Final Exam MTH201 (Spring Term)

Business calculus
Time allowed: 90 minutes

Problem 1: (10 points) Raggs, Ltd., a clothing firm, determines that in order to
sell x suits, the price per suit must be p = 150 - 0.5x. It also determines that the
total cost of producing x suits is given by C(x) = 4000 + 0.25x2 How many suits
must the company produce and sell in order to maximize profit? What is the
maximum profit?

Problem 2: (20 points) The demand function for a haircut is  x  =  600 - 2p2 

a) At what price should a haircut be in order to maximize revenue?

b) Determine the elasticity at the price of $12 and interpret your result.

Problem 3: (15 points) A firm produces two kinds of golf ball, one that sells for
$3 and one priced at $2. The total revenue, in thousands of dollars, from the sale
of x thousand balls at $3 each and y thousand at $2 each is given by R(x, y) = 3x
+ 2y.

The company determines that the total cost, in thousands of dollars, of producing
x thousand of the $3 ball and y thousand of the $2 ball is given by:

C(x, y)= 2x2 - 2xy + y3- 9x + 6y + 7

How many balls of each type must be produced and sold in order to maximize
profit?

Problem 4: (15 points) Given the demand and supply function are:
2
D ( x ) =( x−5 ) and S(x) = x2+ x + 3.

Find the equilibrium point, consumer’s surplus and producer’s surplus.

Problem 5: (20 points) Emma and Jake Tuttle have a new grandchild, Erica.
They want to create a college trust fund for her that will yield $100,000 by her
18th birthday.

a) What lump sum would they have to deposit now, in the Hilbert Prime
Money Market Fund, at 6% interest, compounded continuously, to yield
$100,000?
b) They discover that the required lump sum is more than they can afford at
the time, so they decide to invest a constant stream of R dollars per year.
Find R such that the accumulated future value of the continuous money
stream is $100,000, assuming that the interest rate is 6%, compounded
continuously.

Problem 6: (20 points) (Use Lagrange Multiplier method)

Each unit of a product can be made on either machine A or machine B. The

nature of the machines makes their cost functions differ:

x2
Machine A: C(x) = 10+
6

y3
Machine B: C(y) = 10+
9
Total cost is given by C(x,y) = C(x) + C(y) How many units should be made on
each machine in order to minimize total costs if x + y = 10100 units are equired?