CHAPTER 12

NONLINEAR FUNCTIONS

12.1 When Linear Functions are

Inappropriate
12.2 Quadratic Functions and Their
Characteristics
12.3 Quadratic Functions: Applications
12.4 Other Nonlinear Functions
 12. 1 WHEN LINEAR FUNCTIONS ARE
INAPPROPRIATE
• There are many situations in which the
relationship between variables is nonlinear. A
good example of this from economics is the
law of diminishing returns.
• “An increase in some inputs relative to other
fixed inputs will cause total output to increase;
but after a point the extra output resulting from
the same additions of extra inputs is likely to
become less and less.”

 b 4c  b 2 

 2a , 

 4a 
 12. 2 QUADRATIC FUNCTIONS AND THEIR
CHARACTERISTICS

• A quadratic function involving the independent variable

x and the dependent variable y has the general form
y = f(x) = ax2 + bx + c (12.5)
where a, b, c are constants and a ≠ 0.
• All quadratic functions having the form of Eq (12.5)
graph as parabolas.
• The coordinates of the vertex of a parabola are

  b 4c  b 2 

 2a , 4a 

 
 12.3 QUADRATIC FUNCTIONS:
APPLICATIONS
#1 page 518 The demand function for a particular
product is q = f(p) = 50,000 – 3,000p where q is
stated in units and p is stated in dollars.
a. Determine the quadratic total revenue function
where R is a function of p.
b. What is the concavity of the function? What is the
y intercept?
c. What does total revenue equal at a price of $20?
d. How many units will be demanded at this price?
e. At what price will total revenue be maximized?
 12.3 QUADRATIC FUNCTIONS:
APPLICATIONS
#1 page 518 The demand function for a particular
product is q = f(p) = 50,000 – 3,000p where q is
stated in units and p is stated in dollars.
ANSWERS:
a. R=g(p)w=500,000p – 3,000p2
b. Down, (0,0)
c. g(20) = $8.8 million
d. f(20) = 440,000 units
e. $83.33
 12.3 QUADRATIC FUNCTIONS:
APPLICATIONS
#7 page 519 The supply unction qs = f(p) for a product is
quadratic. Three points which lie on the supply function
are (60, 2750), (40, 3600), and (50, 6300).
(a) Determine the equation for the function.
(b) Find the relevant domain and range of the function.
(c) Compute the intercepts.
(d) What quantity will be supplied at a price of $75?
 12.3 QUADRATIC FUNCTIONS:
APPLICATIONS
#7 page 519 The supply unction qs = f(p) for a product is
quadratic. Three points which lie on the supply function
are (60, 2750), (40, 3600), and (50, 6300).
ANSWERS:
a. qs = f(p) = 2.5p2 – 6.250
b. p ≥ 50
c. (50, 0), when p is $50, there is no supply
d. 7,812.5 units
 12.3 QUADRATIC FUNCTIONS:
APPLICATIONS
#13 page 519 The supply and demand functions for a
product are qs = p2 – 400 and qd = p2 – 40p + 2600.
Determine the market equilibrium price and quantity.

ANSWERS:
p = 75, q = 5,225