Math Camp 2012

Department of Economics
Umass Amherst
9am-1pm, M-F, Aug. 20-30, 2012
hompson 919
Chapter 1, 2, 4-9 were prepared by Sung-Ha Hwang and Seung-Yun Oh,
based on Chapter 1-8 of Matheat!"s for #"ono!sts$ by Ma%"o%
&eberton ' (!"ho%as )au, Se"ond #d!t!on *Man"hester +n!,ers!ty
&ress, 2--./0 1t2s a suary of Chapter 1-3, 4-9 of 5undaenta%
Methods of Matheat!"a% #"ono!"s$, by 6%pha C0 Ch!ang, 7h!rd
#d!t!on *M"8raw-H!%%, 1n"0 1984/
Chapter 3 !s based on Chapter 1 of 5urther Matheat!"s for
#"ono!" 6na%ys!s$ by 9nut Sydsaeter, &eter Haond, 6t%e
Se!erstad and 6rne Stro *&earson #du"at!on :td, 2--8/ and Serge!
7re!%, :!near 6%gebra ;one <rong$ *a,a!%ab%e at
http= >>www0ath0brown0edu>?tre!%>papers>:6;<>:6;<0ht%/0 1t2s a
suary of Chapter 4 and @ of 5undaenta% Methods of
Matheat!"a% #"ono!"s$, by 6%pha C0 Ch!ang, 7h!rd #d!t!on *M"8raw-
H!%%, 1n"0 1984/
Math Cap 2-12 &age 1
Chapter 1 !inear E"uations
1.1 Linear equation
Example 1.1 Suppose the demand schedule for a good, say honey, is given by
8 4 q p
where
p
denotes price and
q
denotes quantity demanded. Suppose also that the supply
schedule for honey is given by
3 q p +
with the interpretation that bee-keepers wish to
produce
3 p +
units of honey when price of honey is
p
. Sketch the graph of demand and
supply function. ind the market clearing price and quantity.
Exercise 1.1 Sketch in the same diagram the graphs of the following linear relations!
"a#
$ y x +
, "b#
3 y x
, "c#
8 y x +
%hat do you notice& ind the equation of the line of slope $ which passes through the
point "-$, '#
Exercise 1.2 Suppose the demand and supply schedules for milk are
$$ 3 q p
,
$ ( q p +
respectively. Sketch these schedules in the
pq
-plane and find the market
clearing price and quantity.
1.2 Simultaneous equations
Remarks! )dditive property implies that
a b
, then
a c b c
Example 1.2 Solve the following simultaneous equation and graph each linear equation
in xy plane.
3 ( 8
( ' *
x y
x y
+
+
Exercise 1.3 Solve the following simultaneous equations and draw the graphs for each.
"$# 3 ( 8
+ 4 *
x y
x y
+
+

"(# 3 ( 8
+ 4 $+
x y
x y
+
+
Math Cap 2-12 &age 2
Rules for Manipulating Equality
,et a, b, c, d be real numbers.
"i# )dditive! -f
a b
, then a+c = b + c.
"ii# .ultiplicative! -f a=b, then a c = b c.
"iii# /ivisibility! -f a = b, then a/c = b/c for c 0
1.2.1 Two equations an two unknowns
1onsider solving the following linear equations.
$$ $( $
($ (( (
a x a y b
a x a y b
+
+
"$.$#
-f we manipulate "$.$#, then we have!
$$ (( $( (( $ ((
($ $( (( $( ( $(
a a x a a y b a
a a x a a y b a
+
+
"$.(#
Subtracting the second equation from the first one, we have!
$$ (( ($ $( $ (( ( $(
" # " # a a a a x b a b a
2hus, we need to divide the cases depending on the values of
$$ (( ($ $(
" # a a a a
and
$ (( ( $(
" # b a b a
.
!ase "
$$ (( $( ($
a a a a
0
!ase ""
$$ (( $( ($
a a a a
3 0 and
$( ( (( $
a b a b
3 0
!ase """
$$ (( $( ($
a a a a
3 0 and
$( ( (( $
a b a b
0
!ase "
$$ (( $( ($
a a a a
0. 2hen, obviously, "$# is the unique solution.
%hen
$$ (( $( ($
a a a a
3 0, we also have to divide cases depending on the value of
$( ( (( $
a b a b
. 2his can be shown as follows.
-n the steps of solving the above equations, we have
( ) ( )
$$ (( $( ($ $( ( (( $
a a a a x a b a b
"$.3#
!ase ""
$$ (( $( ($
a a a a
3 0 and
$( ( (( $
a b a b
3 0
2hus, if
$$ (( $( ($
a a a a
3 0 and
$( ( (( $
0 a b a b
, then any value of
x
can satisfy the
equation "(#. -n this case, we have infinitely many solutions.
!ase """
$$ (( $( ($
a a a a
3 0 and
$( ( (( $
a b a b
0
2hen, no real number can satisfy "(#. 2hus, we have no solution in this case.
Math Cap 2-12 &age 3
)lso, we can verify the relation by drawing the graphs. -n case -, the two linear graphs
intersect at the e4actly one point "unique solution# and case --, two graphs are parallel to
each other and coinciding with each other, thus intersect at infinitely many points.
inally, in case ---, two graphs are parallel, but not intersect at all, resulting no solution.
Summary
$$ (( $( ($
a a a a
0
$$ (( $( ($
a a a a
3 0
$( ( (( $
a b a b
3 0
$( ( (( $
a b a b
0
) 5nique Solution -nfinitely .any Solution 6o Solution
7raphs intersect at one point 7raphs coincide
7raphs are parallel, but not
intersect.
Exercise 1.# Solve the following simultaneous equations.
( 3
( 3 $3
x y
x y
+

Exercise 1.$ Suppose the demand and supply schedules for wine are
4 , $ 3 q k p q p +
respectively, where k is a constant parameter. ind the equilibrium price and quantity in
terms of k. -n each of the following cases, sketch the demand and supply schedules and
write down the equilibrium price and quantity!
"a# 3 k , "b# 4 k , "c# ( k .
%hat happens when
$
(
k &
Math Cap 2-12 &age 4
1.2.2 T%ree equations in t%ree unknowns
1onsider the following a 8triangular system9.
(x : ;y : z 3 (
3y <(z 3 ;
4z 3 4
-t is easy to solve the above system and we can get the solution= x 3 -$0, y 3 3, > 3 $.
2he strategy the solving the three equations is that transforming the given system into a
8triangular system9 by using the property of the equation.
Example 1.3 Suppose that we are given the following three equations system.
(x : 4y : z 3 '
x : y : z 3 +
(x : 3y :(z 3 +
2he solution to the system is x 3 $;, y 3 - +, z 3 - '.
Exercise 1.& Solve the system of equations
( ( $
( ( (
3 3
x y z
x y z
x y z
+ +
+
+
Math Cap 2-12 &age @
(x : 4y : z 3 '
x : y : z 3 +
(x : 3y :(z 3 +
(x : 4y : z 3 '
- y : z/2 3 ;?(
- y : z 3 $
(x : 4y : z 3 '
- y : z/2 3 ;?(
z/2 3 -'?(
"S$# "S(#
"S$# ,eave the first equation alone and eliminate x from the second and third equations by
subtracting from those equations suitable multiples of the first equation.
"S(# ,eave the first and second equations alone and eliminate y from the third equation by
subtracting multiple of the second.
'aussian Elimination
%e can generali>e the above procedures= 7aussian @limination. 2he elimination
procedure is carried out using a sequence of elementary operations. 2hese are two kinds!
Example 1.3
( 4 $ A '
$ $ $ A +
( 3 ( A +
_



,

( 4 $ A '
0 $ $? ( A ; ? (
0 $ $ A $
_

,

( 4 $ A '
0 $ $? ( A ; ? (
0 0 $? ( A '? (
_

,
( 4 $ A '
0 $ $? ( A ; ? (
0 0 $ A '
_

,

$ ( $? ( A '? (
0 $ $? ( A ; ? (
0 0 $ A '
_

,

$ ( $? ( A '? (
0 $ 0 A +
0 0 $ A '
_

,
$ 0 $? ( A (*? (
0 $ 0 A +
0 0 $ A '
_

,

$ 0 0 A $;
0 $ 0 A +
0 0 $ A '
_

,
)dd <$?( times the first row to the second and <$ times the first row to the third.
)dd <$ times the second row to the third
.ultiply the third row by (
.ultiply the second row by <$
)dd $?( times the third row to the second
)dd <( times the second row to the first
)dd <$?( times the third row to the first
Exercise 1.( Solve the following equation system by 7aussian elimination.
( *
( 4 3 $
3 + ' 0
x y z
x y z
x y z
+ +
+
+
Math Cap 2-12 &age 4

"@B$# writing the equations in a different order )"nterc%ange rows*

"@B(# subtracting a multiple of one equation from another equation. )+ a
multiples of one row to t%e ot%er*
"@B3# multiplying one equation by a constant. )Multiply a row ,y a constant*
1.3 "nput-.utput +nalysis
Suppose an economy produces three goods C, D, and E. 2here are non-produced goods
such as ,abor, ,and, -mported raw material, etc.
'ross output of goo /0 the total amount produced, including that fed back into the
system as industrial input.
1et output of goo /! 2he amount of C produced and not fed back into the system,
being therefore available for consumption, accumulation, and e4port.
7ross output 3 Feproduction purpose "the portion fed back into the system as input# :
1onsumption
Tec%nology! -nput requirements per unit of gross output of each produced good are given
in the following table, known as an input-output ta,le. 2his says for e4ample that each
unit of gross output of good D requires the input of 0.( units of good C, 0.' units of good
D and 0.3 units of good E.
Butput
C D E
-6G52
C 0.( 0.( 0.(
D 0.4 0.' 0.$
E 0.4 0.3 0.3
Relation ,etween new an gross output of goo /!
6et output of C 3 gross output of C < quantity of C required as input in industry C
< quantity of C required as input in industry D
< quantity of C required as input in industry E
Example 1.# ,et the gross outputs of C, D, E be x, y, z and the net output x*, y*, >H.
%rite down the relation between net and gross output of good C. )ssuming that the
economy is closed and no accumulation happens. 2hus, the final output can only be used
either as reproduction purpose or consumption. -f the demand of consumption is given as
$0 for C, $' for D, ; for E respectively, what is the amount of outputs of C, D, E required
for this economy&
2he relations are given by
H 0.8 0.( 0.(
H 0.4 0.' 0.$
H 0.4 0.3 0.;
x x y z
y x y z
z x y z

+
+
Math Cap 2-12 &age .
Since net output should be equal to the demand of consumption for each output by
assumptions, setting
H $0, H $' x y
, and H ; z and solving the linear equations gives
'', *0, 80 x y z
. "5se 7aussian elimination#
Exercise 1.2 or the e4ample of the input-output model given in the te4t, find the gross
outputs corresponding to net outputs of $(, $0, $0 of C, D, E respectively.
Math Cap 2-12 &age 8
Chapter 2 !inear #ne"ua$ities
2.1 "nequalites
-nequalities in the xy plane

Exercise 2.1 Shade the region in the xy-plane which satisfies
x+(y 3, (x-3y I $3
Math Cap 2-12 &age 9
x
y
L
3
(
(
x
y
L
3
(
(
3x+4y + 3x+4y J +
y4
y=4 x=-3
x-3
Rules for Manipulating "nequality
,et a, b, c, d be real numbers.
"i# )dditive! -f
a b <
, then a+c < b + c.
"ii# Gositive .ultiplicative! -f a<b and c>0, then a c < b c .
"iii#6egative .ultiplicative! -f a<b and c<0, then a c > b c .
3
'
+
'
3
(
y
x
x <(y 0
3x :4y +
2.2 Economic +pplications
T%e ,uget set an t%e ,uget line
Suppose that there are only two goods labeled $ and (, and that -an consumes quantities
$
x
of good $ and
(
x
of good (. 2he prices of the goods are
$
p
and
(
p
. -f -an9s income is
m
, then the statement that he cannot consume more than his income may be written as
$ $ ( (
p x p x m +
. Since goods can be consumed only in non-negative quantities,
$
0 x
and
(
0 x
. 2he set of points in the
$ (
x x
-plane satisfying these two inequalities and the
budget constraint is called the budget set.
Exercise 2.2 Sketch the budget line and budget set. Ke sure to label every point of
interest. %hat happen to the budget set if the price of good $ increases& )nd, if the price
of good ( decreases& %hat happen to the budget set if the income increases&
Exercise 2.3 Lenry has an income of $8 which he can spend on two goods labeled $ and
(, with prices $ and 3 respectively. Sketch the budget set.
Sketch also the budget set in each of the following cases!
"a# -ncome 3+, prices ( and + "b# -ncome *, prices $ and 3 "c# -ncome $8, prices ( and 3
3rouction possi,ilities
Suppose a firm manufactures two products C and D. ,et the production process involve
three departments ), K and 1, with time "in minutes# required in each department per
unit output of each product given by the table below.
/epartment
) K 1
Groduct C (0 30 4'
Groduct D 40 30 30
Suppose that /epartments ) and K are available for 8 hours per day and that /epartment
1 is available for $$ hours per day. ,et x and y be the amounts of C and D produced each
day by the firm. Sketch the feasible set for the firm9s production plan in xy plane.
Exercises 2.# ) firm produces two products C and D using a production process
involving two departments ) and K. 2he time in minutes required in each department per
unit output of each product is given by the following table.
/epartment
) K
Groduct C $+ $0
Groduct D 8 (0
/epartment ) is available for 4 hours per day and /epartment K is available for ' hours
per day. Sketch the feasible set.
Math Cap 2-12 &age 1-
2.3 Linear 3rogramming
,inear Grogramming is an optimi>ation problem where a linear obMective function is
being ma4imi>ed subMect to linear inequalities.
1onsider the following problem. Suppose that a firm produces two products C and D,
using a production process involving two departments ) and K. 2he time in minutes
required in each department per unit of output of each product is given by the following
table. "6ote that this firm has the same technology e4cept the fact that department 1 has
been deleted#
/epartment
) K
Groduct C (0 30
Groduct D 40 30
Suppose that products C and D yield profit of N30 and N40 per unit respectively and firm
ma4imi>es its profit. ,et x and y be the amount of the products C and D produced per
day respectively. -n this case, the ma4imi>ation problem is given as follows.
,
ma4 30 40
. . ( (4
$+
0, 0
x y
x y
s t x y
x y
x y
+
+
+

%hat would be the optimal amount of C and D that the firm chooses to ma4imi>e the
profit&
2o solve the above the linear programming, it is particularly helpful to use a graphical
approach. 5sing the production constraint, we can draw the production feasibility set.
)lso, for the obMective function, we can consider the different output combination which
yield a given level of profit, say . 2hus, we have
30 40 x y +
. Ky manipulating
this equation, we see that this equation is a straight line with a slope of <3?4 and an
intercept of ?40 in xy plane.
3 $
4 40
y x + --- "$#
2his straight line is called an isoprofit line, since every point on the same line yields the
same profit. )lso, from the "$#, as we increase , the intercept will increase with the
slope being unchanged, thus the graph will shift toward northeast direction.
-n the following, the constraint set and the isoprofit line is given.
Ky using the above graph analysis, we can solve the linear programming problem as
follows.
Math Cap 2-12 &age 11
6ow, as is clear from the above graph, the firm9s profit is ma4imi>ed at x 38 and y38.
"%hat is the ma4imi>ed profit&#. 6ote that this result critically depends on the slopes of
the budget constraints and isoprofit line.
Exercise 2.$ 6ow suppose that production constraint as the above e4ample. Lowever, the
profit function is given as generic form=
x y +
for
0, 0 > >
. )t which level of
output, the firm can ma4imi>e the profit& %hat is the ma4imi>ed profit&
"Lint= -n this case, depending on the slope of isoprofit curve, you should divide cases. or
each case, you can use the same approach as the above. inally, make sure that your
answer should depend on the parameters "
,
#.#
Math Cap 2-12 &age 12
x
y
$+
$(
$+ (4
"8,8#
!onstraint Set
x
y
-ncrease in
Grofit
(4
.,4ecti5e 6unction
3 $
4 40
y x +
(
40

0
40

$
40

$+ y x +
$
$(
(
y x +
x
y
$+
$(
$+ (4
"8,8#
!onstraint Set 7
.,4ecti5e 6unction
Grofit .a4imi>ation Goint
Exercise 2.& 5tility .a4imi>ation problem.
2here are two goods x, y. .ary9s utility is described as linear utility,
" , # U x y x y +
.
)lso, the price of x goods and the price of y goods are given as
x
p
and
y
p
respectively.
inally, .ary9s income is given as
m
. Set up the ma4imi>ation problem and find the
optimal choice in this problem by following the below steps.
Step $! %rite down the relevant ma4imi>ation problem.
Step (! /raw .ary9s budget constraint in xy plane.
Step 3! 7iven a certain level of utility "say, U #, find the straight line on which every
point gives the same utility and draw this line in xy plane. "2his is called an indifference
curve#
Step 4! /raw the budget constraint and indifference curve at the same xy plane and find
the optimal value "6ote that you have to divide cases similarly to @4ercise (.'#
Step '! -nterpret your solution. "2his solution is called a demand function#
Exercise 2.( 1ost .inimi>ation Groblem
Suppose that a firm uses two inputs "L, K# for the production "y#. 2hat is, the production
function is given as
minO , P y L K
for
0, 0 > >
. )lso, the firm faces the price of
input L as w and the price of input K as r. Suppose that, given a certain output level
y
,
the firm minimi>ed its cost wL rK + . %rite down the relevant minimi>ation problem and
solve this problem. "6ote that you should develop the iso-quantity curve for the firm#
Exercise 2.2 6ancy ,erner is trying to decide how to allocate her time in studying for
her economics course. 2here are two e4aminations in this course. Ler overall score for
the course will be the minimum of her scores on the two e4aminations. She has decided
to devote a total of $,(00 minutes to studying for these two e4ams, and she wants to get
as high an overall score as possible. She knows that on the first e4amination if she doesnQt
study at all, she will get a score of >ero on it. or every $0 minutes that she spends
studying for the first e4amination, she will increase her score by one point. -f she doesnQt
study at all for the second e4amination she will get a >ero on it. or every (0 minutes she
spends studying for the second e4amination, she will increase her score by one point.
/raw a Rbudget lineR showing the various combinations of scores on the two e4ams that
she can achieve with a total of $,(00 minutes of studying. Bn the same graph, draw
Rindifference curvesR for 6ancy. ind her optimal allocation of time in each e4am.
Math Cap 2-12 &age 13
Chapter % &ets an' Functions
#.1 Sets an num,ers
) collection of obMects viewed as a single entity is called a set.
Sets are described either by listing their members in braces or by defining their property.
2hus, the set of all positive whole numbers which are divisible by ( can be written as
@ 3 O(, 4, +, 8, SP
or
@ 3 Ox! x is a positive whole number divisible by (P
2he obMects in the collection are called t!e e"eme#ts $r members of the set. or any set %
, we write a % to indicate that a is a member of set ), and a % to indicate that a is not
in the set %.
7iven two sets % and & such that every member of % is also a member of &, we say that
% is a s'bset of K, and write % & .
2he set which contains no elements is called as empty set or null set and is denoted by
.
Bperation with sets.
"$# % & !
O ! or P % & x x % x &
"(#
! O ! and P % & % & x x % x &
"3#
! O ! and P % & % & x x % x &
-f it is clear that all sets are subsets of some "universal# set U, U % is often written as
(
%
, and called the complement of % "in U#.
1um,ers
2he set of numbers used for counting O$,(,3,SP is called the set of #at'ra" #'mbers and
denoted by )
1 3 O$,(,3,4,SP
2he set of *#te+ers, denoted by 8 consists of the natural numbers, their negatives <$, <(,
<3,S and the number 0! 2hus
8 3 O0, $, <$, (, <(,SP
2he quotient of two integers is not usually an integer. So, the natural e4tension is to the
set 9 of all quotients of the integers, called rat*$#a" #'mbers=
9 3
! , and 0
a
a b , b
b


' ;

Math Cap 2-12 &age 14
1an every number be written as the quotient of two integers& -n other words, is every
number a rational number& )lthough it is not readily apparent, some important numbers,
like
(
,
e
, and

cannot be written as quotients of integers. 6umbers that cannot be

written as ratios or quotients of integers are called irrational numbers.
2he set R of rational and irrational numbers is called the set of rea" #'mbers.
2he following gives the useful set in R.
2he set
O ! , FP x a x b x < <
is called an $pe# *#ter-a" and denoted as
" , # a b
.
Similarly, the set
O ! , FP x a x b x
is called a c"$sed *#ter-a" and denoted as Ta, bU.
T%e plane as a set
)n important set related to R whose members are not themselves numbers is denoted by
R
2
and consists of all ordered pairs of real numbers!
R
2
3
O" , # ! F and FP x y x y
Vust as the members of R can be thought as points on a line, the members of R
2
can be
thought as points in a plane on which two a4es have been drawn.
Example #.1
a. 2he straight line
( + y x +
is the set=
(
O" , # ! ( +P x y . y x +
b. ) subset of
(
.
which is particularly relevant for economic applications is the set
(
O" , # ! 0and 0P x y . x y known as the non-negative quadrant.
Math Cap 2-12 &age 1@
.perations in t%e Real 1um,er
"$# )!losure* -f
a
and b are in F: so are a b + and a b
"(# )!ommutati5e* or any
, a b
F, a b b a + + and a b b a
"3# )+ssociati5e* -f
, , a b c
F,
" # " # a b c a b c + + + +
and
" # " # a b c a b c
"4# );istri,uti5e* or all
, , a b c
F,
" # a b c a b a c + +
"'# )"entity* 2here is an element 0F such that 0 a a + for all
a
F. 2here is an
element $F such that $ a a for all
a
F.
"+# )"n5erse* or any
a
F, there is an element bF such that 0 a b + = such a b is
usually written as
a
. or any non>ero
a
F, there is an element
c
F such that
$ a c = such a
c
is usually written as $? a .
Exercises #.1
or the following pairs of sets + and <, state which, if either, is a subset of the other.
"a# + is the set of natural numbers divisible by += < is the set of natural numbers divisible
by (
"b# + 3T-', 'U, <=>-$, (U
"c# + 3"-', '#, <=>-$, 'U
#.2 6unctions
) function from a set + to a set < is a rule that assigns a unique element in K to each
element in +. -n this case, we write /0 + <. 7iven a function /, the set of numbers x at
which /"x# is defined is called the d$ma*# of /. %e refer to the element /"x# of < as the
image of x under /.
Example #.2 Squares
(
" # / x x
Example #.3 )bsolute value. 2he e4pression
A A x
is defined as follows!
if 0
A A
if 0
x x
x
x x

'
<

A A x
is called the absolute value of
x
.
Exercise #.2 Werify the following properties.
"a# A A A A x x

"b#
(
A A x x

Exercise #.3 ind the domain of the following functions.
"a#
$
y
x
"b#
$
$
y
x

"c#
(
$
$ $
y
x

!omposite functions
unctions can be combined as follows. Suppose %, &, ( are sets= let + be a function from
% to & and / a function from & to (= then we define the composite function /X+ from % to
( by .
Example #.# -f + is the function from R
2
to R
2
defined by , and / is the
function from R
2
to R defined by . ind the function /X+.
Exercise #.# ,et ! and + be the functions from R
2
to R
2
defined by ,
respectively. ind the image of "x, y# under each of the composite
function !X+ and +X!.
Math Cap 2-12 &age 14
Math Cap 2-12 &age 1.
#.3 Some simple alge,ra
,et a, b, c be a real number.
Exercise #.$ Ky using the operation rules of real number, derive the following relation.
.ake sure which properties you use.
" #
" #
" #" #
a b c ab ac
a b c ac bc
a b c d ac bc ad bd
+ +
+ +
+ + + + +
Exercise #.& Ky using the above manipulation, derive the followings.
( ( (
( ( (
( (
(
" # (
" # (
" #" #
3 "( 4# + $(
"( 3#"4 '# 8 ( $'
a b a ab b
a b a ab b
a b a b a b
x y xy x
x x x x
+ + +
+
+

+ +
!ompleting t%e square
7iven any quadratic equation, we can complete t%e square.
Suppose that we have
(
3 $0 38 x x + .
2hen we can manipulate as follows.
( ( (
$0 (' (' $0 (' ('
3 $0 38 3 38 3 38
3 * * 3 * 3
x x x x x x
_ _
+ + + + +

, ,

( (
' (' ' 8*
3 38 3
3 3 3 3
x x
_ _
+ +

, ,
.ore generally, we have
(
(
(
4
( 4
b b ac
ax bx c a x
a a
_
+ + +

,
Exercise #.( 1heck the above claim.
Exercise #.2 1omplete the square of followings.
"a#
(
3 30 (; x x + "b#
(
+ 8 x x + "c#
(
( ' $ x x +
Exercise #.? Solve the following quadratic equations.
Math Cap 2-12 &age 18
"a#
(
3 30 (; 0 x x + "b#
(
+ 8 0 x x + "c#
(
( ' $ 0 x x +
6actori@ation
1reatest ($mm$# 2act$r
2he first method of factoring is called factoring out the greatest common factor.
actor the followings
"a#
' ' x y +
"b#
3 (
(4 $+ 8 x x x +
3*//ere#ce $/ 4q'ares
( (
" #" # a b a b a b +
"a#
(
$+ x "b#
( ( (
(' 3+ x y z "c#
( (
" # " # a b c d + "d#
(
* 3+ x
"e#
(
8" # $8 x y +
4'm $r 3*//ere#ce $/ ('bes
3 3 ( (
" #" # a b a b a ab b + + +
3 3 ( (
" #" # a b a b a ab b + +
"a#
3
$(' x + "b#
3
8 (; x "c#
3 3
( $(8 x y + "d#
+ +
x y
5r*#$m*a"s $/ t!e /$rm
(
x bx c + +
"a#
(
8 $( x x + + "b#
(
; $8 x x "c#
(
+ * x x +
5r*#$m*a"s $/ t!e /$rm
(
ax bx c + +
(
" # " #" # acx ad bc x bd ax b cx d + + + + +
"a#
(
( ' $( x x "b#
(
8 (+ (0 x x +
2act$r*#+ by re+r$'p*#+
"a#
ay az by bz + + +
"b#
( ( (
( x xy y z + +
Math Cap 2-12 &age 19
" # " #" # x a b x ab x a x b + + + + +
2he relation between the factori>ation and the completing the square can be shown as
follows
Example #.# Solve the following quadratic equation by completing the square.
(
(
' $($
( ' $( (
4 8
x x x
_


,
3
( ( (
' $($ ' $$
( (
4 $+ 4 4
x x
1 1
_ _ _

1 1

, , ,
1 1
] ]
( )
' $$ ' $$ 3
( ( 4 " 4#"( 3#
4 4 4 4 (
x x x x x x
_ _ _
+ + +

, , ,
Bf course, the 4 x and
3
(
x are solutions to
(
( ' $( 0 x x .
Ky this way, we can always factori>e trinomials by using the completing the square.
7enerally, we have,
( (
(
4 4
( (
b b ac b b ac
ax bx c a x x
a a
_ _
+
+ + + +

, ,
rom here, we can also infer that the solutions to the quadratic equation
(
0 ax bx c + +
are
( (
4 4
,
( (
b b ac b b ac
a a
+

.
Math Cap 2-12 &age 2-
9uaratic polynomial
"i# 1ompleting the square
(
(
(
4
( 4
b b ac
ax bx c a x
a a
_
+ + +

,
"i# actori>ation

( (
(
4 4
( (
b b ac b b ac
ax bx c a x x
a a
_ _
+
+ + + +

, ,
"ii# 7eneral ormula for the solutions of
(
0 ax bx c + +
(
4
(
b b ac
x
a
t

#.# "nices
,et a, b, x, b be the real number. /efine
0
$ x . 2hen, the following properties hold.
-F$.
a b a b
x x x
+

-F(. " #
a b ab
x x for x Y0
-F3. " #
a a a
xy x y for x Y0, y Y0
Exercise #.?
"a# rom
0
$ x and -F$, derive
$
a
a
x
x

for
, x a .
"b# )lso, from -F$, derive
$? (
x x ,
$? 3 3
x x , thus conclude
$? # #
x x
Exercise #.1A Simplify the followings.
8 * 4
" # ? x x x

,
$? 3 $? + 3? (
" # ? x x x ,
( )
$? 4
( (
x y y

,
( ) ( )
$? 3
$? (
+
+4 * x x

"nices an inequalities
,et c be a real number such that , then and for every natural
number #. .ore generally, if , .
"a# -f ', -, a are positive numbers such that , then and .
"b# -f ', a, b are positive numbers such that , then if and
if .
Math Cap 2-12 &age 21
Chapter ( )raphs
$.1 ;efinition of grap%
2he graph of a function / from R to R is the set
(
O" , # ! " #P x y . y / x
2hus the graph of
/
can be depicted in the xy plane by Moining up the points
" , " ## x / x
for
all values of
x
.
6ote that sketch does not mean plot.
Example $.1 /raw the following graph.
"a#
" # 4 A A / x x
, "b#
(
" # 4 / x x
1an you e4plain what happened to the original graph&
$.2 S%ift of 'rap%
Suppose that we know the shape of the graph
" # y / x
already. 2hen, as we already saw
in the previous e4ample, we can draw the graph
" # y / x a b +
by shifting the original
graph.
T%e s%ift of grap%.
)ssume
, 0 a b >
. 2hen the graph of
" # y b / x a
is obtained by shifting
" # y / x
along x a4is by a and along
y
a4is by b
2o see why this is really the case, let
0 0
" , # x y
be on the graph of
" # y / x
. 2hen we have
0 0
" # y / x
"--"$##. Ky shifting this point along x a4is by a and along
y
a4is by b, we can
Math Cap 2-12 &age 22
x
y
(
y x
x
y
A A y x
get new point "
0 0
, x a y b + +
#. 6ow, if we show that "
0 0
, x a y b + +
# is on the graph of
" # y / x a b +
, by repeating the argument again, we can generate the graph of
" # y / x a b +
by shifting all points on
" # y / x
.2hus, the above claim follows. 2o
show that "
0 0
, x a y b + +
# is on the graph of
" # y / x a b +
, by plugging
0
x a +
into
, x
we have
0 0 0
" # " # / x a a b / x b y b + + + +
"by "$##. 2herefore "
0 0
, x a y b + +
# is on the
graph of
" # y / x a b +
.
2he similar argument as the above shows the followings.
Example $.2
Math Cap 2-12 &age 23
" , #
0 0
x y
" , #
0 0
x a y b + +
Shift by a
Shift by b
" # y / x
" # y / x a b +
" # y / x
" # y / x
Feflecting against
x a4is
T%e reflection of t%e grap%.
2he graph of
" # y / x
can be obtained by reflecting
" # y / x
against x a4is.
2he graph of
" # y / x
can be obtained by reflecting
" # y / x
against y a4is.
" # y / x
Feflecting against
y a4is
$.3 'rap%s of 5arious functions
9uaratic function
-n section 3.( we sketched the graph of the function
(
y x . 6ow consider the function
(
y ax where a is a real number such that 0 a .
Exercise $.1 /raw the following graph.
"i#
(
( y x , "ii#
(
3 y x , "iii#
(
$
(
y x , "iv#
(
$
3
y x
"v#
(
( y x "vi#
(
3 y x "vii#
(
$
(
y x "viii#
(
$
3
y x
7iven
(
y ax , as we saw in the above e4ercise, the magnitude of
a
"or
A A a
# determines
the width "or si>e# of parabola and the sign of
a
decides whether graph will be 5-shaped
or inverted 5-shaped. ")lso, all the verte4 of these function are "0,0##
Ky this, we now e4plain how to sketch the graph of any quadratic function. 2he essential
trick is to complete the square.
Example $.3 Sketch the graph of the function
(
" # ( 8 * / x x x + + .
( (
" # ( 8 * (" (# $ / x x x x + + + +
2hus, by the above rule "&#, we know that this graph can be drawn by shifting the graph
of
(
( y x by <( along x a4is and by :$ along y a4is. Bf course, in this case, the verte4
will be "-(, $#.
Exercise $.2 Sketch the parabola
(
3 30 (; y x x +
Rational functions
2he graph of the rational function is given as follows.
Math Cap 2-12 &age 24
x
y
$
y
x

-n this case, x a4is is called hori>ontal asymptote since when x goes to t the graph get
closer to the x a4is. Similarly, the y a4is is called vertical asymptote.
6ow consider how to draw the
3
(
x
y
x
+

+
.
-f we manipulate the above equation, then we have
3 ( $ $
$
( ( (
x x
y
x x x
+ + +
+
+ + +
2hus, by the same reasoning, we can infer that this graph is obtained by shifting the graph
of
$
y
x
along x a4is by <( and along y a4is by $. 2hus the graph will be following.
Example $.#
.ore generally, we have the following results
(
b b b bc ad
bc ad
c x d c x
cx d cx d a a a a
a
y c
b b b b ax b
a x a x a x x
a a a a
_ _

+ + +

+ +
, ,
+
+ _ _ _ _
+ + + +

, , , ,
2hus, we can write
, c
y
b a
x
a
+
_
+

,
where,
(
bc ad
,
a

.
rom here, we know that the graph
cx d
y
ax b
+

+
can be obtained by shifting the graph of
,
y
x
along
x
a4is by
b
a
and y a4is by c.
Math Cap 2-12 &age 2@
x
y
$
-(
Bseful grap%s
Exercise $.& Ky plugging the relevant value into the equations, verify the above graphs.
Math Cap 2-12 &age 24
x
$
(
y
x

y
x
y
3
y x
x
(? 3
y x
x
y
y x
y
x
3
y x
y
x
3? (
y x
y
x
( (
$ x y +
y
Example $.$ .a4imi>ing and minimi>ing quadratic function
Suppose a monopolist can produce quantity x of a product at total cost ;:+x. ,et the
demand function for the product be given by
$
$'
(
x p
where p is the price charged. ind the profit-ma4imi>ing price and output, and the
ma4imal profit.
irst e4press the profit as a function of output x. 2hen the revenue for the firm is given
by= re-e#'e = px="30 < (x#x.
2hus we have the following profit ma4imi>ation problem.
ma4 "30 ( # "; + #
. . 0
x
x x x
s t x
+

)s is clear, the obMective function is quadratic. 2hus, we can graph the obMective function
and verify that the obMective function is ma4imi>ed at its verte4.
Exercise $.( 5sing the graph, solve the following optimi>ation problem.

( )
( (
ma4
. . $
0, 0
x
a x
s t x y
x y
+


,
(
" # ma4 (
. . 4 0
0, 0
x y
b x y
s t x x y
x y
+
+



( (
,
" # min
. . (
0, 0
x y
c x y
s t x y
x y
+
+


,
" # ma4
. . ( $0
0, 0
x y
d xy
s t x y
x y
+

Math Cap 2-12 &age 2.
Chapter * &e"uences an' &eries
&.1 Sequences
,et ) be the set of natural numbers= we define a sequence of real number to be a
function from ) to .. -f ' is such a function, we may write the values it takes as
"$#, "(#, "3# ' ' '
and so on. -t is conventional to denote these values by
$ ( 3
, , ,... ' ' '
and to refer to the sequence as
O P
#
'
.
Exercise &.1 ind the #
t!
term for each sequence. 1an you tell where the sequence tends&
"a# (, 4, +, 8, S
"b# (0, $$, (, -;, S
"c# S
"d# 8, -(, S
"e# $ S
Limits
-n this case, we say that the sequence c$#-er+es to z and we write
lim
#
' z
or
lim
#
#
' z

or simply
#
' z
%hat this definition means, roughly speaking, is that we can make
#
'
as close as we like
to z for all sufficiently large #.
Math Cap 2-12 &age 28
;efinition. ,et
O P
#
'
be a sequence and let z be a real number. %e say that
z
be the "*m*t of
this sequence if for any "small# positive number

, there is a positive integer ) such that for

all # ) ,
#
'
is in the

-interval about z= that is

A A
#
' z <
.
2here is a small person "/ /e W# and a large person ")S#. / /e W chooses a small
positive number, say 0.0$. )S then looks for a natural number
$
)
such that
A A 0.0$
#
' z <
for all
$
# ) >
. Suppose he finds such an
$
)
. 2hen / /e W chooses
an even smaller number, say
;
$0

, and )S tries to find an integer

(
)
such that
#
'
is squee>ed between
;
$0 z

and
;
$0 z

+ for all
(
# ) >
. -f this process can be
repeated indefinitely,
lim
#
' z
= if not, not.
Example &.1 1laim
$
lim lim8 " 4# 0
#
#
# #
'



.
,et 0 > be given. 1hoose a positive integer ) Y
( ) log 4 log ? 8
log 4

.
2hen, for # ) > , we have
log 4 log"
log 4
#
/8)
>
--- "$#
Ky manipulating "$#,
$ $
log log 4 log 4 4 8 4
8
# #
#

_
> > >

8
,
----"(#
2hus, for # ) > , then
$ $ $
A 8 " 4# A 8A " 4# A 8 4
# # #

<
"by "(##.
2herefore, given any small

, we can always choose ) which satisfies the definition.

"6ote that "(# holds since the logarithm is increasing function #
Exercise &.2 Show that
$ $
lim
( (
#
#
#

Lere, we notice that it is difficult to calculate the limit by the direct method. 2hus, the
following results would be useful.
Math Cap 2-12 &age 29
T%eorem &.1. 7iven a real number x,
lim 0
#
#
x

if and only if $ $ x < <

T%eorem &.2 7iven a real number b ,
lim 0
b
#
#

if and only if 0 b <

T%eorem &.3 )Sanwic% t%eorem*
,et
#
x a and
#
y a . ,et O P
#
z be a sequence such that
# # #
x z y for all
#
. 2hen
Example &.2 Show that
$
lim sin" # 0
#
#x
#

Since we have
$ $
sin" # #x
# #
<
, by the squee>e theorem, we have
$
lim sin" # 0
#
#x
#

.
T%eorem &.#0 Limit T%eorem " )Sequence*
,et
O P
#
x
and
O P
#
y
be a sequence and suppose that
#
x x
and
#
y y
.
2hen,
"i#
( ) lim
# #
#
x y x y

+ +
"ii#
( ) lim for a real number
#
#
cx cx c

"iii#
( ) lim
# #
#
x y xy

"iii# -n addition,
0 and 0 for all
#
y y #
, then
lim
#
#
#
x x
y y

,
Exercise &.3 -n each of the following cases, state whether the sequence
O P
#
x
converges,
and find the limit if it e4ists.
"a#
$
(
$
#
x # + "b#
$
(
$
#
x # "c#
( )
$
(
#
#
x "d#
( )
$
(
#
#
x
&.2 Series
2he series generated by a sequence
O P
#
'
is defined to be the sequence
O P
#
s
, where
$ $
s '
,
( $ (
s ' ' +
,
3 $ ( 3
s ' ' ' + +
and so on.
2hus we have
$
#
# *
*
s '

Exercise &.#
"a# Show that
$
" $#
(
#
*
# #
*

"b# ind the sum of the first $' terms of the sequence
48, 44, 40, 3+, S
"c# Show that
$
$
$
$
# #
*
*
r
ar a
r

for $ r
"d# ind the sum of the first 8 terms of the geometric progression
$0, '0, ('0, $('0, S
Math Cap 2-12 &age 3-
!on5ergence of series
,et
O P
#
'
be any sequence and let
O P
#
s
be the series generated by it. -f
#
s
approaches a
limit 4 as
#
, we say that the series
O P
#
s
is convergent and we write
$
r
r
4 '

) series which is not convergent is said to be d*-er+e#t $r per*$d*c.

rom the result of the limit, we have the following results=
$
$
*
*
ar

converges if and only if $ $ r < < , in which we have

$
$
$
*
*
a
ar
r

@4ample= ind the sum of the series

$ $
8 ( ...
( 8
+ +
Ky applying the above formula, we see that the sum of series is $
4
8 3(
'
$

+
&.3 +pplication in economics
,et an amount of money 6 be invested at the beginning of year $. ,et the rate of interest
rate be r. %e also suppose that interest is paid once a year at the end of the year. 2hus, at
the beginning of year (, the investment is worth 6"$:r#.
Example &.3 -f N'0 is invested at 4Z per annum, the value in N at the beginning of the ;
th
year is
+
'0 "$.04# +3.(; .
Example &.# -n this e4ample we allow compounding of interest to take place more often
than once a year. ,et interest be compounded quarterly= then with a rate of interest of 4Z
per annum, $Z of the value of the investment accrues as interest at the end of each
quarter. %ith N'0 invested at the beginning of the first year, the value in N of the
investment after + years "(4 quarters# is
(4
'0 "$.0$# +3.4* .
7enerally, if a sum 6 is invested at a rate of interest of r per year, compounded m times
per year, the value of the investment after # years is
$
m#
r
6
m
_
+

,
-f $ m > , the amount of interest earned in a year per dollar invested at the beginning of
the year is given as
Q $ $
m
r
r
m
_
+

,
.
%hen r and r7 are e4pressed as percentages, r is called the flat rate and r7 t!e a##'a"
perce#ta+e rate 8%6.9.
Math Cap 2-12 &age 31
Exercise &.$ 6ow suppose that an amount of money % is placed in an account at the
beginning of eac! year, starting at the beginning of year $. 2hen, how much is the
amount of money in the account at the beginning of year # "Must after the #th investment
has been made#
Exercise &.& -f N+0 is invested at a constant rate of interest r, what value of r is required
for the investment to be worth N*0 at the end of the si4 years&
Exercise &.( -f N80 is invested in an account once per year, and the rate of interest is 8Z
per annum, after how many payments will there be at lease N;00 in the account&
3resent Calue
Suppose that a sum of money : is going to be available 3 years from now. -ts present
value 6 is the amount of money which, if invested now, would compound to . in the
three years time. )ssuming a constant rate of interest rate r , we have
3
"$ # 6 r : + , so
that
3
"$ # 6 : r

+ . 2he process of finding present values from future ones is called
d*sc$'#t*#+. %hen the interest rate is r, the discount factor is $?"$:r#
Similarly, the present value
#
6
of an annual income stream of % per year for # years,
starting one year from now, is given by
(
...
"$ # "$ # "$ #
# #
% % %
6
r r r
+ + +
+ + +
) security which gives this income stream is called annuity.
Exercise &.2 1alculate the above equation.
Exercise &.? Suppose that N('0,000 is borrowed to be repaid over (0 years. Suppose also
that the "flat# rate of interest is +Z per annum, and that repayments, and compounding of
interest, take place monthly. )ssuming that each month9s repayment is a constant amount
of z , what must z be&
Exercise &.1A )ssume a constant rate of interest r. 2hen how much is the value of the
perpetuity giving its holder the right to an annual income of % per year, starting one year
from now&
"Gerpetuity= a security which gives its holder the right to an annual income of % per year
forever, starting one year from now#
Math Cap 2-12 &age 32
Chapter + Continuit,
(.1 Limit of a function
-nformally speaking, the limit of
" # / x
as x approaches a is the number L, if
" # / x
gets
arbitrarily close to L for all x sufficiently close to a.
Example (.1
Math Cap 2-12 &age 33
doesn9t e4ist
a
lim " #
x a
/ x b

a
b
;efinition ,et
" # / x
be defined on an open interval about a, e4cept possibly at a
itself. %e write
lim " #
x a
/ x L

,
if, for every > 0 , there e4ists a > 0 such that for all x,
A " # A / x L
whenever
0 A A x a <
T%eorem (.1 ) function
" # / x
has a limit as x approaches a if and only if it has
left-hand and right-hand limits there and these one-sided limits are equal
lim " # lim " # lim " #
x a x a x a
/ x L / x L a#d / x L
+



%e have the limit theorem of a function.
T%eorem (.2 Limit T%eorem "" )6unction*
,et
lim " #
x a
/ x

and
lim " #
x a
+ x

2hen,
"i#
( ) lim " # " #
x a
/ x + x

+ +
"ii#
( ) lim " # for a real number
x a
c/ x c c

"iii#
( ) lim " # " #
x a
/ x + x

"iii# -n addition,
0 and " # 0 for + x x
in the domain of +, then
" #
lim
" #
x a
/ x
+ x

,
Exercise (.1 ind the limits of the function
(
8 * y x x +
"a# )s 0 x "b# )s 3 x "c# )s $ x
Exercise (.2 ind the limits of the function
"3 '# ?" (# y x x + +
"a# )s 0 x "b# )s ' x "c# )s $ x
Exercise (.3 7iven
(
(0
" #
4
x x
y / x
x
+

"a# -s it possible to apply the quotient limit theorem to find the limit of this function as
4 x &
"b# -s this function continuous at 4 x & %hy&
"c# ind a function which, for 4 x , is equivalent to the above function, and obtain from
the equivalent function the limit of
y
as 4 x .
(.2 !ontinuity
Ky the definition of the limit of a function,
lim " # " #
x a
/ x / a

if for every > 0 , there

e4ists a
> 0
such that for all x, A " # " # A / x / a whenever 0 A A x a <

/ is said to be c$#t*#'$'s if it is continuous at every a in a domain of /.
Math Cap 2-12 &age 34
;efinition " ) function /"x# is continuous at a point a in a domain of / if and only if
lim " # " #
x a
/ x / a

%e can summari>e continuity at a point in the form of a test.

Example &.2 ind the points at which / is continuous or discontinuous.
2he following gives the useful results.
T%eorem (.3
,et / and + be continuous functions and let ; be the intersection of the domain of /
and the domain of +.
"a#
/ + +
is continuous on ;
"b# or any constant c, the function c/ is continuous on the domain of /
"c# /+ is continuous on ;
"d#
/
+
is continuous at all x

; such that
" # 0 + x
"g#
/ + o
is continuous where it is defined.
2he above result easily follows from the limit theorem of the sequence.
Exersice (.# Grove 2heorem "a#["d# using the limit theorem of the sequence.
Math Cap 2-12 &age 3@
$ 4 3 ( 0
(
$
!ontinuity Test
) function /"x# is continuous at
x a
if and only if it meets the following three
conditions
$.
" # / a
e4ists "a lies in the domain of /#
(.
lim " #
x a
/ x

e4ists "/ has a limit as

x a
#
3.
lim " # " #
x a
/ x / a

"the limit equals the function value#
(
$ (
$
2here is another definition of continuity.
Remark 2he above definition suggest that
( )
lim " # lim
# #
# #
/ x / x

. 2hat is, you can

change the order of limit and function.
6ote that the second definition corresponds to the first definition of continuity of our te4t.
%e can start from one definition and derive the other definition as a theorem.
%e have
lim " #
x a
/ x L

if and only if
lim " #
#
#
/ x L

for all sequences

O P
#
x
in the domain
of /, with
#
x a
that converge to a. 2hus we can always check
lim " #
x a
/ x

by using the
sequence of
O P
#
x
which is sometimes easier to check than the definition of
lim " #
x a
/ x

.
Example (.3 1onsider the function
(
" # / x x whose domain is the whole real line R. ,et
a
R be given and suppose
.
#
x a
2hen,
( )
(
( (
lim " # lim lim " #
# # #
# # #
/ x x x a / a

,
where we used the limit theorem of sequence in the second step. 2hus, / is continuous at
a. Since a is arbitrary, / is continuous on R.
Example (.# 1onsider the following function defined on T0,(U =
( $
(
( if 0 $
" #
( if $ (
x x
/ x
x x
<

'

-f we draw the graph of this function, we can verify

that / is not continuous at $. 2o see that the criterion in
the definition is violated, let
$
$
#
#
x . 2hen
$
#
x
as
#
, but
( )
$
lim " # lim( $ ( "$#
#
# # #
/ x /


Math Cap 2-12 &age 34
;efinition "" ) function / is said to be c$#t*#'$'s at a p$*#t a in a domain of / if for
every sequence
O P
#
x
of points of a domain of / which converges to a, we have
lim " # " #
#
#
/ x / a

2he following theorem is one of the most important theorems which we will use.
2he following e4ample shows that why the hypothesis of the continuity and closed
interval is required.
Example (.$ 1onsider the following function defined on T0,$U
( $
(
$
(
4 4 if
" #
$
if
(
x x x
/ x
x

'

-n this case, the ma4imum of the function doesn9t e4ist.
Example (.& 1onsider a function
y x
defined on "0,$#. -n this case, the ma4imum of
the function doesn9t e4ist.
Exercise (.$ Ky drawing the graphs of e4ample +.4 and e4ample +.', verify the above
claim by the graph.
Exercise (.& 1onsider a function
$
x
y defined on "0.$U. /oes this function has a
ma4imum in "0.$U.
Exercise (.( 1onsider a function
$
x
y defined on Tt, $U where
"0,$# t
. /oes this
function has a ma4imum in Tt, $U&
Math Cap 2-12 &age 3.
T%eorem (.# )Maximum an Minimum* ,et / be a continuous function on a closed
interval Ta,bU. 2hen there e4ist points c and d in Ta, bU such that
" # ma4O " # ! T , UP / c / x x a b and " # minO " # ! T , UP / d / x x a b .
Chapter - Di.erentiation
2.1 ;ifferentiation
%e will use the standard notation Q" #
d/
/ x
dx

Example 2.1 2o illustrate the definition, we9ll check that
(
" # / x x is differentiable
everywhere. ,et x be given, then
( (
" # " # " #
(
/ x ! / x x ! x
x !
! !
+ +
+
Since the limit of
"( # x ! +
e4ists as 0 ! and equals (x, we conclude from the
definition that
Q /
e4ists at x and
Q" # ( / x x
2he difference quotient is the slope of the straight line through the point
" , " ## x / x
and
" , " ## x ! / x ! + +
on the graph of /. 2hus,
Q" # / x
is the limit of these slopes, that is the
slope of the line tangent to the graph of / at
" , " ## x / x
.
Example 2.2 1onsider the function
" # A A / x x
. Lere, we will show that this function is
not differentiable at x30.
irst, we can write the difference quotient as follows=
"0 # "0# A A / ! / !
! !
+

rom this, we know that

0 0
0 0
"0 # "0# "0 # "0#
lim $ and lim $
! !
! !
/ ! / / ! /
! !

> <
+ +

2hus, the limit of difference quotient doesn9t e4ist and
" # A A / x x
is not differentiable at
0.
Math Cap 2-12 &age 38
;efinition. ) function / is said to be d*//ere#t*ab"e at a point x if the limit of the
difference quotient
" # " # / x ! / x
!
+
e4ists as 0 ! , in which case we call the limit the der*-at*-e of / at x and denoted by
0
" # " #
Q" # lim
!
/ x ! / x
/ x
!

Exercise 2.1 Ky setting x ! a + , verify that

Q" # / x
can be written as the following way.
" # " #
Q" # lim
a x
/ a / x
/ x
a x

5sing notation
, and " # " # x a x y / a / x
, conclude that=
0
Q" # lim
x
y
/ x
x

2he following theorem gives us the relationship between the continuity and
differentiability.
2o show this, we write
" # " #
" # " #
/ x ! / x
/ x ! / x !
!
+
+
Since / is a differentiable at x, the quotient on the right converges to a finite limit.
2herefore, since 0 ! , the right-hand side converge to >ero by the limit theorem. 2hus,
the left-hand side converges to >ero too, which shows that / is continuous at x.
%e have the following rules of differentiation.
T%eorem 2.2 ;ifferentiation T%eorem
Suppose that /"x# and +"x# are differentiable at x. 2hen,
"i# or any constants

and

,
" # " # / x + x +
is differentiable at
x
and
" " # " ## Q Q Q / x + x / + + +
"ii# 2he product
" # " # / x + x
is differentiable at x and
" " # " ## Q Q" # " # " # Q" # / x + x / x + x / x + x +
"iii# -f
" # 0 for + x x
in the domain of +, then
" #
" #
/ x
+ x
is differentiable at x and
Q
(
" # Q" # " # " # Q" #
" # " #
/ x / x + x / x + x
+ x + x
_

,
Math Cap 2-12 &age 39
T%eorem 2.1 -f / is differentiable at x, then / is continous at x.
Lere, the main idea of the product rule can be illustrated as follows. 2o do this, suppose
that
" #, " # / x + x
is increasing function with respect to
. x
irst note that the area of the
shaded rectangle in the
diagram corresponds to
/ +
. 6ow suppose that
there is a slight increase in x.
2hen, by this change, / will
increase by
/
and
+
by
+
. 2hus the area of rectangle
will increase by the area
which is composed of
,,. %e can write this
as follows.
" # " # " # " #" # /+ / + / + / + + +
-"$#
/ivide "$# by x and taking a limit, we have
0 0 0 0
" #
lim lim lim lim
x x x x
/+ / + /
+ / +
x x x x


+ +

Since as 0 x ,
0 +
"why&#, we can drop the third term in the right hand side.
2hus, we can obtain the following formula.
( )
0
" #
" # " # Q lim Q" # " # " # Q " #
x
/+
/ x + x / x + x / x + x
x

Exercise 2.2 Ky using theorem "ii# show that

(
(
dx
x
dx
. )gain by using this result and
theorem "ii#, establish
3
(
3
dx
x
dx
and conclude that
$
#
#
dx
#x
dx

.
2his result also can e4tend to the case where the power is the real number.
T%eorem 2.30 3ower rule
,et
c
F, then we have
$
" #
c c
d
x cx
dx

Math Cap 2-12 &age 4-

/
/
+
+

T%eorem 2.#0 T%e !%ain Rule

Suppose that / is differentiable at x and + is differentiable at /"x#. 2hen
" # " # 1 x + / x o
is differentiable at x and ( ) Q" # Q " # Q" # 1 x + / x / x
2o see why this is true, let
" # and " # ' / x y + '
. irst note that we can write=
y y '
x ' x

2hen,
( )
0 0 0 0
Q" # " # lim lim lim lim
x x ' x
d y y ' y '
1 x + / x
dx x ' x ' x




( ) ( ) Q Q" # Q " # Q" # + ' / x + / x / x
-n the above, we use the fact that as 0 x , 0 ' "why&# and the limit theorem
"where&#.
inally, the following definition will be used in the later.
;efinition
-f / is differentiable at every point of an open interval "a, b#, we say that / is
differentiable on "a, b#. -f, in addition,
Q /
is continuous on "a, b#, we say that / is
c$#t*#'$'s"y d*//ere#t*ab"e on "a, b#.
Exercise 2.3 /ifferentiate the followings.
"a#
3 + 4
"+ #" 3 (# x x x x +
"b#
4 (
"4 ( $#" '#
#
x x x x + +
Exercise 2.# /ifferentiate the followings.
"a#
( 3
" $# ?"( $# x x + +
"b#
(
"3 #" # x a x b + +
Exercise 2.$ 2he functions / and + are defined as follows!
3 4
" # $, " # ( / x x + x x +
ind e4pressions for ( ) " # / + x
and ( ) " # + / x
Exercise 2.& /ifferentiate!
Math Cap 2-12 &age 41
"a#
3 '
" $# x + "b#
+ (? 3
" $# x "c#
4 ( $? 4
" 3 ' $# x x x + + "d#
( )
'
8? ( x +
"e#
( 3 '
" $#" $# x x + "f#
$? 3 ' 3
" (# ?" (# x x
Math Cap 2-12 &age 42
2.2 Monotone function an "n5erse function
) function / is said to be strictly monotone increasing if
x y <
implies
" # " # / x / y <
.
Strictly monotone decreasing is defined similarly. -f a function / is strictly monotone
increasing, for any given
0
y
, we can always find the unique
0
x
such that
0 0
" # y / x
." See
the graph#. 2hen we can define an inverse function + such that
" # x + y
. %e denote this
inverse function as
$
/

.
Example 2.3 -f
3
" # 4 y / x x + then the inverse function of / is given as
$? 3
" # " 4# x + y y .
-t is easy to see that the inverse function satisfy the following properties.
( ) " # / + y y
and ( ) " # + / x x
.
T%eorem 2.$
Suppose that / is a strictly monotone continuous function. 2hen,
$
/

is continuous.
)ssociated with inverse functions, there is another rule for differentiation.
T%eorem 2.&0 T%e "n5erse 6unction Rule
Suppose that / is a strictly monotone continuous function on an interval Ta, bU. -f / is
differentiable at x and
Q" # 0 / x
, then
$
/

is differentiable at
" # y / x
and
( )
$
$
Q" #
Q" #
/ y
/ x

2o see why this is true, note the following.

$
y
x
x
y

Ky taking a limit at both sides,

( )
$
0 0
$ $
Q" # lim lim
Q" #
y x
y
x
x
/ y
y / x

-n the above, we use the previous theorem "theorem &# and the limit theorem.
Math Cap 2-12 &age 43
2he following e4ample illustrates how useful this theorem is.
Example 2.# 2he inverse of
" # y / x mx
is
" # "$? # x + y m y
. 6ote that
( )
$
$ $
Q" #
Q" #
/ y
m / x

Example 2.$ ,et
$
" #
$
x
/ x
x

+
. %e are interested in the value of ( )
$
Q" # / y

when ( x
"or
$? 3 y
#. -n this case, the inverse
$
/

sends $?3 to (. Since
(
Q" # (?" $# / x x + ,
Q"(# (? * /
. 2hus, by the inverse theorem,
( )
$
3
$ $ *
Q
Q"(# (? * (
+
/

%e can check this answer by computing directly that
( )
(
$
3
$ ( ( *
" # , Q" # , and Q
$ "$ # 4? * (
y
+ y + y +
y y
+


Exercise 2.( Ky the inverse function theorem, establish the following result. "which we
already saw#
or any positive integer #,
( )
$
$
$?
$
# #
x x
#
_

Exercise 2.2 Ky using the above results, show the following result.
or any positive integer m and #,
( )
$
?
m
m # #
m
x x
#
_

Exercise 2.? Show that the function

3
y x is monotonic increasing. ind
? dx dy
!
"a# by finding an e4plicit formula for the inverse function and differentiating it.
"b# by using the inverse function rule.
Exercise 2.1A )re the following functions monotonic&
"a#
+
' y x + "b#
+
' " 0# y x x + > "c#
' 3
* 4 y x x x + +
Math Cap 2-12 &age 44
Chapter 9 Ma/ima an' Minima
?.1 Bsing t%e first eri5ati5e for grap%ing
2he derivative of a function carries much information about the important properties of
the function. %e will see that the knowing Must the signs of a function9s first and second
derivatives and the location of only a few points on its graph usually enables us to draw
an accurate graph of the function.
T%eorem ?.1 )T%e 6irst eri5ati5es "nformation*
,et / be a continuously differentiable function on domain ;

R.
-f
Q 0 / >
on interval
" , # a b 3
, then / is increasing on
" , # a b
.
-f
Q 0 / <
on interval
" , # a b 3
, then / is decreasing on
" , # a b
.
-f / is increasing on
" , # a b
, then
Q 0 /
on
" , # a b
.
-f / is decreasing on
" , # a b
, then
Q 0 /
on
" , # a b
.
2he following steps describe how to use first derivatives to sketch graphs.
"$# irst find the points at which
Q" # 0 / x
. Such points are called cr*t*ca" p$*#ts of
/
.
Lopefully, the function under consideration has only finitely many critical points
$ (
, ,....
k
x x x
.
"(# @valuate the function at each of these critical points
$ (
, ,....
k
x x x
, and plot the
corresponding points on the graph
"3# 2hen, check the sign of
Q /
on each of the intervals
$ $ ( $
" , #, " , #,...., " , #, " , #
k k k
x x x x x x

.
2hen, on these intervals, the sign of
Q /
is always negative or always positive "why&#.
"4# -f
Q 0 / >
on interval ;, draw the graph of / increasing over ;. -f
Q 0 / <
on ;, draw a
decreasing graph over ;.
Example ?.1 1onsider the cubic function
3
" # 3 / x x x . Bne easily computes that
(
Q" # 3 3 3" $#" $# / x x x x +
2he critical points are -$, $ and the corresponding points on the graph of / are "-$, (# and
"$, -(#. 6e4t, we check the sign of
Q /
on the three intervals.
"a#
Q" (# * 0 / >
, so
Q 0 / >
and / is increasing on
" , $#
=
"b#
Q"0# 3 0 / <
, so
Q 0 / <
and / is decreasing on
" $, $#
=
"c#
Q"(# * 0 / >
, so
Q 0 / >
and / is increasing on
"$, #
=
Kased on the above information, we can draw the following graph. "Low to draw the
e4act shape will be discussion later.#
Math Cap 2-12 &age 4@
?.2 Secon ;eri5ati5es an !on5exity
-f / is a differentiable function, then
Q /
is a function, which may itself be differentiable.
%e denote the derivate of
Q" # / x
with respect to x by
QQ" # / x
and call it the second
derivative of
" # / x
. %e also use the following notation for
" # y / x
(
(
QQ" #
d dy d y
/ x
dx dx dx
_


,
-n the above graph, for
"0, # x a
, the slope of
Q" # / x
is an increasing function. Ky the
above theorem "theorem&#, the derivative of
Q /
,
QQ" # / x
, is nonnegative there!
QQ" # 0 / x
on
"0, # a
. or
" , # x a
,
Q /
is a decreasing function of x= so
QQ" # 0 / x
on
" , # a
. 2he
function
/
for which
QQ" # 0 / x
on an interval ", is said to c$#-ex. 2he function
/
for
which
QQ" # 0 / x
on an interval ", is said to c$#ca-e.
2he following is a formal definition of concave "conve4# function.
Math Cap 2-12 &age 44
-$
$
3
" # 3 5!e +rap! $/ / x x x
a
x
y
increasing
decreasing
;efinition
) function / is called c$#ca-e on interval " if
( )
$ ( $ (
"$ # "$ # " # " # / x x / x / x + +
for all

" and all T0,$U
) function / is called c$#-ex on interval " if
( )
$ ( $ (
"$ # "$ # " # " # / x x / x / x + +
for all

" and all
T0,$U
) point where the concavity "or conve4ity# is changed is called a point of inflection. "-n
the above figure,
" , " ## a / a
.
Example ?.2 7raph the function
4 3
" # 4 $0 y / x x x + .
Step $! ind
Q" # / x
and
QQ" # / x
.
3 ( (
(
Q" # 4 $( 4 " 3#
QQ" # $( (4 $( " (#
/ x x x x x
/ x x x x x


Step (! Sketch the sign pattern for
Q" # / x
and
QQ" # / x
and use it to describe the behavior of
" # / x
(
4 " 3# x x

+

Step 3! Summary
Math Cap 2-12 &age 4.
$( " (# x x +

+
x
0 ( 3
03
0
(
conv conc conv
Step 4! Specific points and curves. Glot the curve9s intercepts "if convenient# and the
points where
Q" # / x
and
QQ" # / x
are >ero.
)s the above e4ample reveals, if we are given any twice differentiable function, then in
principle, by the similar method, we can draw the graph of the function.
Exercise ?.1 Sketch the graphs of the following functions
"a#
3
3 x x + "b#
4 3 (
8 $8 $$ x x x + "c#
;
; x x "d#
(? 3
x
Exercise ?.2 Sketch the graphs of the following functions
"a#
'? 3 (? 3
' y x x "b# "xY0#
?.3 Maxima an Minima
7iven the function
" # y / x
, if y has its greatest "smallest# value in a neighborhood of
the point, such a point is called a local ma4imum "minimum#. )lso, if y has its greatest
"smallest# value in the domain of /, then such a point is called a global ma4imum
"minimum#. )lso, we call a ma4"or min# that occurs at a boundary point of the domain of
/ a boundary ma4 "or boundary min#. %e will call a ma4"or min# which is not an endpoint
of the domain of / an interior ma4 "or interior min#.
T%eorem ?.2
"a# -f
0
Q" # 0 / x
and
0
QQ" # 0 / x <
, then
0
x
is a local ma4imum of /=
"b# -f
0
Q" # 0 / x
and
0
QQ" # 0 / x >
, then
0
x
is a local minimum of /=
"c# -f
0
Q" # 0 / x
and
0
QQ" # 0 / x
, then
0
x
is a local ma4imum, a local minimum or
neither.
1ote ! @4amples of the ambiguous case "c#
Math Cap 2-12 &age 48
x
y
"0,$0#
-nflection
point
"(,-+#
-nflection
point
"3,-$;#
,ocal
.inimum
"a# "b# "c#
Remarks 7iven ma4imi>ation "or minimi>ation# problem,
Q" # 0 / x
is called the first-
order condition and
0
QQ" # 0 / x <
"or
0
QQ" # 0 / x >
# is called the second order condition.
Example ?.3
Suppose the monopolist faces the demand function
$00 q p
%here
q
is output and
p
is the price, and let the monopolist9s total cost be
3 ( $
3
" # ; $$$ '0 ( q q q q + +
$. %rite the firm9s ma4imi>ation problem. %hat kind of assumption you use about the
monopoly in writing this problem.
(. /erive the first order condition and find the critical points.
3. 1heck the second order condition for each critical points and determine whether it is
local ma4imum or local minimum.
4. /raw the profit function.
'. ind the marginal revenue "defined by
Q" # . q
when
" # . q
is total revenue# and the
marginal cost "similarly,
Q" # ( q
#.
+. /raw the marginal revenue, marginal cost and demand function in the same graph.
1ompare marginal revenue with the demand curve and compare the marginal revenue
and marginal cost. ind the optimal price and quantity for the monopoly in the graph.
Example ?.#
1onsider a firm9s cost function
(
" # $0 3+ ( x x x + + , which e4press the dependence of
total cost on output x. )verage cost is defined to be
" # ? ( x x
. 2he firm is assumed to
minimi>e its average cost.
$. Show that the firm9s cost function is a conve4 function.
(. Setup the relevant minimi>ation problem
3. Solve the above minimi>ation problem. "Lere, you should find B1, SB1 and optimal
choice#
4. ind the marginal cost. @valuate these functions at the optimal level of output. %hat
can you find& 1an you Mustify your answer more rigorously&
Math Cap 2-12 &age 49
2he following generali>es the above observation.
T%eorem ?.2
Suppose that the cost function
" # ( x
is continuously differentiable. 2hen,
"a# if .1 Y )1, then )1 is increasing
"b# if .1 J )1, then )1 is decreasing
"c# at an interior minimum of )1, )13.1
Exercise ?.3 5sing the definition of average cost, that is
" #
" #
( x
%( x
x
and the \uotient
Fule, prove the above theorem.
rom an intuitive point of view, the theorem says that if you do better than your average
some day, your average goes up that day. Bn days that you do worse than your average,
your average goes down. or baseball fans, a batter who goes hitless in a game will see
his batting average drop= a batter who has a ]perfect day at the plate^ will raise his
batting average.
2aking a geometric point of view, consider the graph of cost function
" # y ( x
.
Math Cap 2-12 &age @-
)s x increase from 0 in the upper figure, the slope of the lime from
" , " ## x ( x
to the
origin starts very large, decreases past
$
x
, reaches its minimum value at
0
x
, and then
increases again as
x
passes
(
x
and become arbitrarily large. -f we graph this slope, that is,
if we graph the average cost curve
" # %( x
, versus x, we find a 5-shaped curve, as
pictured in the right figure. %e have also drawn the marginal cost curve .1 in the right
figure. 2he critical property in this figure is that for
0
x x <
, the .1-curve lies below the
)1-curve while )1 is decreasing, for
0
x x >
the .1-curve lies above the )1-curve as
)1 increases.
Math Cap 2-12 &age @1
Slopes of the lines from the origin ! )1
" # y ( x
y
x
Slopes of the tangent line ! .1
$
x
0
x
(
x
p
x
$
x
0
x
(
x
)1
.1