GEST1001 – QUANTITATIVE REASONING FOR BUSINESS

PROBLEM SET

Lecture 1 – Linear and Quadratic functions

1. Give the domain of each of the following two functions:
(a) ; (b) .

2. Find the slope of the straight line that passes through the points (6, 2) and (8, 3).

3. Find a general linear equation (ax + by + c = 0) of the straight line that has the
indicated properties.
(a) Passes through (5, 5) and has slope 1/2.
(b) Has slope 1/2 and y-intercept 3.

4. In 1996, the stock in a computer hardware company traded for $37 per share.
However, the company was in trouble and the stock price dropped steadily, to $8 per
share in 2006. Draw a line showing the relationship between the price per share and
the year in which it traded for the time interval [1996, 2006], with years on the x-axis
and price on the y-axis. Find and interpret the slope.

5. A delicatessen owner starts her business with debts of $100,000. After operating for
five years, she has accumulated a profit of $40,000. Find an equation of the line
describing the given information.

6. Graph the function s = h(t) = t2 + 6t + 9. Give the vertex and intercepts.

7. The daily profit for the garden department of a store from the sale of trees is given
by , where x is the number of trees sold. Find the function’s
vertex and intercepts, and graph the function.

Lecture 2 – Applications of Linear and Quadratic functions (1)

1. Suppose consumers will demand 60 units of a product when the price is $15.30 per
unit and 35 units when the price is $19.30 each. Find the demand function, assuming
that it is linear. Find the price per unit when 40 units are demanded.

2. A refrigerator manufacturer will produce 3000 units when the price is $940, and
2200 units when the price is $740. Assume that price (p) and quantity produced (q)
are linearly related, find the supply function.

3. In part (a) and part (b) below, if p represents price per unit in dollars and q represents
the number of units sold, find the equilibrium point.
(a) Supply function: , Demand function:
(b) Supply function: , Demand function:

4. Supply and demand functions for a certain product are and

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 respectively, where p represents the price per unit in dollars
and q represents the number of units sold. Find the equilibrium price.

Lecture 3 – Applications of Linear and Quadratic functions (2)

1. A manufacturer sells a product at $8.35 per unit, selling all produced. The fixed cost
is $2116 and the variable cost is $7.20 per unit. At what level of production will
there be a profit of $4600? At what level of production will there be a loss of $1150?
At what level of production will the break-even point occur?

2. A manufacturer of a children’s toy will break even at a sales volume of $200,000.

Fixed costs are $40,000, and each unit of output sells for $5. Determine the variable
cost per unit.

3. The demand function for a manufacturer’s product is , where p

is the price (in dollars) per unit when q units are demanded. Find the level of
production that maximizes the manufacturer’s total revenue, and determine this
revenue.

4. A factory produces mobile phones. Each mobile phone is sold at MOP1,700. The
monthly fixed cost incurred by the factory is MOP580,000, and the variable cost of
producing each mobile phone is MOP900.
(a) Find the cost function, revenue function and profit function.
(b) Determine the break-even point for this factory.

5. The demand function for a manufacturer’s product is where p is the price

per unit when q units are demanded by customers. The total cost function is given by
the equation .
(a) Determine the level of production that maximizes the manufacturers’ total
revenue and determine the total revenue.
(b) Determine the production level(s) that would result in the maximum profit.
(c) Determine the level(s) of production required to break even.

Lecture 4 – Exponential functions and Lecture 5 – Logarithmic functions

1. Bacteria are growing in a culture and their number is increasing at an exponential
rate of 5% per hour. Initially, 400 bacteria are present. (a) Determine an equation
that gives the number, N, of bacteria present after t hours. (b) How many bacteria are
present after one hour? (c) After four hours? (d) What is the doubling time? (e) What
is the tripling time?

2. Because of an economic downturn, the population of a certain urban area declines at

an exponential rate of 1.5% per year. Initially, the population is 350,000. To the
nearest person, what is the population after three years?

3. A radioactive element is such that N grams remain after t hours, where

.
(a) How many grams are initially present? To the nearest tenth of a gram, how many
grams remain after (b) 10 hours? (c) 44 hours? (d) What is the half-life of this
element?

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4. If a radioactive substance has a half-life of 9 years, how long does it take for 1 gram
of the substance to decay to gram?

5. The demand function for a new toy is .

(a) Evaluate q to the nearest integer when p = 10.
(b) Convert the demand function to the form .
(Hint: Find a number x such that 0.95123  ex.)
(c) Use the function in part (b) to evaluate q to the nearest integer when p =10.
Your answer in parts (a) and (c) should be the same.

6. In Springfield the population P grows at an exponential rate of 3% per year after the
year 2009. If the initial population is 1,500,000 and t represents the number of years
after 2009, find the value of t for which the population will be 2,000,000. Give your
answer to the nearest tenth.

Lecture 6 – Mathematics of Finance

1. A certificate of deposit is purchased for $6500 and is held for three years. If the
certificate earns 2% compounded quarterly, what is it worth at the end of three
years?

2. If $2000 is invested in a savings account that earns interest at the rate of 9.9%
compounded annually, after how many full years will the amount at least double?

3. If $2600 is invested for 6.5 years at 6% compounded quarterly, find (a) the
compound amount and (b) the compound interest.

4. Find the nominal rate that corresponds to a periodic rate of per month.

5. Find the effective annual rate of interest (rounded to three decimal places) that is
equivalent to a nominal rate of 10% compounded
(a) yearly, (b) semiannually, (c) quarterly, (d) monthly, (e) daily.

6. A $6000 certificate of deposit is purchased for $6000 and is held for seven years. If
the certificate earns an effective annual rate of 8%, what is it worth at the end of that
period?

7. A major credit card company has a finance charge of 1.5% per month on the
outstanding indebtedness. (a) What is the nominal rate compounded monthly? (b)
What is the effective annual rate?

8. An investor has a choice of investing a sum of money at 8% compounded annually

or at 7.8% compounded semiannually. Which is the better of the two rates?

9. A bank account pays 5.3% annual interest, compounded monthly. How much must
be deposited now so that the account contains exactly $12,000 at the end of one
year?

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10. A trust fund for a 10-year-old child is being set up by a single payment so that at age
21 the child will receive $27,000. Find how much the payment is if an interest rate of
6% compounded semiannually is assumed.

11. A debt of $600 due in three years and $800 due in four years is to be repaid by a
single payment two years from now. If the interest rate is 8% compounded
semiannually, how much is the payment?

12. Suppose that a person has the following choices of investing $10,000:
(a) placing the money in a savings account paying 6% compounded semiannually;
(b) investing in a business such that the value of the investment after 8 years is
$16,000.
Which is the better choice?

13. For an interest rate of 4% compounded monthly, find the present value of an annity
of $150 at the end of each month for eight months and $175 thereafter at the end of
each month for a further two years.

14. An annuity consisting of equal payments at the end of each quarter for three years is
to be purchased for $15,000. If the interest rate is 4% compounded quarterly, how
much is each quarterly payment?

15. Suppose $50 is placed in a savings account at the end of each month for four years.
If no further deposits are made, (a) how much is in the account after six years, and
(b) how much of this amount is compound interest? Assume that savings account
pays 6% compounded monthly.

16. In 10 years, a $40,000 machine will have a salvage value $4,000. A new machine at
that time is expected to sell for $52,000. In order to provide funds for the difference
between the replacement cost and the salvage value, a sinking fund is set up into
which equal payments are placed at the end of each year. If the fund earns 7%
compounded annually, how much should each payment be?

Lecture 7 – Differentiation 1 (Derivative and Rules of differentiation)

1. Differentiate the following functions:
(a) (b)

(c) (d)

(e) (f)

(g) (h)

(i) (j)
(k)

(l) (m)

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 (n) (o)

(p) (q)

2. Find an equation of the tangent line to the curve at the indicated point:
(a) at the point (1, 15). (b) at the point .

Lecture 8 – Differentiation 2 (Instantaneous rate of change)

1. Sociologists studied the relation between income and number of years of education
for members of a particular urban group. They found that a person with x years of
education before seeking regular employment can expect to receive an average
yearly income of y dollars per year, where

Find the rate of change of income with respect to number of years of education.
Evaluate the expression when x = 9.

2. The approximate temperature T of the skin in terms of the temperature Te of the

environment is given by where T and Te are in degrees
Celsius. Find the rate of change of T with respect to Te.

3. For the cost function , how fast does c change with respect to q
when q = 10?

4. For a certain manufacturer, the revenue obtained from the sales of q units of a
product is given by . How fast does revenue change with respect to
the number of units sold?
5. The position function for an object moving in a straight line is where t is
the time taken in seconds and s is the position in meters. Find the position and
velocity of the object at t = 1.

Lecture 9 – Differentiation 3 (Marginal analysis)

1. If the total cost function for a manufacturer is given by where the
total cost c is in dollars, find the marginal cost when 2 units are produced and
interpret the meaning.

2. Suppose the total revenue in dollars of selling q units of a product is

. Use marginal analysis to estimate the revenue by selling the
21st unit.

3. Suppose that x units can be sold at a price of (7 – 0.001x) dollars per unit and that the
total cost of producing x units is (1000 + 2x + 0.00025x2) dollars.
(a) What production level maximizes revenue?
(b) What production level maximizes profit?
(c) What is the maximum profit and what is the corresponding unit price?
4. A manufacturer has fixed cost of $8,000 each month and must pay $48 in labor and

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 materials for each tape recorder it builds. It expects to receive total revenue
from selling recorders per month, where dollars.
(a) Find the rate of change in cost when the level of production is 300
recorders per month.
(b) Assume that the manufacturer can sell all the products it produced. Find the
marginal profit when 1,000 recorders are made each month.
(c) At what production level would it become foolish to consider increasing
production?

Lecture 10 – Differentiation 4 (Chain rule)

1. Differentiate the following functions:
(a) (b)

(c) (d)
(e) (f)

(g) (h)

(i) (j)

(k) (l)

2. If and , find when t = 1.

3. If and , find when x = 0.

4. Find the slope of the curve at the point (8, 0).

5. The cost c of producing q units of a product is given by . If

the price per unit p is given by the demand equation , find the rate of
change of cost with respect to price per unit when p = 85.

6. Suppose pq = 100 is the demand equation for a manufacturer’s product. Let c be the
total cost, and assume that the marginal cost is 0.01 when q = 200. Find dc/dp when
q = 200.

7. Suppose is a demand equation for a manufacturer’s product.

(a) Find the rate of change of p with respect to q.
(b) Find the marginal revenue function.

8. A manufacturer has found that when m employees are working, the number of units
of product produced per day is . The demand equation for
the product is where p is the unit selling price when the demand
for the product is q units per day.
(a) Determine the manufacturer’s marginal revenue product when m = 240.

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 (b) Suppose it would cost the manufacturer $400 more per day to hire an additional
employee. Would you advise the manufacturer to hire the 241 st employee?
Why or why not?

9. For a firm, the daily output on the tth day of a production run is given by
. Find the rate of change of output q with respect to t on the tenth
day.

Lecture 11 – Differentiation 5 (Higher-order derivatives)

1. Find the second derivatives of the following two functions:
(a) (b)

2. Find the rate of change of if .

3. Given , where c is the total cost (in dollars) when q units of a

product is produced, how fast is marginal cost changing when q = 97.357?

4. If , determine the values of x for which .

Lecture 12 –Differentiation 6 (Optimization)

1. Find the absolute extrema of the given function on the given interval.
(a) [1, 0]
(b) [2, 0]
(c) [, +]

2. A company has set aside $9000 to fence in a rectangular portion of land adjacent to a
stream by using the stream for one side of the enclosed area. The cost of the fencing
parallel to the stream is $15 per foot installed, and the fencing for the remaining two
sides costs $9 per foot installed. Find the dimensions of the maximum enclosed area.

3. A manufacturer finds that the total cost c of producing a product is given by the cost
function . At what level of output will average cost per unit be
a minimum?

4. For a monopolist’s product, the demand function is and the cost

function is . At what level of output will profit be maximized? At what
price does this occur, and what is the profit?

5. For XYZ Manufacturing Co., total fixed costs are $1200, material and labor costs
combined are $2 per unit, and the demand equation is . What level of
output will maximize profit? Show that this occurs when marginal revenue is equal
to marginal cost. What is the price at profit maximization?

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6. A TV cable company has 6400 subscribers who are each paying $24 per month. It
can get 160 more subscribers for each $0.50 decrease in the monthly fee. What
monthly rate will yield maximum revenue, and what will this revenue be?

7. A container manufacturer is designing a rectangular box, open at the top and with a
square base, that is to have a volume of 32ft3. If the box is to require the least amount
of material, what must be its dimensions?

8. Imperial Education Services (I.E.S.) is considering offering a workshop in resource

allocation to key personnel at Acme Corp. To make the offering economically
feasible, I.E.S. feels that at least 30 persons must attend at a cost of $50 each.
Moreover, I.E.S. will agree to reduce the charge for everybody by $1.25 for each
person over the 30 who attends. How many people should be in the group for I.E.S.
to maximize revenue? Assume that the maximum allowable number in the group is
40.

9. Each day, a firm makes x tons of chemical A (x ≤ 4) and tons of

chemical B. The profit on chemical A is $2000 per ton, and on B it is $1000 per ton.
How much of chemical A should be produced per day to maximize profit? Answer
the same question if the profit on A is $P per ton and that on B is $P/2 per ton.

Lecture 13 – Integration 1 (Antiderivatives and Indefinite integrals)

1. Determine the indefinite integrals.
(a) (b)

(c) (d)

(e) (f)

(g) (h)

2. A manufacturer has determined that the marginal cost function is

where q is the number of units produced. If fixed costs are $5000, what is the
average cost of producing 100 units?

3. Given a marginal revenue function: , find the demand

function.
4. The rate of change of the value of a house that cost $350,000 to build can be
modeled by , where t is the time in years since the house was built
and V is the value (in thousands of dollars) of the house. Find V(t).

Lecture 14 – Integration 2 (Method of substitution)

1. Determine the indefinite integrals.

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 (a) (b)

(c) (d)

(e) (f)

(g) (h)

(i) (j)

Lecture 15 – Integration 3 (Definite integrals and Area under a curve)

1. Evaluate the definite integrals.

(a) (b)

(c) (d)

2. A manufacturer’s marginal cost function is . If the total cost (c) is in

dollars, determine the cost involved to increase production (q) from 65 to 75 units.

3. A manufacturer’s marginal revenue function is . If the total revenue

(r) is in dollars, find the change in the manufacturer’s total revenue if production (q)
is increased from 500 to 800 units.

4. A sociologist is studying the crime rate in a certain city. She estimates that t months
after the beginning of next year, the total number of crimes committed will increase
at the rate of 8t + 10 crimes per month.
(a) Determine the total number of crimes that can be expected to be committed next
year.
(b) How many crimes can be expected to be committed during the last six months
of that year?

5. Find the area of the region bounded by the given curve, the x-axis, and the given
lines.
(a) , x = 2, x = 2
(b) , x = 1, x = 2
(c) , x = 2, x = 6

Lecture 16 – Matrix Algebra 1 (Basic Operations)

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1. If , verify the general property that by finding AT and

then .

2. Express the matrix equation

as a system of linear equations and solve.

3. Compute the required matrices if

(a) (b) (c) (d)

Lecture 17 – Matrix Algebra 2 (Determinants)

1. Using the properties of the determinants verify that

=0

2. (Multiple Choice)

(a) 0 (b) 72 (c) 144 (d) 144.

3. Find the determinant of matrix : .

4. Find the determinant of matrix .

5. Given the matrix A in question 4, find

(a) the minor of .
(b) the minor of .

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 (c) the cofactor of .
(d) the cofactor of .

Lecture 18 – Matrix Algebra 3 (Reduction Method and Inverse of a matrix)

1. Solve the systems by the method of reduction.
(a) (b) (c)

2. If the given matrix is invertible, find its inverse.

(a) (b)

3. If the coefficient matrix of the system is invertible, solve the system by using the
inverse. If not, solve the system by the method of reduction.
(a) (b)

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