Business Mathematics-2

Example 2.5.1: A manufacturer estimates that when units of a particular commodity are

produced, the cost will be C( ) = dollars, and furthermore, that all units will

be sold when the price is P( ) = dollars per unit.

A) Find the marginal cost & marginal revenue.

B) Use marginal cost to estimate the cost of producing the ninth unit.
C) What is the actual cost of producing the ninth units?
D) Use marginal revenue to estimate the revenue derived from the sale of the ninth unit.
E) What is the actual revenue derived from the sale of the ninth units?

Example 2.5.2: A manufacturer of digital cameras estimates that when hundred cameras are

produces, the total profit will be P( ) = thousand dollars.

A) Find the marginal profit function.

B) What is marginal profit when the level of production is ?
C) Interpret these results.

Example 11.31(HW): If the total manufacturing cost Y of making units of a product is: Y = 20

, (a) What is the variable cost per unit? (b) What is the Fixed cost? (c) What is total
cost of manufacturing 4000 units? (d) What is the marginal cost of producing 2000 units?
Example 11.33(HW): A study has shown that the cost of producing sign pens of a manufacturing
concern is given by, C =

What is the marginal cost at = 1000 units? If the pens sell for TK. 5.00 each for what values of

does marginal cost equal marginal revenue?

Exercise 2.5(HW):

1) Estimate how much the function will change as increase from 5

to 5.3.
2) Estimate the percentage change in the function as increase from
4 to 4.3.
 3) Estimate the percentage change in the function as decrease from 5 to
4.6.
4) Suppose the total cost in dollars of manufacturing q units is
A) Use marginal analysis to estimate the cost of manufacturing the 41st unit.
B) Compute the actual cost of manufacturing the 41st unit.

Example 11.30: The profit function of a company can be represented by P = f( =

where is unit sold. Find the optimal sales volume and the amount of profit to
be expected at the volume.
Example 11.34: A trading company has examined its cost structure and revenue structure and
has determined that C the total cost, R total revenue and the number of unit’s production are

related as, C =

Find the production rate ) that will maximise profits of company. What is maximum profit.

Calculate also the profit when

Example 11.35(HW): The total cost of producing of articles are and the

price at which each article can be sold is . What should be the output for a maximum
profit. Calculate the profit.

Example 2.5.6: The GDP of certain country was billion dollars t year
after 2000. Use calculus to estimate the percentage change in the GDP during the first quarter
of 2008.

Example 13.23: The marginal cost (Y) function for production is Y = if the
total cost of producing one unit is TK. 50. Find the total cost function and the average cost
function.

Example 13.34: A company determines that the marginal cost of producing units of a

commodity during a one-year operation is MC = , where the production cost is in

dollar. The selling price of a commodity is fixed at $9 per unit and the fixed cost is $1800 per
day.
A) Find the cost function.
B) Find the revenue function.
 C) Find the profit function.

Examples 13.36: If the marginal revenue and the marginal cost for an output of a commodity

are given as MR = and MC = , and if the fixed cost is zero, find the profit

function and the profit when the output

Examples 16.17: A person lends TK. 1000 to a friend agreeing to charge no interest and to
recover the amount by monthly installments decreasing successively by TK. 2. In how many
months will the loan be paid up, if the first installment be TK. 64?

Example 16.19(HW) A firm produced 500 sets of close circuit TV during its first year. The total
sum of the firm’s production at the end of 5 years operation 4500 sets.
A) Estimate by how many units, production increased each year, if the increase each year is
uniform; and
B) Forecast based on the estimate of the annual increment in production, the level of
output for the 9th year.
Example 16.34(HW) Ayan saved TK. 165000 in ten years. In each year after the first, he saved
TK. 1000more than he did in the preceding year. How much did he save in the first year?
Example 16.35(HW) A man secures an interest free loan of TK. 14500 from a friend and agrees
to repay it in ten installments. He pays TK. 1000 as first installment and then increase each
installment by equal amount over the preceding installment. What will be his last installment?
Exercise 15: A man saved TK. 20000 in 12 years. In each year after the first he saved TK. 200
more than he did in the preceding year. How much did he save in the first year?

Theory:
1) What is marginal cost & marginal revenue?
2) Define progression. Types of progression.
3) Increasing & Decreasing function with example.