fans at a price of $100 per unit.
Find its cost function, revenue function and profit
function.

23
Example 4.5
• Let x be the number of units produced and sold. Then
C  x  25 x  20, 000
R  x  100 x
P  x  R  x   C  x 
100 x  25 x  20, 000 
75 x  20, 000

24
Break-even analysis
• The break-even level of operations is defined as the
level of production at which the firm neither makes a
profit nor sustains a loss.
• Any production level above the break-even quantity will
result in a profit for the business. Any production level
below the break-even quantity will result in a loss for the
business.

25
Break-even analysis
• The point of intersection P,
between the revenue and
cost functions is the break-
even point.
• Thus, we can compute the
break-even quantity by
solving R(x) = C(x).
• Alternatively, we can also
assume the profit to be
zero, i.e. P(x) = 0. 26
Example 4.6
• Pretz Inc. manufactures its products at a cost of $5 per
unit and sells them for $13 per unit. Assuming a monthly
fixed cost of $12,000, determine the break-even point.

Let x be the number of units produced and sold. Then

C(x) = 5x + 12,000
R(x) = 13x.

27
Example 4.6
At the break-even point, R(x) = C(x),
13 x 5 x  12, 000
8 x 12, 000
x 1,500
Substituting x = 1500 into the revenue function,
R(1,500) = 13(1,500) = 19,500
Break-even quantity = 1500
Break-even revenue = $19,500.
28
Example 4.7
• The management of Tony’s Thermostats must decide
between two manufacturing processes for its new
model of thermostat. The monthly costs for the two
processes are summarised below.
Process 1: Monthly cost, C1(x) = 30x + 10,000
Process 2: Monthly cost, C2(x) = 25x + 20,000
• where x is the number of thermostats produced. If the
projected monthly sales are 600 thermostats at a unit
price of $50, which process should the management
choose to maximize the firm’s profits? 29
Example 4.7
In both processes, R(x) = 50x.
First process: Break-even level is obtained by
50 x 30 x  10, 000
20 x 10, 000
x 500
Second process: Break-even level is obtained by
50 x 25 x  20, 000
25 x 20, 000
x 800 30
Example 4.7
Since the projected monthly sales is 600, the management
should choose the first process which will give the
company a profit.

31
Demand curve
• In a free-market economy, consumer demand for a
particular commodity depends on its unit price. This
relationship is known as the demand function. Its graph
is known as a demand curve.
• A demand function is often denoted by p = D(x), where
p measures the unit price and x measures the number
of units of commodity.
• The demand function is usually a decreasing function
(as demand increases, unit price decreases) and lies
in the first quadrant only. 32
Example 4.8
• The demand function for a brand of mini-speakers is given
by
p  0.025 x 2  0.5 x  60
• where p is the wholesale unit price in dollars and x is the
quantity demanded each month, measured in units of a
hundred.
• (a) Sketch the corresponding demand curve.
• (b) What is the maximum quantity demanded per month?
• (c) Above what price will there be no demand?
33
Example 4.8
(a) The curve can be sketched using the techniques
shown earlier. However, as x and p are positive, only the
portion in the first quadrant need to be shown.

34
Example 4.8
(b) The maximum quantity demanded occurs when the
price is zero, that is p = 0.
 0.025 x 2  0.5 x  60 0

  0.5    0.5   4  0.025 60 

2

x
2  0.025 
40 or  60(rej )
Since x must be non-negative, we reject x = –60. Hence,
maximum quantity demanded per month is 4,000. 35
Example 4.8
When there is no demand, x = 0.
p  0.025 0   0.5 0   60
2

60
Thus the price above which there is no demand is $60.

36
Supply curve
• Similarly, the unit price of a commodity is also
dependent on the availability of the commodity. This
relationship is known as the supply function and its
graph is known as a supply curve.
• A supply function is denoted by p = S(x), where p
measures the unit price and x measures the number of
units of commodity.
• The supply function is usually an increasing function (as
unit price increases, it will induce the supplier to
increase supply) and lies in the first quadrant only. 37
Example 4.9
• The supply function for a brand of mini-speakers is
given by .
p 0.02 x 2  0.6 x  20
• where p is the wholesale unit price in dollars and x is
the quantity, measured in units of a hundred, that will be
made available in the market by the supplier.
• (a) Sketch the corresponding supply curve.
• (b) What is the lowest price at which the supplier will
make the mini-speakers available to the market?
38
Example 4.9
(a) The curve can be sketched using the techniques
shown earlier. However, as x and p are positive, only the
portion in the first quadrant need to be shown.

39
Example 4.9
The lowest price occurs when there is no supply to the
market, i.e. x = 0.
p 0.02 0   0.6 0   20
2

20
Thus the lowest price is $20.

40
Market equilibrium
• Under the circumstances of pure competition, the price
of a commodity will eventually settle at a fixed level.
• If the price is too high, the consumer will not purchase.
• If the price is too low, the supplier will not produce.
• At this level, quantity produced is equal to the quantity
demanded and we say that market equilibrium prevails.
• At market equilibrium, the quantity produced is called
the equilibrium quantity and the price is called the
equilibrium price.
41
Market equilibrium
• By its definition, market equilibrium corresponds to the
point at which the demand and supply curve intersect.
• The intersection of both
curves, P, corresponds to
the point where market
equilibrium occurs.
• At this intersection, x0 is
the equilibrium quantity
and p0 is the equilibrium
price. 42
Example 4.10
• The demand function for a brand of mini-speakers is
given by
p D  x   0.025 x  0.5 x  60
2

• and the corresponding supply function is given by

p S  x  0.02 x 2  0.6 x  20
• where p is in dollars and x is measured in units of a
hundred. Find the equilibrium quantity and price.

43
Example 4.10
To determine the equilibrium quantity, we equate the
demand and supply functions.
 0.025 x 2  0.5 x  60 0.02 x 2  0.6 x  20
0.045 x 2  1.1x  40 0

 1.1  1.1  4 0.045  40 

2

x
2 0.045 
400
20 or  (rej )
9 44
Example 4.10
To obtain the equilibrium price, we substitute x = 20 into
either the demand or supply function.
p 0.02 20   0.6 20   20
2

40
Thus equilibrium quantity = 2,000
Equilibrium price = $40.

45
Exercise
• Try Discussion questions Q4, 5 and 6.

46
Mathematical modelling
• In the real world, mathematics is often used to solve
problems in many fields, such as business, economics,
social, life and physical sciences, e.g. intensity of air
pollutants, the quality of wine, the value of a stock and
the projected costs in government expenditure.
• Regardless of the field, the real world problem is
analysed using a process called mathematical
modelling.

47
 Mathematical modelling
Observe a real Formulate a Solve the Interpret and
world problem mathematical mathematical test on the real
model model world problem

Recognize the Identify the Use appropriate Test the results in

issues we want to different variables tools to solve the the original
resolve, e.g. involved. Use model, e.g. context. Observe
predict how much algebraic numerical how well it
money I will get in techniques to operations or predicts past or
10 years. form a model calculus future behavior.

48
Algebraic functions used in modelling
• Polynomial functions
f  x  an x n  an  1 x n  1  ...  a1 x  a0

• Rational functions
f x 
R x  
g x 
• Power functions
f  x  x r

49
Constructing mathematical models
• Construction from theory
1. Assign a letter to each variable in the problem. At times, it
might be useful to draw and label a diagram.
2. Find an expression for the quantity that you want.
3. Use any conditions given to write the quantity that you
want as a function f of one variable. Note any restrictions
placed on the domain of f due to physical considerations.

50
Example 4.11
• NZT charges $300 per person for a tour of an exclusive
island if exactly 200 people sign up for the tour.
However, if more than 200 people sign up for the tour,
then each fare is reduced by $1 for each additional
person. Assuming that more than 200 people sign up for
the tour, find a function giving the revenue realised by
the NZT.

51
Example 4.11
Since the revenue depends on the number of people
above 200, we will assign the letter x to this variable, i.e.
let x be the number of people above 200 who sign up for
the tour.
The number of people who sign up would be 200 + x.
As each fare will be reduced by $1 per additional person,
the fare per person will be 300 – x.

52
Example 4.11
The revenue would be the number of people multiplied by
the fare per person.
R  x  200  x 300  x 
 x 2  100 x  60, 000

The least possible fare is $0. Hence 300 – x ≥ 0 or x ≤ 300.

Since x cannot be negative, the required function is
R(x) = –x2 + 100x + 60,000
with domain [0, 300]. 53
Constructing mathematical models
• Construction from past data
1. Use past data to construct a scatterplot depicting the
relation between two variables on an x-y plane.
2. By fitting a curve onto all the points on the scatterplot, we
can estimate the equation of the curve.

54
Example 4.12
• One of the major causes of global warming is the
increase of carbon dioxide (CO2) levels in the
atmosphere. The Keeling curve gives the average
amount of CO2, measured in parts per million volume
(ppmv), in the atmosphere from 1958 to 2010. Some
randomly selected data points are shown in the table
below.

55
Example 4.12
• Using the data points, a scatter plot is drawn and a
curve is fitted to the points.

56
Example 4.12
• The mathematical equation relating the approximate
amount of CO2 in the atmosphere is estimated to be A(t)
= 0.012313t2 + 0.7545t + 313.9, (1 ≤ t ≤ 53), where t is
measured in years, with t = 1 corresponding to 1958.
• (a) Use the model to estimate the average amount of
CO2 in the atmosphere in 1980.
• (b) Using the model, predict the average amount of
CO2 in the atmosphere in 2025.

57
Example 4.12
(a) In the year 1980, t = 23.
A 23 0.012313 23  0.7545 23  313.9 337.77
2

Hence the average amount of CO2 in the atmosphere is

approximately 337.77 ppmv.

(b) In the year 2025, t = 68.

A 68  0.012313 68   0.7545 68   313.9 422.14
2

The predicted average amount of CO2 in the atmosphere

will be approximately 422.14 ppmv. 58
Exercise
• Try Discussion question Q7.

59