Complementary Practical Lessons

Prof. Carmen Juan Martinez

GIB. Academic Year 2014-15

Complementary Practical Lesson 1

Domains
1. Calculate the domain of the following functions

x + 3y + ln(xy)
z
ex5y

4
3
a
c
P (a, b, c, d) = 2

2
3
3
a +b +1 c +d +1
f (x, y, z) =

(x + y)3/4
xy
p
4
x y2
f (x, y) = p
3
x3 2y
f (x, y) =

s(p, q, r) = (p + q)ln r

Complementary Practical Lesson 2

Calculation of total and partial increments

rp
Consider demand function D(r, p, p0 ) = 2p
, being r the consumers monthly income, p
0
the selling price and p the selling price of a substitutive good. Current monthly income
is set at r = 36 m.u. and prices are set at p = 1 and p0 = 1.

1. Calculate current demand.

2. Considering current situation, calculate the demand increment if current selling
price p increases by 20 cents c.p. Interpret the result.
3. Considering current situation, calculate the demand increment if current selling
price of the substitutive good p0 increases to 2 euros c.p. Interpret the result.
4. Considering current situation, calculate the demand increment if variations of
prices p and p0 described in previous sections both happen simultaneously. Interpret the result.
5. Considering current situation, calculate the demand increment if monthly income
as well as prices p and p0 all double their corresponding values simultaneously.
Interpret the result.

Complementary Practical Lesson 3

Graphic analysis of multivariable functions. The ceteris paribus analysis
1. The following function quantifies the monthly demand of beer of a consumer:
D(r, p) =

15r
r2 ,
p

where r denotes the consumers monthly income and p the price in dollars of a liter
of beer. Currently r = 2 thousand of dollars and p = 2$. Following graph shows
c.p. functions D(r, 2) and D(r, 3).
14
12
10
8
6
4
2
1

(a) Write the analytical expression of functions D(r, 2) and D(r, 3). Identify each
one of these functions on the graph. Locate current situation on the graph.
(b) Using the graph, determine whether the number of liters consumed either
increases or decreases If monthly income becomes 4000 $. Locate the new
situation on the graph. Do the corresponding analytical calculations.
(c) If p = 2$, determine the amount of monthly income that provides consumer
with the highest consumption of beer. Locate the new situation on the graph.
Do the corresponding analytical calculations.
(d) Consider current situation. If monthly income becomes r = 2.5 and price
becomes p = 3, does consumption of beer either increase or decrease? Locate
the new situation on the graph. Do the corresponding analytical calculations.
(e) Looking at the graph, do you think that beer is a normal good or an inferior
good?

rp
2. Consider demand function D(r, p, p0 ) = 2p
, being r the consumers monthly
0
income, p the selling price and p the selling price of a substitutive good. Current
monthly income is set at r = 36 m.u. Following graph shows the c.p. lines
D(36, p, p0 ) for p0 = 1, p0 = 2 and p0 = 3.

3
4
3.5
3
2.5
2
1.5
1
0.5

(a) Write the analytical expression of c.p. lines D(36, p, 1), D(36, p, 2) and D(36, p, 3).
Identify each one of these c.p. lines on the graph. Interpret their meaning.
(b) If price p0 remains unchanged while price p increases, then does demand increase or decrease?
(c) If price p remains unchanged while price p0 increases from 1 to 2 and from 2
to 3, then does demand increase or decrease?
(d) Locate on the graph the initial and final points associated with total increment
D(36, 2, 1)(0, 1, 2). Is this increment positive or negative? Locate it on the
graph. Do the corresponding analytical calculations.

Complementary Practical Lesson 5

Function composition
1. A company plans to launch a new cosmetic product. Cost analysts have determined
that the most suitable selling price for the new product satisfies the equation
p = 30 + 12c, where c is a quality index that measures the quality of the new
product. On the other hand, marketing analysts have determined that the demand
function of the new product is as follows:
D(p, c) =

60000 c
.

(a) Obtain function c(p).

(b) Obtain compound function D(p) and interpret its meaning. Explain the difference with function D(p, c).

4
(c) Consider an initial selling price of p = 36$. If this current initial selling
price increases by 2$, what is the effect on demand? Calculate the suitable
increment of demand for determining whether demand increases or decreases.
(d) Interpret the result of previous section.
(e) Calculate the selling price for which demand equals 6000 units. What is the
corresponding value of the quality index c?
2. Consider utility function
U (x, y, z) =

3
xyz

where x, y and z denote the amounts acquired of three products A, B and C

respectively. As both A and B, and C and B, are complementary products, it is
known that x = 3y and z = 9y.
(a) Calculate the compound function U (y). Interpret its meaning and the difference with respect to function U (x, y, z).
(b) Calculate U (2) and interpret the result.

Complementary Practical Lesson 7

Marginal analysis and elasticity
1. Consider cost function C(x, p) = 150 ln (2 + x + 3y), where x and y denote the
amount produced of products A and B respectively. Currently (x, y) = (100, 100).
(a) Calculate the domain of C(x, y).
(b) Calculate the exact variation of cost for an increment of production of A given
by x = 4. Approximate this value by means of the suitable marginal cost.
Calculate the error in the approximation.
(c) Calculate the exact variation of cost for an increment of production of B given
by y = 4. Approximate this value by means of the suitable marginal cost.
Calculate the error in the approximation.
2. Consider profit function B(D, p), where D denotes daily demand and p denotes
selling price. Currently (D, p) = (2000, 3) and B(2000, 3) = 90000 $. Moreover


B 
B 
=2
= +100000 or 100000
D (2000,3)
p (2000,3)
(a) Which is the correct sign of partial derivative
nomic theory?
(b) Interpret both partial derivatives.

B 
p (2000,3)

according to eco-

5
(c) Calculate p B(2000, 3)(0.1) and interpret the result.
(d) Calculate price elasticity of profit at current situation. Interpret the result.
(e) Use prior elasticity for approximating the variation in profit associated with
a 0.5 % decrease in price. Whats the new value of profits?
3. Consider demand function D(r, p, q) = (200 r)e0.1q/p of a given brand of wine,
where r denotes average monthly income of consumers, p denotes selling price of a
liter of wine and q denotes selling price of a competing brand of wine. Currently
(r, p, q) = (100, 2, 4).
(a) Check the following results for partial derivatives:


D 
D 
= 1.22
= 12.21
r (100,2,4)
p (100,2,4)


D 
= 6.10
q (100,2,4)

(b) Interpret prior partial derivatives. What can you tell about the quality of
this wine?
4. Consider production function Q(K, L) = K 2 ln (L3 ), where K denotes capital and
L denotes labour. Currently (K, L) = (2, 1).
(a) Calculate current production.


(b) Calculate Q
and interpret the result.
L 
(2,1)

(c) Calculate the approximate variation in production if L becomes L = 1.05.

(d) Calculate the corresponding exact variation and the error made.

rp
5. Consider demand function D(r, p, p0 ) = 2p
, being r the consumers monthly
0
income, p selling price and p selling price of a substitutive good. Currently
D(r, p, p0 ) = (36, 1, 1). Calculate income elasticity of demand, price elasticity of
demand and substitutive good price elasticity of demand. Interpret the results.

6. Consider demand function

r
r
D(r, p) = 3000 3 2 20 ln p,
p
being r the consumers monthly income and p the selling price. Currently (r, p) =
(16000, 4). Calculate price elasticity of demand at current situation and interpret
the result. Use elasticity for approximating the variation in demand given a 0.5%
decrease in price. Calculate the corresponding error.
7. Consider demand function

re r
D(r, p) =
,
p

being r the consumers monthly income and p the selling price. Currently (r, p) =
(9, 2).

6
(a) Calculate

D 
r (9,2)

and interpret the result.

(b) Calculate the exact variation of demand if monthly income becomes r = 9.2.
(c) Calculate the approximate variation of demand by means of the corresponding
partial derivative.
(d) Calculate income elasticity of demand at current situation. Interpret the
result. Use elasticity for approximating the variation of demand of section
(b). Compare the result with the one of section (c).

Applications of elasticity to the approximation of partial increments

Summary of formulas This section summarizes the formulas that will be used for the
approximation of partial increments by means of the elasticity for the case of a demand
function depending on price and monthly income. These formulas can be generalized for
any type of function.
Formulas for calculating both price elasticity of demand and monthly income elasticity of demand given current values of demand and given both current marginal
demand with respect to price and current marginal demand with respect to monthly
income:

p
D 

ED,p (r, p) =

p (r,p) D(r, p)

D 
r
ED,r (r, p) =


r (r,p) D(r, p)
Incremental approximation rule of partial increments of a demand function with
respect to both price and monthly income given both current values of marginal
demand with respect to price and current value of marginal demand with respect
to monthly income, and given both price and monthly income increments, where
all these inputs are expressed as numbers:

D 
r D(r, p)(r)
r
r (r,p)

D 
p
p D(r, p)(p)
p (r,p)
Incremental approximation rule of total increments of a demand function given
current values of marginal demand with respect to both price and monthly income
and given both price and monthly income increments, where all these inputs are
expressed as numbers:


D 
D 
r +
p
D(r, p)(r, p)
r (r,p)
p (r,p)

7
Incremental approximation rule of partial increments of a demand function with
respect to price expressed as a percentage of current demand, given current values
of price elasticity of demand and price increment, where these two inputs are also
expressed as percentages:
(p D(r, p)(p))% ED,p (r, p) (p)%
Incremental approximation rule of partial increments of a demand function with
respect to monthly income expressed as a percentage of current demand, given current values of monthly income elasticity of demand and monthly income increment,
where these two inputs are also expressed as percentages:
(r D(r, p)(r))% ED,r (r, p) (r)%
Incremental approximation rule of total increments of a demand function expressed
as a percentage of current demand, given current values of both price elasticity
of demand and monthly income elasticity of demand and given both price and
monthly income increments, where all these inputs are expressed as percentages:
(D(r, p)(r, p))% ED,r (r, p) (r)% + ED,p (r, p) (p)%
Formulas for converting numerical increments into increments expressed as percentages and vice-versa:
D

((p D(r, p)(p))%

= (p D(r, p)(p))numerical
100

(p)%
= (p)numerical
100

value

value

Exercises
1. Consider demand function D(r, p) where r denotes consumer monthly income and
p denotes selling price (in dollars). Current values of inputs are r = 1000 and
p = 5. Current demand is D(1000, 5) = 10000 units and current marginal demand
with respect to price at current situation is 30.
(a) Calculate price elasticity of demand at current situation.
(b) Interpret the result of previous section.

8
(c) Expressed both the elasticity and its interpretation as numbers.
(d) Calculate the approximate value of the partial increment of demand with
respect to price expressed as a percentage, if selling price increases by 5% of
its current value.
(e) Using price elasticity of demand, approximate the partial increment of demand with respect to price expressed as a percentage if selling price decreases
by 30 cents from its current value.
(f) Convert the result of previous section into numerical units.
(g) Calculate the new value of demand for the situation describe in section (e).
Solution
(a) Using the formula below for calculating price elasticity of demand:

p
D 

ED,p (r, p) =

p (r,p) D(r, p)
we obtain the following value for elasticity:
ED,p (1000, 5) = 30

5
= 0.015%
10000

(b) If price increases by 1% of its current value of p = 5, while keeping monthly

income at its current value of r = 10000, then demand decreases by 0.015 %
of its current value approximately.
(c) According to conversion formulas below:
D

((p D(r, p)(p))%

= (p D(r, p)(p))numerical
100

value

(p)%
= (p)numerical value ,
100
1
we obtain p = 5 100
= 0.05 dollars and p D(r, p)(p) 10000 0.015
100 = 1.5
units. Therefore, If price increases by 0.05 dollars from its current value of
p = 5, while keeping monthly income at its current value of r = 10000, then
demand decreases by 1.5 units from its current value approximately. So the
new value of demand is 9998.5.
(d) Using the incremental approximation rule expressed as percentages:
p

(p D(r, p)(p))% ED,p (r, p) (p)% ,

we obtain:
(p D(r, p)(p))% (0.015) 5 = 0.075%
So if price increases by 5% of its current value of p = 5, while keeping monthly
income at its current value of r = 10000, then demand decreases by 0.075%
of its current value approximately.

9
(e) Using the following conversion formula:
p

(p)%
= (p)numerical
100

value ,

we obtain:

(p)%
= 0.3 = (p)% = 6%.
100
Then using the incremental approximation rule expressed as percentages, we
obtain:
(p D(r, p)(p))% (0.015)(6) = 0.09%
5

So if price decreases by 30 cents, which results in a 6% decrease of its current

value of p = 5, while keeping monthly income at its current value of r = 10000,
then demand increases by 0.09% of its current value approximately.
(f) Using the conversion formula:
D

((p D(r, p)(p))%

= (p D(r, p)(p))numerical
100

we obtain that (p D(r, p)(p))unidadesabsolutas = 10000

0.09
100

value ,

= 9 units.

(g) We have obtained that (p D(1000, 5)(0.30)) = D(1000, 4.70)D(1000, 5)

9 units. Therefore, solving for D(1000, 4.70), we obtain that D(1000, 4.70)
9 + D(1000, 5) = 9 + 10000 = 10009.
2. Consider cost function C(x, p) where x denotes production level and p the price
of a key raw material involved in the production process. Current situation is
(x, p) = (95, 6) and current cost is 100000 euros. Also current marginal cost with
respect to production is known to be 2 m.u. and current marginal cost with respect
to price of the key raw material is known to be 3 m.u.. Point out which statements
are true from the following list.
(a) It is known that

C 
= 2m.u.
x (95,6)

and


C 
= 3m.u..
p (95,6)

(b) Currently C(2, 3) = 100000.

(c) The approximate value of the total increment of cost if x and p become x = 90
and p = 7 respectively, is 7 m.u..
(d) We cannot approximate the total increment of cost if x and p become x = 90
and p = 7 respectively, because we don not know the value of the corresponding marginal costs at new situation x = 90 and p = 7.
(e) The approximate value of total cost if x and p become x = 90 and p = 7
respectively, is 7 m.u..

10
(f) If x and p become x = 90 and p = 7 respectively, then the new value of total
cost will be 100007 euros approximately.
(g) The production elasticity of cost at current situation is 0.0019 %.
(h) The production elasticity of cost at current situation is 0.0019 m.u..
(i) The production elasticity of cost is set at 0.0019 %.
(j) If current production level increases by 1% while keeping the price of the key
raw material at its current level, then cost increases by 0.0019 % approximately.
(k) If current production level increases by 1% while keeping the price of the key
raw material at its current level, then cost increases by 0.0019 m.u. approximately.
(l) If production level increases by 1%, then cost increases by 0.0019 % approximately.
(m) If current production level increases by 7% while keeping the price of the key
raw material at its current level, then cost increases by 0.0133 % approximately.
(n) If current production level increases by 7% while keeping the price of the key
raw material at its current level, then cost increases by 133 m.u. approximately.
(o) If production level becomes 90 units, while keeping the price of the key raw
material at its current level (6 o 7), then cost decreases by 0.01 % approximately.
(p) Consider the following partial derivative:

C 
=2
x (95,6)
Its interpretation is as follows: if production level increases by 1 unit from its
current level while keeping the price of the key raw material at 6 m.u., then
total cost increases by 2 m.u. approximately.
(q) Consider the following partial derivative:

C 
=2
x (95,6)
Its interpretation is as follows: if production level increases by 1 unit from its
current level while keeping the price of the key raw material at 6 m.u., then
total cost becomes 2 m.u. approximately.
(r) Consider the following partial derivative:

C 
=2
x (95,6)

11
Its interpretation is as follows: if production level increases by 1, then total
cost increases by 2 m.u. approximately.
(s) The total increment of cost if both production level and price of the key raw
material increase their current values by 1%, is 0.00208 % of current total
cost.
(t) The total increment of cost if production level increases its current value by
2% and price of the key raw material increases its current value by 7%, is
0.00506% approximately.
Solution:

Formulas used in the resolution of this exercise are as follows:

Formulas for calculating both production level elasticity of cost and raw material elasticity of cost given current values of cost and given both current
marginal cost with respect to production level and current marginal cost with
respect to raw material price:

C 
p
EC,p (x, p) =


p (x,p) C(x, p)

C 
x
EC,x (x, p) =

x (x,p) C(x, p)
Incremental approximation rule of partial increments of a cost function with
respect to both raw material price and production level given both current
values of marginal cost with respect to raw material price and current value of
marginal cost with respect to production level, and given both raw material
price and production level increments, where all these inputs are expressed
as numbers:

C 
x C(x, p)(x)
x
x (x,p)

C 
p
p C(x, p)(p)
p (x,p)
Incremental approximation rule of total increments of a cost function given
current values of marginal cost with respect to both production and raw
material price and given both production and raw material price increments,
where all these inputs are expressed as numbers:


C 
C 
C(x, p)(x, p)
x +
p
x (x,p)
p (x,p)
Incremental approximation rule of partial increments of a cost function with
respect to production expressed as a percentage of current cost, given current

12
values of production elasticity of cost and production increment, where these
two inputs are also expressed as percentages:
(x C(r, p)(x))% EC,x (x, p) (x)%
Incremental approximation rule of partial increments of a cost function with
respect to raw material price expressed as a percentage of current cost, given
current values of raw material price elasticity of demand and raw material
price increment, where these two inputs are also expressed as percentages:
(p C(x, p)(p))% EC,p (x, p) (p)%
Incremental approximation rule of total increments of a cost function expressed as a percentage of current cost, given current values of both production elasticity of demand and raw material price elasticity of demand and
given both production and raw material price increments, where all these
inputs are expressed as percentages:
(C(x, p)(x, p))% EC,x (x, p) (x)% + EC,p (x, p) (p)%
Formulas for converting numerical increments into increments expressed as
percentages and vice-versa:
C

a
V

b
F

c
V

d
F

((x C(x, p)(x))%

= (x C(x, p)(x))numerical
100

e
F

f
V

(p)%
= (p)numerical
100

value

(x)%
= (x)numerical
100

value

g
V

h
F

i
F

j
V

k
F

l
F

m
V

n
V

o
V

value

p
F

q
F

r
V

s
V

3. A company uses K = 6 machines and L = 10 workers for producing a given product

A. Production function describing the companys production process is as follows:
p
4
Q(K, L) = K 4 + L4
Then current workforce elasticity of production is:
(a) 0.8852%
(b) 0.1023%

13
(c) 1.8967%
4. Demand of a given product depends on monthly income r and selling price p in
accordance with the following expression:
D(r, p) =

r + 40
p2 + 2.

Current situation is (r, p) = (5, 5). If monthly income becomes r = 5.2 and, simultaneously, price decreases by 0.2 monetary units, then the exact variation of
demand, the approximate variation of demand as well as the error of the approximation (in absolute value) are, respectively:
(a) 0.1385 (exact), 0.5133 (approximate), 20.70% (error)
(b) 0.1385 (exact), 0.0386 (approximate), 15.20% (error)
(c) 0.1385 (exact), 0.1308 (approximate), 5.55% (error)

Complementary Practical Lesson 10

Models of continuous evaluation tests on integrals
Model 1
1. (0.5 points) Calculate the following integral:
Z 3
4x cos (6x 1)dx
2

The result must be one of the following three values:

(a) -0.6205
(b) 0.8867
(c) -1.2345
2. Consider the following marginal cost function:
q+10
si 0 q 30
20
Cm (q) =

(q 30)2 + 2 si 30 < q 100

Fixed cost are CF = 12.
(a) (0.5 points) Calculate the total cost of producing 20 units. The result must
be one of the following three values:

14
i. 32
ii. 28
iii. 14
(b) (0.5 points) Calculate the mean cost of producing 35 units. The result must
be one of the following three values:
i. 2.5476
ii. 3.2548
iii. 1.2323
Model 2
1. (0.5 points) Calculate the following integral:
Z
2

x
q
dx
3
(x2 + 1)2

The result must be one of the following three values:

(a) 1.2919
(b) 2.5543
(c) 3.6543
2. Consider the following marginal profit function:

5
2 3 t+1

e
0t<8
3
(t+1)2 

Bm (t) =
t
t
1 e 7 cos e 7 + 5
8 t 12
3
(a) (0.5 points) Calculate accumulated profit between February and Juny. The
result must be one of the following three values:
i. 209.833
ii. 302.6789
iii. 155.4433
(b) (0.5 points) Calculate the mean profit between February and November. The
result must be one of the following three values:
i. 38.5048
ii. 30.2548
iii. 123.2323

15
Model 3
1. (0.5 points) Calculate the following integral:
Z

7x sin (5x + 3)dx

0

The result must be one of the following three values:

(a) 0.4412
(b) 0.8867
(c) -1.2345
2. Consider the following probability density function of random variable X:
q
(


2x+5 3
0.106
0x<2
4
f (x) =
3
2
0.25x
2.77 x e
2x6
(a) (0.5 points) Calculate the probability that random variable X is lower than
2. The result must be one of the following three values:
i. 49.581%
ii. 70.2354%
iii. 29.4321%
(b) (0.5 points) Calculate the probability that random variable X is between 1
and 5. The result must be one of the following three values:
i. 80.0238%
ii. 66.2548%
iii. 23.2323%

Complementary Practical Lesson 11

Improper integrals
1.
Z

2.
Z

dx
2x + 1

e5x/4 dx

16
3.

Z
1

4.

dx
(x 2)3

5.

6.

dx
x4

x
dx
+1

x2

ex dx

7.

ex dx

8.

etx 0.02e0.02x dx

9.

4e4x dx

10.

11.

dx
2x + 1

e5x/4 dx

12.

(x2

13.
Z

5x
dx
+ 1)2
2

xex dx

14.
Z

15.
Z
1

x2
dx
x3 2

e3x/2 dx

17
16.

17.
Z

x3
dx
(1 + x4 )3

x2 ex dx

Definite Integrals. Applications to Statistics

1. Calcula las siguientes integrales definidas:
Z 17
Z 5

x 1 dx,
xex dx,
10

x3 ex dx

xex dx.

2. Consider the following probability density function:


x
x2
f (x) = 6 36 si x [0, 6],
0
resto.
(a) Check that the area defined by f (x) and the horizontal axis is equal to 1.
(b) Calculate the probability that x is less than or equal to 5 (P (x 5)), that is,
calculate the following integral:
Z 5
x x2

dx
36
0 6
3. Consider the following probability density function:

2x+1
si x [0, 1],
2
f (x) =
0
resto.
(a) Calculate the mean value ( = E[x]), that is, calculate the following integral:

Z 1 
2x + 1
x
dx
2
0
(b) Calculate the median, that is, solve the following equation for M :
Z
0

2x + 1
dx = 0.5
2

4. Consider the following probability density function:


1
f (x) = ba si x [a, b],
0
resto.
(a) Check that the area defined by f (x) and the horizontal axis is equal to 1.

18
(b) Calculate in terms of a and b both, the mean value ( = E[x]) and E[x2 ].
That is, solve the following integrals:

Z b 
1
x
dx
ba
a

Z b 
1
x2
dx
ba
a
(c) Calculate in terms of a, b and t the following integral:


Z b
1
etx
dx
ba
a
5. Consider the following probability density function:

2
f (x) = k(1 + x ) si x [0, 3],
0
resto.
Obtain k so that the area defined by f (x) and the horizontal axis is equal to 1.
6. Consider the following probability density function:

2x si x 0,
f (x) = 2e
0
resto.
Obtain the probability that x is between 0.3 and 0.6, That is, solve the following
integral:
Z 0.6
2e2x dx
0.3

7. Consider the following probability density function:


3
f (x) = 4 (x 1)(3 x) si x [1, 3],
0
resto.
Obtain the probability that x is between 1.7 and 2.4. That is, solve the following
integral::
Z 2.4
3
(x 1)(3 x) dx
1.7 4
8. Consider the following probability density function:

3
f (x) = k(1 x) si x [0, 1],
0
resto.
(a) Obtain k so that the area defined by f (x) and the horizontal axis is equal to
1. (Solution: k = 4).
(b) Using prior value of k so that P (x a) = 0.95, that is, solve the following
equation for a:
Z
a

4(1 x)3 dx = 0.95