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Mathematics for Economics Worksheet 5

This document contains 5 mathematics problems for economics and business. Problem 1 involves determining properties of 4 functions such as their domain, zeros, extreme values, and drawing their graphs. Problem 2 involves computing the price and output quantities that minimize average variable costs given cost and demand functions. Problem 3 similarly involves determining costs given another cost function. Problem 4 involves finding the maximum total revenue, break even points, and maximum total profit given demand and cost functions. Problem 5 extends this to involve determining price, quantity, and maximum total profit at multiple demand intervals.

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9 views4 pages

Mathematics for Economics Worksheet 5

This document contains 5 mathematics problems for economics and business. Problem 1 involves determining properties of 4 functions such as their domain, zeros, extreme values, and drawing their graphs. Problem 2 involves computing the price and output quantities that minimize average variable costs given cost and demand functions. Problem 3 similarly involves determining costs given another cost function. Problem 4 involves finding the maximum total revenue, break even points, and maximum total profit given demand and cost functions. Problem 5 extends this to involve determining price, quantity, and maximum total profit at multiple demand intervals.

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© Attribution Non-Commercial (BY-NC)
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Hochschule für Wirtschaft und Recht Berlin Prof. Dr.

Susanne Hannappel
Worksheet 5

MATHEMATICS FOR ECONOMICS AND BUSINESS Date: (1)/4

1. You are given the following functions. Determine their domain, zeroes,
relative extreme values, inflection points, monotony and their curvature.
Draw a graph of each function.

1 4
a) f ( x) = x 4 − 8 x 2 − 9 b) f ( x) = x − 2 x 3 + 7 .5 x 2
12
c) f ( x) = 10 ⋅ x 0.8 d) f ( x) = x 2 ⋅ e − x

2. You are given the following cost function of a monopolist:

K ( x) = 0.01x 3 − 1.5 x 2 + 120 x + 4000 ( K : total costs; x : output)

x ( p ) = 1044 − 0.3 p ( x : demand; p : price )

i) Compute the price for which the increase of one MU/QU leads to a
decrease of 0.3 QU in demand.

ii) Which output quantities lead to minimal average variable costs?


Hochschule für Wirtschaft und Recht Berlin Prof. Dr. Susanne Hannappel
Worksheet 5

MATHEMATICS FOR ECONOMICS AND BUSINESS Date: (2)/4

3. You are given the following cost function

K ( x) = 0.1x 3 − 2.4 x 2 + 30 x + 640 x : output (QU)


K : total costs (MU)

i) Determine the minimum of the average variable costs


(Betriebsminimum).

ii) Show that the average costs have their minimum at x=20 QU
(Betriebsoptimum).

iii) Compute the quantity of output for which the marginal costs are
minimum.

iv) Show that at the Betriebsoptimum the marginal costs are equal to the
average costs.

100 MC
95 K ′ (x ) AC
90 k (x )
85
80
75
70
65 Minimum of AC AVC
60 kv (x )
55
50
45
40
35 Minimum of AVC
30
25
20
15
10
5
0 x
0 5 10 15 20 25 30
Hochschule für Wirtschaft und Recht Berlin Prof. Dr. Susanne Hannappel
Worksheet 5

MATHEMATICS FOR ECONOMICS AND BUSINESS Date: (3)/4

4. A commodity is sold with the following demand function

⎧ 180 − 2 x für 0 ≤ x ≤ 60
p ( x) = ⎨ ( p : price , x : quantity )
⎩78 − 0.3 x für x > 60

The total cost function is given by: K ( x ) = 15 x + 3000 .

Determine the following:

a) maximum of the total revenue,


b) the break even points,
c) maximum of the total profit.
Hochschule für Wirtschaft und Recht Berlin Prof. Dr. Susanne Hannappel
Worksheet 5

MATHEMATICS FOR ECONOMICS AND BUSINESS Date: (4)/4

5. You are given the following demand function

⎧ − 0.5 x + 50 für 0 ≤ x ≤ 10 ME
⎪
p ( x) = ⎨ − 2 x + 65 für 10 < x ≤ 20 ME ,
⎪ − 0.5 x + 35 für 20 < x ≤ 70 ME
⎩

draw its graph.

Determine price, quantity and total profit at the maximum of the total profit
function, assuming that the supplier is producing with the following cost
function:

a) K ( x) = 0.008 x 3 − 0.6 x 2 + 20 x + 150


b) K ( x ) = 30 x + 100

Note
Determine the total profit function and its marginal profit function.

⎧ ... for 0 ≤ x ≤ 10 ME ⎧ ... for 0 ≤ x ≤ 10 ME


⎪ ⎪
G ( x) = ⎨ ... for 10 < x ≤ 20 ME and G ′( x) = ⎨ ... for 10 < x ≤ 20 ME
⎪ for 20 < x ≤ 70 ME ⎪ for 20 < x ≤ 70 ME
⎩ ... ⎩ ...

Compute the relative extrema for each interval and compare their function
values G (x ) with the function values at the interval boundaries.

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