Assignment on Studied Materials of

Business Mathematics
Submitted to
Md. Tanvir Hasan
Assistant Professor, Department of Finance
University of Dhaka

Submitted by:
Mohammad Faisal Karim
ID#34036
Email mdfaisalkarim@gmail.com
Phone: 01550155101

Course Code: F-502

Course Title: Business Mathematics
Dated: September 10, 2020
 1. Introduction:
Mathematics is everywhere: weather forecasting, automatic teller machines, secure websites,
electronic games, statistical data analysis, opinion polls and many more. Mathematics hold pivotal
position in almost every field like Industry, Commerce, Physics, Chemistry, Economics, Biology,
Psychology, Astronomy and many more, so application of mathematics is quite extensive. It has
devised many tools in the field of commerce and management. Mathematics is used in almost
every field of daily life and business. Business involves the buying and selling of goods in order to
earn profit, it uses mathematics to record, classify, summarize and analyze the business
transactions. So mathematics is used by commercial enterprises to record and manage the business
operations such as, elementary arithmetic involving fractions, decimals, percentage, elementary
algebra, statistics and probability. Now a days business management is using advanced
mathematics such as calculus, matrix algebra and liner programming. Practical applications include
checking accounts, forecasting the sales, price discounts, mark-ups, mark-downs, payroll
calculations, simple and compound interest, reducing wastage of resources.

2. Objective of Assignment:
Objective of the assignment is two:
a. Real life implications of each content (Linear function, Matrix and calculus etc)
b. Generate some hypothetical real life mathematical examples of the covered topics.

To achieve the objective most of the mathematical contents taught in the class has been described
with real life implications and each with some real life mathematical examples. It is to be noted
that due to space limitations most of the examples are truncated. Moreover due to typing difficulty
of mathematical expression and diagrams it has been copied from internet.

3. Linear Equations:

Linear equations are those equations that are of the first order. These equations are defined for lines in
the coordinate system. 
Linear equations are also first-degree equations as it has the highest exponent of variables as 1.  Some of the
examples of such equations are as follows:

 2x – 3 = 0, 
 2y = 8
  m + 1 = 0,
  x/2 = 3
  x + y = 2
 3x – y + z = 3
When the equation has a homogeneous variable (i.e. only one variable), then this type of equation is known
as a Linear equation in one variable. In different words, a line equation is achieved by relating zero to a linear
polynomial over any field, from which the coefficients are obtained
3.1 Marginal Propensity to Consume (MPS):
Marginal propensity to consume (MPC) is defined as the share of additional income that a consumer
spends on consumption. That means it describes the percentage of additional income they spend on
 buying goods and services, instead of saving. Hence, the marginal propensity to consume can be
calculated as the change in consumption (ΔC) divided by the change in income (ΔY). This can be
expressed using the following formula:

MPC = ΔC / ΔY

Example: For example consider Tuhin living in US having change in income is USD 5,000. Out of this
additional income, she spends USD 3,000 on her vacation. Therefore, her marginal propensity to
consume is 0.6 (i.e., 3,000/5,000). That means she spends 60% of her additional income on
consumption. However, if Emily decided to extend her vacation and spend all the additional income
on it, her MPC would be 5,000/5,000, which is equal to 1, or 100%. Similarly, if she decided to save
all her additional money, instead, her MPC could be calculated as 0/5000, which is equal to 0.

3.2 Break Even Analysis:

Break-even analysis depends on the following variables:
1. Selling Price per Unit:The amount of money charged to the customer for each unit of a product or
service.
2. Total Fixed Costs: The sum of all costs required to produce the first unit of a product. This amount
does not vary as production increases or decreases, until new capital expenditures are needed.
3. Variable Unit Cost: Costs that vary directly with the production of one additional unit.
Total Variable Cost The product of expected unit sales and variable unit cost, i.e., expected unit sales
times the variable unit cost.
4. Forecasted Net Profit: Total revenue minus total cost. Enter Zero (0) if you wish to find out the
number of units that must be sold in order to produce a profit of zero (but will recover all associated
costs)
Each of these variables is interdependent on the break-even point analysis. If any of the variables
changes, the results may change.
Total Cost: The sum of the fixed cost and total variable cost for any given level of production, i.e.,
fixed cost plus total variable cost.
Total Revenue: The product of forecasted unit sales and unit price, i.e., forecasted unit sales times
unit price.
Break-Even Point: Number of units that must be sold in order to produce a profit of zero (but will
recover all associated costs). In other words, the break-even point is the point at which your product
stops costing you money to produce and sell, and starts to generate a profit for your company.
One may use the JavaScript to solve some other associated managerial decision problems, such as:
 setting price level and its sensitivity
 targeting the "best" values for the variable and fixed cost combinations
 determining the financial attractiveness of different strategic options for your company
The graphic method of analysis (below) helps you in understanding the concept of the break-even
point. However, the break-even point is found faster and more accurately with the following
formula:
Q = FC / (UP - VC)
where:
Q = Break-even Point, i.e., Units of production (Q),
FC = Fixed Costs,
VC = Variable Costs per Unit
UP = Unit Price
 Therefore,
Break-Even Point Q = Fixed Cost / (Unit Price - Variable Unit Cost)
Example: Consider (elaborate example)

3.3 Functions:
Cost, revenue and Profit of a business can be represent in function from where dependent
variable is the unit produce.
Example:
Given the cost function C(x)= 0.85x+35000 and Revenue Function R(x)=1.55x find the breakeven
point and the profit function.
Solution:
To find the Break-even point Cost is Equal to revenue, therefore:
0.85x+35000 = 1.55x
0.7x=35000
x=50000
Substitute x=50000
1.55 X 50000=77500
The break-even point is (50000, 77500)
The profit function can be found P(x)= R(x)- C(x)
= 1.55x -0.85x+35000
=0.7x-35000
Therefore, The cost to produce 50,000 units is $77,500, and the revenue from the sales of 50,000
units is also $77,500. To make a profit, the business must produce and sell more than 50,000 units.

3.4 Piecewise Linear Function:

A piecewise linear function is a function defined on a (possibly unbounded) interval of real
numbers, such that there is a collection of intervals on each of which the function is an affine
function. If the domain of the function is compact, there needs to be a finite collection of such
intervals; if the domain is not compact, it may either be required to be finite or to be locally
finite in the reals. We use piecewise functions to describe situations in which a rule or
relationship changes as the input value crosses certain “boundaries.” For example, we
 often encounter situations in business for which the cost per piece of a certain item is
discounted once the number ordered exceeds a certain value. Tax brackets are another
real-world example of piecewise functions. For example, consider a simple tax system in
which incomes up to $10,000 are taxed at 10%, and any additional income is taxed at
20%. The tax on a total income, S, would be 0.1S if S≤S≤ $10,000 and 1000 + 0.2 (S –
$10,000), if S> $10,000.

Example:
A cell phone company uses the function below to determine the cost, CC, in dollars
for gg gigabytes of data transfer.
C(g)=25 if 0<g<2
C(g)=10g+5 if g≥2
Find the cost of using 1.5 gigabytes of data and the cost of using 4 gigabytes of data.
Solution:
C(1.5)=25 dollars
C(4) = 10*4+5= 45 dollars.

4. Matrix and Applications:

4.1 What is a Matrix?

A matrix is a two-dimensional arrangement of numbers in rows and columns enclosed by a pair of

square brackets ([ ]), in the form shown below.

a11 a 12 ⋯ a1 n

[ a21 a 22 ⋯ a2 n
⋮ ⋮ ⋮ ⋮
am 1 a m 2 ⋯ a mn ]
The above figure shows an m × n matrix of m rows and n columns.

Matrices are used to describe linear equations, keep track of the coefficients of linear transformations
and to record data that depend on multiple parameters. They can be added, multiplied, and
decomposed in various ways, which also makes them a key concept in the field of linear algebra.

The subject of matrices has been researched and expanded by the works of many mathematicians, who
have found numerous applications of matrices in various disciplines such as Economics, Engineering,
Statistics and various other sciences.

4.2 Applications of Matrix Addition and Subtraction

The applications of addition and subtraction of matrices can be illustrated through the following
examples:
Illustration 1 - The quarterly sales of Jute, Cotton and Yarn for the year 2002 and 2003 are given below.

Year 2002
QI Q2 Q3 Q4

Jute 20 25 22 20
Cotton

A=
[ 10 20 18 10
15 20 15 15 ]
Year 2003

Jute 10 15 20 20
Cotton

BYarn
=
[ 5 20 18 10
8 30 15 10 ]
Find the total quarterly sales of Jute, Cotton and Yarn for the two years.

Solution – The total sales of Jute, Cotton and Yarn will be obtained as under

20 25 22 20 10 15 20 20

A+B =
[ 10 20 18 10
15 20 15 15 ] [+
5 20 18 10
8 30 15 10 ]
30 40 42 40

=
[ 15 40 33 40
23 50 30 25 ]
Illustration 2 – X Ltd has the following sales position of its products A and B at its two centers P and Q at
the end of the year
P Q

50 45
Y =B
A

[ 60 70 ]
If the sales for the first three months is given as

P Q

30 15
Q =B
A

[ 20 20 ]
Find the sales position for the last nine months.

Solution – Given are the sales positions for the whole year (Y) and for the first three months (Q).

Hence, sales position for the remaining nine months –

50 45 30 15
Y–Q =
[ 60 70 ] [ -
20 20 ]
P Q

20 30
=
B
[ 40 50 ]
4.3 Applications of Matrix Multiplication

The application of multiplication of matrices can be illustrated through the following examples.
Illustration 3 – Ram, Shyam and Mohan purchased biscuits of different brands P, Q and R. Ram
purchased 10 packets of P, 7 packets of Q and 3 packets of R. Shyam purchased 4 packets of P, 8 packets
of Q and 10 packets of R. Mohan purchased 4 packets of P, 7 packets of Q and 8 packets of R. If brand P
costs Rs 4, Q costs Rs 5 and R costs Rs 6 each, then using matrix operation, find the amount of money
spent by these persons individually.
Solution –
Let Q be the matrix denoting the quantity of each brand of biscuit bought by P, Q and R and let C be the
matrix showing the cost of each brand of biscuit.

P Q R

Ram
10 7 3

Q=
Shyam
[ ]
4 8 10
4 7 8 3×3

P 4

C=
Q
[]
5
6 3×1
Since number of columns of first matrix should be equal to the number of rows of the second matrix for
multiplication to be possible, the above matrices shall be multiplied in the following order.

10 7 3 4

Q×C =
[ ] []
4 8 10
4 7 8 ×
5
6

[10×4+7×5+ 3×6¿][ 4 ×4+8×5+10 ×6¿]¿¿

= ¿
[40+35+18 ¿][16+40+16 ¿]¿¿¿ 93

= ¿ =
[] 116
99
Amount spent by Ram, Shyam and Mohan is Rs 99, Rs 116 and Rs 99 respectively.

Calculus and its Business Applications: