Name of the Course : B.

A(H) Business Economics

Name of the Paper : Mathematics for Business
Economics
Semester : II
Type : Assignment
Maximum Marks : 100

Attempt all Questions

Section A: Each Question equals 4 Marks

Question 1. Find the domain of the function defined by the following equa-
tions:
p
(i) y = (x − 1)/(x − 2)(x + 3) (ii) y = (2x − 1)/(x2 − x)

√ √
Question 2. Sketch the graph of the equation x + y = 1. Identify domain
and show that function is convex.

Question 3. Compute the following limits

3x2 +3x−18
1. limx→2 x−2

√
h+1−1
2. limh→0 h

Question 4. Consider the function f (x) = 1 − x1/3 , for x ∈ [−1, 1]. Is there
a number η in (-1,1) such that f 0 (η) = [f (1) − f (−1)]/(1 − (−1))? Does the
mean value theorem apply? Why or why not ?

Question 5. The present discounted value of a payment D growing at a con-

stant rate g when the discount rate is r is given by

D D(1 + g) D(1 + g)2

+ + + ···
1+r (1 + r)2 (1 + r)3

where r and g are positive. What is the condition for convergence? Show that
if the series converges with sum P0 , then P0 = D/(r − g).

Question 6. Let f be defined by f (x) = x2 − 2 for x < 0, and f (x) =

−3x2 + 15 for x > 2. Can you define f (x) as a linear function of [0, 2] so that
f is continuous for all x?

1
Question 7. Let the function x(t) be given by the codition x(0) = 1 and

ẋ(t) = tx(t) + 2[x(t)]2

Determine the second order Taylor polynomial for x(t) about t = 0.

Question 8. Classify the stationary points of the following function

6x3
f (x) =
x4 + x2 + 2

into local maxima or minima. Also state intermediate-value theorem.

Question 9. Plot following functions.

a. Increasing Concave b. Decreasing Convex
Also show the sign of first and second derivatives with diagram.

Question 10. Differentiate following function:

x
a. y = log10 f (x) b. y = xx

Section B: Each Question equals 6 Marks

Question 11. What is the present value of 15 annual deposits of Rs. 3500
each when the first deposits is 1 year from now and the interest rate is 12%
per annum.

Question 12. Suppose that the price of a commodity after x years is given
by f (x) = Aekx where A and k are constants. )

1. Find A and k when f (0) = 4 and f 0 (0) = 1. In this case, what is the
price after 5 years? (Do not solve for ex or ln(x))

2. We assume now that A = 4 and k = 0.25. When the price has in-
creased to 18, it becomes controlled so that the annual price increases is
limited to 10%. When the price controls first needed? What length of
time is needed for the price to double before and after price control are
introduced?(Do not solve for ex or ln(x))

Question 13. What do you understand by convergent and divergent series?

Show that following harmonic series is divergent.

1 1 1 1
1+ + + + ··· + + ···
2 3 4 n

2
Question 14. Find f 0 (1) for following function

 2x−1

x 6= 1
2x −7x+5
f (x) =
− 1

x=1
3

Question 15. Consider the function f defined for all x by

f (x) = ex−1 − x

a. Show that f (x) ≥ 0 for all x. (Hint: Study the sign of f 0 (x)). Draw
the graph.
b. Show that the equation ex−1 − x = 1 has precisely two solutions.
c. Define the function g by the formula

1
g(x) =
ln(ex−1 − x)

For which x is g is defined?

Question 16. A student has current income y1 and expects future income
y2 . She plans current consumption c1 and future consumption c2 in order to
maximize the utility function

1
ln c1 + ln c2
1+δ

where δ is her discount rate. If she borrows now, so that c1 > y1 , then future
consumption, after repaying the loan amount c1 − y1 with interest charged at
rate r, will be
c2 = y2 − (1 + r)(c1 − y1 )

Alternatively, if she saves now, so that c1 < y1 , then future consumption will
be
c2 = y2 + (1 + r)(y1 − c1 )

after receiving interest at the same rate on her savings. Find the optimal
borrowing or saving plan.

Question 17. Suppose that functions U and g are both increasing and con-
cave, so that U 0 > 0, U 00 ≤ 0, g 0 ≥ 0, and g 00 ≤ 0. Prove that the composite
function
f (x) = g(U (x)))

is also increasing and concave.

3
 √
Question 18. Find Taylor’s formula for f (x) = x + 25 = (x + 25)1/2 with
√
n = 1, and use it to give an estimate of 25.01. Also find maximum error
involve with approximation.

Section C: Each Question equals 12 Marks

Question 19. In the linear supply and demand model, where D is demand,
S is supply, P is price and t is tax per unit imposed on consumers. Then

D = a − b (P + t), S =α+βP [1]

Here a, b, α, and β are positive constants. The equilibrium price is determined

by equating supply and demand, so that

a − b (P + t) = α + β P [2]

1. Equation [2] implicitly define the price P as a function of unit tax t.

Compute dP/dt by implicit differentiation.

2. Compute tax revenue T as a function of t. For what value of t does the

quadratic function T reach its maximum?

3. Generalize the foregoing model by assuming that

D = f (P + t) and S = g(p)

where f and g are differentiable function with f 0 < 0 and g 0 > 0. The
equilibrium condition
f (P + t) = g(P )

defines P implicitly as a differentiable function of t. Find an expression

for dP/dt by implicit differentiation.