Functions of One Variable — Complete Notes

Mathematics for Economic Analysis | For CUET PG & UPSC Optional Economics

Contents
Chapter: Functions of One Variable 1
1. The Concept of a Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Graphs of Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Linear Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Quadratic Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5. Polynomials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6. Power Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7. Inverse Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7A. Composite Functions (“Function of a Function”) . . . . . . . . . . . . . . . 8
8. Exponential Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9. Logarithmic Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10. Other Important Functions to Know . . . . . . . . . . . . . . . . . . . . . . 11
11. Worked Examples (Solve These Yourself First) . . . . . . . . . . . . . . . . 11
12. Practice Problems (Answers at the End) . . . . . . . . . . . . . . . . . . . . 12
13. Master Formula Sheet (Quick Revision) . . . . . . . . . . . . . . . . . . . . 12
14. Where This Chapter Leads Next . . . . . . . . . . . . . . . . . . . . . . . . 13

Chapter: Functions of One Variable

How to use these notes: This chapter is foundational — almost every later
topic (differentiation, optimization, elasticity, comparative statics) builds on it.
Read it slowly once, then use it as a revision sheet. Every definition, rule, and
economic application you need for CUET PG / UPSC Optional Economics is
included here.

1. The Concept of a Function

1.1 Definition

A function is a rule that assigns to each element 𝑥 in a set 𝐴 (the domain) exactly one
element 𝑦 in a set 𝐵 (the codomain). We write:

𝑓 ∶ 𝐴 → 𝐵, 𝑦 = 𝑓(𝑥)
• 𝑥 = independent variable (input/argument)

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 • 𝑦 = dependent variable (output/value)
• The set of all actual outputs {𝑓(𝑥) ∶ 𝑥 ∈ 𝐴} is called the range of 𝑓 (range ⊆
codomain).
Key requirement: For every 𝑥 in the domain, there must be one and only one value
of 𝑦 . This is what separates a function from a general relation.
Vertical line test (graphical): A curve represents a function of 𝑥 if and only if no
vertical line cuts it more than once.

1.2 Ways to Represent a Function

1. Algebraic formula — e.g. 𝑓(𝑥) = 2𝑥 + 3

2. Table of values
3. Graph in the 𝑥𝑦 -plane
4. Verbal description — e.g. “cost equals Rs. 50 per unit plus a fixed charge of Rs.
200”

1.3 Domain and Range — How to Find Them

The natural domain is the largest set of real 𝑥 for which the formula is defined. Watch
for three restrions:

Restriction Rule Example

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Division by zero Denominator ≠0 𝑓(𝑥) = : domain is
𝑥−2
𝑥≠2 √
Even roots Expression under root ≥0 𝑓(𝑥) = 𝑥 − 3: domain is
𝑥≥3
Logarithms Argument >0 𝑓(𝑥) = ln(𝑥): domain is
𝑥>0

Economic domains are often further restricted. E.g. if 𝑄 is quantity produced,

economically we usually need 𝑄 ≥ 0, even if the formula is defined for negative 𝑄.

1.4 Function Notation and Evaluation

If 𝑓(𝑥) = 𝑥2 − 3𝑥 + 5: - 𝑓(2) = 4 − 6 + 5 = 3 - 𝑓(𝑎) = 𝑎2 − 3𝑎 + 5 - 𝑓(𝑎 + ℎ) =

(𝑎 + ℎ)2 − 3(𝑎 + ℎ) + 5 — this expansion is exactly what you need later for the difference
quotient in differentiation:
𝑓(𝑎 + ℎ) − 𝑓(𝑎)
ℎ

2. Graphs of Functions
2.1 Basic Idea

The graph of 𝑦 = 𝑓(𝑥) is the set of all points (𝑥, 𝑓(𝑥)) plotted in the Cartesian (𝑥𝑦) plane.

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2.2 Increasing, Decreasing, Monotonic Functions

• 𝑓 is increasing on an interval if 𝑥1 < 𝑥2 ⇒ 𝑓(𝑥1 ) < 𝑓(𝑥2 ) (graph rises left to

right).
• 𝑓 is decreasing if 𝑥1 < 𝑥2 ⇒ 𝑓(𝑥1 ) > 𝑓(𝑥2 ) (graph falls left to right).
• 𝑓 is strictly monotonic if it is either strictly increasing or strictly decreasing
throughout its domain — such functions are one-to-one and therefore invertible
(see §7).

2.3 Shifting and Scaling Graphs (very useful shortcut)

Starting from the graph of 𝑦 = 𝑓(𝑥):

Transformation Effect on graph

𝑦 = 𝑓(𝑥) + 𝑐 Shift up by 𝑐 (if 𝑐 > 0)
𝑦 = 𝑓(𝑥) − 𝑐 Shift down by 𝑐
𝑦 = 𝑓(𝑥 − 𝑐) Shift right by 𝑐
𝑦 = 𝑓(𝑥 + 𝑐) Shift left by 𝑐
𝑦 = −𝑓(𝑥) Reflect about the 𝑥-axis
𝑦 = 𝑓(−𝑥) Reflect about the 𝑦 -axis
𝑦 = 𝑐 ⋅ 𝑓(𝑥), 𝑐 > 1 Vertical stretch
𝑦 = 𝑐 ⋅ 𝑓(𝑥), 0 < 𝑐 < 1 Vertical compression

3. Linear Functions
3.1 General Form

𝑓(𝑥) = 𝑎𝑥 + 𝑏
Graph is a straight line: 𝑎 = slope, 𝑏 = 𝑦 -intercept (value when 𝑥 = 0).

3.2 Slope

For any two points (𝑥1 , 𝑦1 ) and (𝑥2 , 𝑦2 ) on the line:

𝑦2 − 𝑦 1 Δ𝑦
𝑎 = slope = =
𝑥2 − 𝑥 1 Δ𝑥
• Slope is constant everywhere on a line — this is the defining property of linearity.
• 𝑎 > 0: line rises (positive relationship)
• 𝑎 < 0: line falls (negative/inverse relationship)
• 𝑎 = 0: horizontal line
• Vertical line (𝑥 = 𝑘): slope is undefined — not a function of 𝑥.

3.3 Point–Slope and Two-Point Formulas

• Point–slope form: given slope 𝑎 and one point (𝑥1 , 𝑦1 ):

𝑦 − 𝑦1 = 𝑎(𝑥 − 𝑥1 )

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 • Two-point form: given (𝑥1 , 𝑦1 ) and (𝑥2 , 𝑦2 ):
𝑦 − 𝑦1
𝑦 − 𝑦1 = 2 (𝑥 − 𝑥1 )
𝑥2 − 𝑥 1

3.4 Parallel and Perpendicular Lines

• Parallel lines have equal slopes: 𝑎1 = 𝑎2 .

• Perpendicular lines satisfy 𝑎1 ⋅ 𝑎2 = −1.

3.5 Economic Applications of Linear Functions

(a) Demand and Supply Curves

𝑄𝑑 = 𝑎 − 𝑏𝑃 (𝑎, 𝑏 > 0), 𝑄𝑠 = 𝑐 + 𝑑𝑃 (𝑑 > 0)
- 𝑏 (slope w.r.t. 𝑃 , in absolute value) tells you how much quantity demanded falls per unit
rise in price. - Equilibrium: set 𝑄𝑑 = 𝑄𝑠 and solve for 𝑃 ∗ , then substitute back for 𝑄∗ .
(b) Total Cost Function
𝐶(𝑄) = 𝐹 + 𝑣𝑄
- 𝐹 = fixed cost (intercept), 𝑣 = variable cost per unit (slope). - Average cost: 𝐴𝐶(𝑄) =
𝐶(𝑄) 𝐹
= + 𝑣 (falls as 𝑄 rises — this is not linear, it’s a rectangular hyperbola shifted
𝑄 𝑄
up by 𝑣).
(c) Total Revenue (with a fixed price)
𝑅(𝑄) = 𝑝𝑄
a line through the origin with slope 𝑝.
𝑅(𝑄) = 𝐶(𝑄):
(d) Break-even Analysis Break-even quantity is where
𝐹
𝑝𝑄 = 𝐹 + 𝑣𝑄 ⟹ 𝑄∗ =
𝑝−𝑣
(e) Linear Consumption Function (Keynesian)
𝐶 = 𝑎 + 𝑏𝑌
- 𝑎 = autonomous consumption, 𝑏 = marginal propensity to consume (MPC), 0 < 𝑏 < 1.
(f) Taxation - Specific tax 𝑡 per unit shifts supply: 𝑄𝑠 = 𝑐 + 𝑑(𝑃 − 𝑡). - New equilibrium
price paid by consumers rises, price received by sellers falls — the classic tax incidence
graph, entirely linear-function based.

4. Quadratic Functions
4.1 General Form

𝑓(𝑥) = 𝑎𝑥2 + 𝑏𝑥 + 𝑐, 𝑎≠0

Graph is a parabola: - Opens upward (∪-shape, has a minimum) if 𝑎 > 0 - Opens
downward (∩-shape, has a maximum) if 𝑎 < 0

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4.2 Vertex (Turning Point)

The vertex — where the max/min occurs — is at:

∗ 𝑏 ∗ 𝑏2
𝑥 =− , 𝑓(𝑥 ) = 𝑐 −
2𝑎 4𝑎

Derivation intuition: complete the square:

2
2 𝑏 𝑏2
𝑎𝑥 + 𝑏𝑥 + 𝑐 = 𝑎 (𝑥 + ) + (𝑐 − )
2𝑎 4𝑎
Since a square is always ≥ 0, the bracketed square term is minimized (=0) at 𝑥 = −𝑏/2𝑎,
giving the vertex directly — no calculus needed, though later you will re-derive this via
𝑓 ′ (𝑥) = 0.

4.3 Roots (x-intercepts) — the Quadratic Formula

√
−𝑏 ± 𝑏2 − 4𝑎𝑐
𝑥=
2𝑎
Discriminant 𝐷 = 𝑏2 − 4𝑎𝑐 tells you the nature of roots:

Discriminant Roots
𝐷>0 Two distinct real roots (parabola crosses
x-axis twice)
𝐷=0 One repeated real root (parabola touches
x-axis, that point = vertex)
𝐷<0 No real roots (parabola never touches
x-axis)

4.4 Factored Form

If roots are 𝑥1 , 𝑥2 :
𝑓(𝑥) = 𝑎(𝑥 − 𝑥1 )(𝑥 − 𝑥2 )

4.5 Sum and Product of Roots (very handy, avoid solving fully)
𝑏 𝑐
𝑥1 + 𝑥2 = − , 𝑥 1 ⋅ 𝑥2 =
𝑎 𝑎

4.6 Economic Applications of Quadratics

(a) Profit Maximization with Linear Demand If 𝑃 = 𝑎 − 𝑏𝑄 (demand) and 𝐶(𝑄) =

𝐹 + 𝑣𝑄 (linear cost):
𝜋(𝑄) = 𝑅(𝑄) − 𝐶(𝑄) = 𝑃 𝑄 − 𝐶(𝑄) = (𝑎 − 𝑏𝑄)𝑄 − 𝐹 − 𝑣𝑄 = −𝑏𝑄2 + (𝑎 − 𝑣)𝑄 − 𝐹

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This is a downward-opening parabola in 𝑄 (since −𝑏 < 0). Profit-maximizing output:
𝑎−𝑣
𝑄∗ =
2𝑏
(found using the vertex formula 𝑥∗ = −𝑏/2𝑎 applied to this quadratic — you’ll later
confirm this equals the calculus condition 𝑀 𝑅 = 𝑀 𝐶 ).
(b) Quadratic Total Cost with U-shaped Marginal/Average Cost

𝐶(𝑄) = 𝑎𝑄2 + 𝑏𝑄 + 𝑐
gives rise to the classic U-shaped average and marginal cost curves used throughout
production theory.
(c) Revenue Maximization Given 𝑃 = 𝑎 − 𝑏𝑄, 𝑅(𝑄) = 𝑎𝑄 − 𝑏𝑄2 is a downward
parabola; revenue-maximizing 𝑄∗ = 𝑎/2𝑏 (the midpoint of the demand curve — corre-
sponds to unit price elasticity of demand, a key UPSC-relevant link).
(d) Break-even with quadratic cost: solve 𝑅(𝑄) = 𝐶(𝑄) using the quadratic formula
to get two break-even quantities (lower and upper).

5. Polynomials
5.1 General Form

𝑃 (𝑥) = 𝑎𝑛 𝑥𝑛 + 𝑎𝑛−1 𝑥𝑛−1 + ⋯ + 𝑎1 𝑥 + 𝑎0 , 𝑎𝑛 ≠ 0

- 𝑛 = degree of the polynomial (must be a non-negative integer) - Linear (𝑛 = 1) and
quadratic (𝑛 = 2) functions are special cases of polynomials.

5.2 Key Facts

• A polynomial of degree 𝑛 has at most 𝑛 real roots.

• Behaviour at infinity is governed by the leading term 𝑎𝑛 𝑥𝑛 : as 𝑥 → ±∞, 𝑃 (𝑥)
behaves like 𝑎𝑛 𝑥𝑛 .
• Polynomials are defined for all real 𝑥 — domain is always ℝ.
• Polynomial division / factor theorem: if 𝑃 (𝑥0 ) = 0, then (𝑥 − 𝑥0 ) is a factor of
𝑃 (𝑥).

5.3 Cubic Cost Functions (economically important)

𝐶(𝑄) = 𝑎𝑄3 − 𝑏𝑄2 + 𝑐𝑄 + 𝑑

This shape (with 𝑎, 𝑏, 𝑐 > 0 suitably chosen) generates the textbook S-shaped total
cost curve, and hence U-shaped marginal and average variable cost curves — standard
in production theory diagrams for UPSC.

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6. Power Functions
6.1 Definition

𝑓(𝑥) = 𝑥𝑟 , 𝑟 any real number

6.2 Rules of Exponents (must be automatic)

𝑥𝑎
𝑥𝑎 ⋅ 𝑥𝑏 = 𝑥𝑎+𝑏 , = 𝑥𝑎−𝑏 , (𝑥𝑎 )𝑏 = 𝑥𝑎𝑏
𝑥𝑏
1 √
𝑥−𝑎 = , 𝑥1/𝑛 = 𝑛 𝑥, 𝑥0 = 1 (𝑥 ≠ 0)
𝑥𝑎
𝑥 𝑎 𝑥𝑎
(𝑥𝑦)𝑎 = 𝑥𝑎 𝑦𝑎 , ( ) = 𝑎
𝑦 𝑦

6.3 Shapes to Remember

• 𝑟 > 1: convex, increasing (e.g. 𝑥2 , 𝑥3 )

• 𝑟 = 1: straight line √
• 0 < 𝑟 < 1: concave, increasing (e.g. 𝑥) — diminishing returns shape
• 𝑟 < 0: decreasing, hyperbola-like (e.g. 1/𝑥)

6.4 Economic Application: Cobb–Douglas-type Building Block

A single-input production function 𝑄 = 𝐴𝐿𝛼 (0 < 𝛼 < 1) is a power function showing

diminishing marginal returns to labour — the concave shape above. This single-
variable version is the stepping stone to the full multivariable Cobb–Douglas function
you’ll study later.

7. Inverse Functions
7.1 Idea

If 𝑓 is one-to-one (strictly monotonic) on its domain, it has an inverse function 𝑓 −1

such that:
𝑓 −1 (𝑓(𝑥)) = 𝑥 and 𝑓(𝑓 −1 (𝑦)) = 𝑦

7.2 How to Find an Inverse

1. Write 𝑦 = 𝑓(𝑥).
2. Solve algebraically for 𝑥 in terms of 𝑦 .
𝑓 −1 ).
3. Swap the labels 𝑥 ↔ 𝑦 (or just interpret the result as
𝑦−5 𝑥−5
Example: 𝑦 = 𝑓(𝑥) = 3𝑥 + 5 ⇒ 𝑥 = ⇒ 𝑓 −1 (𝑥) = .
3 3

7.3 Graphical Property

The graph of 𝑓 −1 is the mirror image of 𝑓 reflected in the line 𝑦 = 𝑥.

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7.4 Economic Application

• If𝑄𝑑 = 𝑎 − 𝑏𝑃 is the demand function (quantity as a function of price), its inverse

𝑎−𝑄
𝑃 = is the inverse demand function — this is exactly what you plot with
𝑏
price on the vertical axis, the convention used in every demand-supply diagram.

7A. Composite Functions (“Function of a Function”)

7A.1 Definition

Given two functions 𝑓 and 𝑔, the composite function 𝑓 ∘ 𝑔 is defined by:

(𝑓 ∘ 𝑔)(𝑥) = 𝑓(𝑔(𝑥))
Read as “𝑓 of 𝑔 of 𝑥.” Here 𝑔 is applied first (the inner function), then 𝑓 is applied to
the result (the outer function).
Domain rule: 𝑥 must be in the domain of 𝑔, and 𝑔(𝑥) must be in the domain of 𝑓 .

7A.2 Example

If 𝑓(𝑢) = 𝑢2 and 𝑔(𝑥) = 3𝑥 + 1, then:

(𝑓 ∘ 𝑔)(𝑥) = 𝑓(𝑔(𝑥)) = (3𝑥 + 1)2
Note (𝑔 ∘ 𝑓)(𝑥) = 𝑔(𝑓(𝑥)) = 3𝑥2 + 1 — order matters; 𝑓 ∘ 𝑔 ≠ 𝑔 ∘ 𝑓 in general.

7A.3 Why This Matters in Economics

Composite functions appear constantly because economic variables are chained together:
- Cost as a function of labour, via output: if output 𝑄 = 𝑔(𝐿) (production function)
and cost 𝐶 = 𝑓(𝑄) (cost function), then total cost as a function of labour directly is the
composite 𝐶(𝑔(𝐿)). - Utility from income, via consumption: 𝑈 = 𝑓(consumption)
where consumption = 𝑔(income). - This chaining is exactly what the chain rule (next
𝑑𝐶 𝑑𝐶 𝑑𝑄
chapter) differentiates: = ⋅ — a calculus rule that only makes sense once
𝑑𝐿 𝑑𝑄 𝑑𝐿
you see the underlying composite function here.

8. Exponential Functions
8.1 General Form

𝑓(𝑥) = 𝑎𝑥 , 𝑎 > 0, 𝑎 ≠ 1
- Domain: all real 𝑥. Range: (0, ∞) — always positive, never touches zero. - 𝑓(0) = 1
always (since 𝑎0 = 1).

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8.2 Shape

• 𝑎 > 1: strictly increasing, convex (exponential growth)

• 0 < 𝑎 < 1: strictly decreasing, convex (exponential decay)

8.3 The Natural Exponential Function

The special base 𝑒 ≈ 2.71828... defines:

𝑓(𝑥) = 𝑒𝑥
This is the most important exponential in economics because of its calculus property
(its own derivative — covered in the differentiation chapter) and because continuous
compounding uses it directly.

8.4 Laws of Exponents (same as power rules, restated for base functions)

𝑥+𝑦 𝑥 𝑦 𝑥−𝑦 𝑎𝑥 1
𝑎 =𝑎 𝑎 , 𝑎 = 𝑦 , (𝑎𝑥 )𝑦 = 𝑎𝑥𝑦 , 𝑎−𝑥 = 𝑥
𝑎 𝑎

8.5 Economic Applications

𝑟 𝑛𝑡
(a) Compound Interest - Compounded 𝑛 times per year: 𝐴 = 𝑃 (1 + ) - Contin-
𝑛
uous compounding (as 𝑛 → ∞):
𝐴 = 𝑃 𝑒𝑟𝑡
(b) Present Value / Discounting (continuous case)

𝑃 𝑉 = 𝐴𝑒−𝑟𝑡

(c) Exponential Growth Models - Population, GDP, money supply growth: 𝑁 (𝑡) =
𝑁0 𝑒𝑔𝑡 , where 𝑔 is the continuous growth rate. - Doubling time shortcut: 𝑡𝑑𝑜𝑢𝑏𝑙𝑒 ≈
0.693 ln 2
= (the “Rule of 70/69.3”).
𝑔 𝑔
(d) Depreciation: 𝑉 (𝑡) = 𝑉0 𝑒−𝛿𝑡 , 𝛿 = depreciation rate.

9. Logarithmic Functions
9.1 Definition

The logarithm is the inverse of the exponential function:

𝑦 = log𝑎 𝑥 ⟺ 𝑎𝑦 = 𝑥, (𝑎 > 0, 𝑎 ≠ 1, 𝑥 > 0)

• Natural log (base 𝑒): written ln 𝑥 = log𝑒 𝑥. This is the one used almost everywhere
in economics.
• Common log (base 10): log10 𝑥, occasionally seen but far less used in economic
theory.

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9.2 Domain and Shape

• Domain: 𝑥 > 0 only (cannot take log of zero or a negative number).

• Range: all real numbers.
• ln 1 = 0 always; ln 𝑥 < 0 for 0 < 𝑥 < 1; ln 𝑥 > 0 for 𝑥 > 1.
• The graph is increasing and concave — increases without bound, but ever more
slowly.

9.3 Laws of Logarithms (memorize cold — these are used constantly)

ln(𝑥𝑦) = ln 𝑥 + ln 𝑦
𝑥
ln ( ) = ln 𝑥 − ln 𝑦
𝑦
ln(𝑥𝑟 ) = 𝑟 ln 𝑥
ln(𝑒𝑥 ) = 𝑥, 𝑒ln 𝑥 = 𝑥
ln 𝑒 = 1, ln 1 = 0

Change of base formula:

ln 𝑥
log𝑎 𝑥 =
ln 𝑎

9.4 Solving Equations with Logs

Example: Solve 5𝑥 = 20.

ln 20
ln(5𝑥 ) = ln 20 ⟹ 𝑥 ln 5 = ln 20 ⟹ 𝑥 =
ln 5

9.5 Economic Applications

(a) Elasticity and log-linear (constant elasticity) demand:

𝑄 = 𝐴𝑃 −𝑏 ⟺ ln 𝑄 = ln 𝐴 − 𝑏 ln 𝑃
Taking logs turns a power/multiplicative relationship into a linear one in ln 𝑄 and ln 𝑃 —
the coefficient 𝑏 is directly the (constant) price elasticity of demand. This log-linearization
trick is central to applied economics and econometrics (regression on log variables to
estimate elasticities).
(b) Growth rate interpretation: For small changes,

Δ𝑥
Δ ln 𝑥 ≈ = percentage change in 𝑥
𝑥
This is why economists take log-differences to approximate growth rates (e.g. ln 𝐺𝐷𝑃𝑡 −
ln 𝐺𝐷𝑃𝑡−1 ≈ GDP growth rate).
(c) Solving for time in growth/interest problems: From 𝐴 = 𝑃 𝑒𝑟𝑡 :
ln(𝐴/𝑃 )
𝑡=
𝑟
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used to compute doubling time, time to reach a target income/output level, etc.
(d) Cobb–Douglas log-linearization: 𝑄 = 𝐴𝐿𝛼 𝐾 𝛽 ⇒ ln 𝑄 = ln 𝐴 + 𝛼 ln 𝐿 + 𝛽 ln 𝐾
— this is precisely how such production functions are estimated empirically, and is a
favourite UPSC application question.

10. Other Important Functions to Know

10.1 Absolute Value Function
𝑥 𝑥≥0
|𝑥| = {
−𝑥 𝑥 < 0
V-shaped graph, vertex at origin. Domain: all reals; Range: [0, ∞).

10.2 Piecewise-Defined Functions

Functions defined by different formulas on different intervals — very common in pro-

gressive income tax problems:

⎧0 0 ≤ 𝑌 ≤ 250000
{
𝑇 (𝑌 ) = ⎨0.05(𝑌 − 250000) 250000 < 𝑌 ≤ 500000
{
⎩⋮
Each “slab” is linear, but the overall marginal rate (slope) increases — a kinked,
piecewise-linear graph.

10.3 Rational Functions

𝑃 (𝑥)
𝑓(𝑥) =
𝑄(𝑥)
ratio of two polynomials. Domain excludes zeros of 𝑄(𝑥). The average cost function
𝐴𝐶(𝑄) = 𝐹 /𝑄 + 𝑣 is a simple rational function — its graph is a rectangular hyperbola
shifted vertically, asymptotic to 𝑣 as 𝑄 → ∞ and to +∞ as 𝑄 → 0+ .

11. Worked Examples (Solve These Yourself First)

Example 1 — Equilibrium. 𝑄𝑑 = 100 − 2𝑃 , 𝑄𝑠 = −20 + 3𝑃 . Find equilibrium price
and quantity. > Set 100 − 2𝑃 = −20 + 3𝑃 ⇒ 120 = 5𝑃 ⇒ 𝑃 ∗ = 24, 𝑄∗ = 100 − 48 = 52.
Example 2 — Profit-maximizing output (quadratic). 𝑃 = 50−𝑄, 𝐶(𝑄) = 10𝑄+200.
Find 𝑄∗ , 𝑃 ∗ , max profit. > 𝜋(𝑄) = (50 − 𝑄)𝑄 − 10𝑄 − 200 = −𝑄2 + 40𝑄 − 200. >
40
Vertex: 𝑄∗ = − = 20. 𝑃 ∗ = 50 − 20 = 30. > 𝜋(20) = −400 + 800 − 200 = 200.
2(−1)
Example 3 — Doubling time. At a continuous growth rate of 7% p.a., how long for GDP
ln 2 0.693
to double? > 𝑡 = = ≈ 9.9 years.
0.07 0.07
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Example 4 — Inverse demand. 𝑄 = 200 − 4𝑃 . Find inverse demand and revenue
function; find revenue-maximizing 𝑄. > 𝑃 = 50 − 𝑄/4. 𝑅(𝑄) = 𝑃 𝑄 = 50𝑄 − 𝑄2 /4. >
50
Vertex: 𝑄∗ = − = 100; 𝑃 ∗ = 25.
2(−1/4)
Example 5 — Logs and elasticity. Demand: 𝑄 = 500𝑃 −1.5 . Write in log-linear form
and state the price elasticity. > ln 𝑄 = ln 500 − 1.5 ln 𝑃 . Price elasticity of demand
= −1.5 (elastic).

12. Practice Problems (Answers at the End)

√
𝑥+4
1. Find the domain of 𝑓(𝑥) = .
𝑥−1
2. A firm has 𝐶(𝑄) = 500 + 20𝑄 and sells at 𝑃 = 45. Find the break-even quantity.
3. Find the vertex and roots of 𝑓(𝑥) = 2𝑥2 − 8𝑥 + 6.
4. Solve for 𝑥: 3𝑒2𝑥 = 24.
5. If 𝑄𝑑 = 80 − 2𝑃 and 𝑄𝑠 = −10 + 𝑃 , find equilibrium 𝑃 ∗ , 𝑄∗ .
6. Simplify: ln(𝑒3 𝑥2 ) − 2 ln 𝑥.
7. A sum of Rs. 10,000 is invested at 6% continuous compounding. Find its value after
5 years (𝑒0.3 ≈ 1.35).
2𝑥 + 1
8. Find the inverse of 𝑓(𝑥) = .
3
9. For 𝜋(𝑄) = −3𝑄2 + 90𝑄 − 150, find the profit-maximizing 𝑄 and maximum profit.
10. Is 𝑓(𝑥) = 𝑥3 one-to-one on all of ℝ? Justify, and state whether it has an inverse.

Answers

1. 𝑥 ≥ −4 and 𝑥 ≠ 1.
2. 𝑄∗ = 500/(45 − 20) = 20 units.
3. Vertex at 𝑥 = 2, 𝑓(2) = 2(4)−16+6 = −2; roots: 2𝑥2 −8𝑥+6 = 0 ⇒ 𝑥2 −4𝑥+3 =
0 ⇒ 𝑥 = 1, 3.
ln 8
4. 𝑒2𝑥 = 8 ⇒ 2𝑥 = ln 8 ⇒ 𝑥 = ≈ 1.04.
2
5. 80 − 2𝑃 = −10 + 𝑃 ⇒ 90 = 3𝑃 ⇒ 𝑃 ∗ = 30, 𝑄∗ = 20.
6. ln(𝑒3 𝑥2 ) − 2 ln 𝑥 = 3 + 2 ln 𝑥 − 2 ln 𝑥 = 3.
7. 𝐴 = 10000 × 𝑒0.3 ≈ 𝑅𝑠.13,500.
8. 𝑦 = (2𝑥 + 1)/3 ⇒ 𝑥 = (3𝑦 − 1)/2 ⇒ 𝑓 −1 (𝑥) = (3𝑥 − 1)/2.
9. 𝑄∗ = −90/(2 × −3) = 15; 𝜋(15) = −675 + 1350 − 150 = 525.
10. Yes — 𝑥3 is strictly increasing on all of ℝ (never flattens into a repeated value), so
it is one-to-one and has an inverse 𝑓 −1 (𝑥) = 𝑥1/3 .

13. Master Formula Sheet (Quick Revision)

Δ𝑦
Linear: 𝑓(𝑥) = 𝑎𝑥 + 𝑏; slope =
Δ𝑥

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 √
𝑏 −𝑏 ± 𝑏2 − 4𝑎𝑐
Quadratic: 𝑓(𝑥) = 𝑎𝑥2 + 𝑏𝑥 + 𝑐 ; vertex 𝑥∗ = − ; roots 𝑥 =
2𝑎 2𝑎
𝑎 𝑏 𝑎+𝑏 𝑎 𝑏 𝑎𝑏 −𝑎 𝑎
Exponent rules: 𝑥 𝑥 = 𝑥 ; (𝑥 ) = 𝑥 ; 𝑥 = 1/𝑥
Log rules: ln(𝑥𝑦) = ln 𝑥 + ln 𝑦; ln(𝑥/𝑦) = ln 𝑥 − ln 𝑦; ln(𝑥𝑟 ) = 𝑟 ln 𝑥; ln 𝑒𝑥 = 𝑥
ln 2
Compound growth: 𝐴 = 𝑃 𝑒𝑟𝑡 ; 𝑃 𝑉 = 𝐴𝑒−𝑟𝑡 ; doubling time =
𝑟
Inverse function: solve 𝑦 = 𝑓(𝑥) for 𝑥, then relabel
Economic pairings: - Demand/Supply → linear or log-linear functions - Cost → lin-
ear (𝐹 + 𝑣𝑄), or cubic (S-shaped) - Profit/Revenue with linear demand → quadratic,
maximized at vertex - Elasticity estimation → log-linear (power) functions - Inter-
est/growth/discounting → exponential and logarithmic functions

14. Where This Chapter Leads Next

This chapter’s job is to make you fluent with the shapes and algebra of functions. In
the next chapter (Differentiation / Derivatives), you will: - Use the difference quotient
𝑓(𝑎 + ℎ) − 𝑓(𝑎)
(introduced in §1.4) to define the derivative. - Differentiate every func-
ℎ
tion type covered here (power, exponential, log) using specific rules. - Re-derive the
vertex formulas of §4 (max/min of quadratics) using 𝑓 ′ (𝑥) = 0 — confirming what you
found here algebraically. - Apply all of this to marginal analysis, elasticity, and optimiza-
tion — the core toolkit for both CUET PG and UPSC Optional Economics quantitative
questions.
Exam tip (UPSC Optional/CUET PG): Questions rarely test “pure math” in isolation —
they embed these functions inside demand/supply, cost/revenue, growth, or production-
function contexts. So while revising, always attach one economic example to each math-
ematical rule above; that is exactly how these notes are structured.

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