P0= $18 000

r = 5%
m = 12 (compounded monthly)

( )
mx n
r%
Pn = P0 1+ m

Answer:
•Call a is “Each monthly repayment”:

[ ( )
]
−36
5%
1− 1+
12
18 000= a x
5%
=> a = 539.48
12

•Call a’ is “Each quarterly payment”:

3 months 3 months 3 months
T0 T1 …………………………T15 T16 T’1 T’2 T’3

V’o
V0=18 000 539.48 539.48 539.48 a’ a’ a’

( ) [ ( ) +....+539.48 ]
16 15
5% 5%
V’o = Vo 1+ 12
− 539.48 1+
12

[ (
][ ] ) ( )
5 % 16 4.5 % −3
1+ −1 1− 1+
( ) −539.48 x
16
5% 12 4
= Vo 1+
12
= a’
5% 4.5 %
12 4

[ ][ ]
( ) ( )
16 −3
5% 4.5 %
1+ −1 1− 1+
( ) −539.48 x
16
5% 12 4
 18000 1+
12 5%
= a’
4.5 %
12 4

 a’ = 3521.6
 x2 −1 ( x−1)( x+ 1)
f(x) = x−1 = x−1

= {undefined
x +1 , if x ≠ 1 ,
if x=1

Table of value
One-sided limits

Left hand limit Right hand limit

X→1 −¿ ¿
X→1 +¿¿

1
x 0.999 0.9999 1 1.00001 1.001
F(x) 1.999 1.9999 II 2.00001 2.001
2 = lim f ( x ) i.e.f(x)≈2 as x≈1
x →1

(a)lim f (x ) = 2
x →1 (b) lim
−¿
x→ 3 f (x)¿
¿
=1
(c) lim
+¿
x→ 3 f (x)¿
¿
=4 (d) lim f ( x ) = is not defined
x →3

(e) f ( x)= 3 (f) f (3)= is not defined

(a) lim
−¿
x→ 2 f (x)¿
¿
=3
≠

(b) lim
+¿
x→ 2 f (x)¿
¿
=1

(c) lim f (x ) = does not exit

x →2 (d) f (2) = 3
(e) lim f (x ) = 4
x→ 4 (f) f (4 )= is not defined

(a)lim R ( x) = -∞
x →2 (b) lim R ( x) = + ∞
x →5

(c) lim
−¿
x→−3 R (x)¿
¿
= -∞ (d) lim
+¿
x→−3 R( x)¿
¿
= + ∞ (e) The equations of
the vertical asymptotes (answer’s on the picture)
(41)lim (2 x+|x−3|) = 2 x 3 + |3−3| = 6
x →3

= [0]
2 x +12 0
(42) lim
x→−6 |x +6|
0
→ The limit has the indeterminate form 0 . So, we try to
eliminate this indeterminate form
[ ] doesn’t exist because:
0
0

lim ¿ lim ¿
L1 = x→−6
2 x+12
−¿
−(x+6)
¿ =-2 ≠ L2= x→−6
2 x +12
+¿
x+6
¿ =2

(43) x→ 0.5
lim
−¿ 2 x−1
|2 x 3−x 2|
¿
¿ 0
0 [ ]= x→ 0.5
lim
−¿ 2 x−1
x 2|2 x−1|
¿
¿

lim ¿
= −¿
x→ 0.5 2
2 x−1
x [ −(2 x−1) ]
¿

lim ¿
= x→ 0.5
−¿ 1
x2
¿ = -4
 2−|x| 2−(−x )
(44) lim
x→−2 2+ x
= lim
x→−2 2+ x =1
x →−2=¿ x ≈−2=¿ x <0

lim ¿ lim ¿
(45) −¿
x→ 0
( 1 1
−
x |x|)¿ = x→ 0
−¿
( 1 1
−
x −x
¿)
lim ¿
= −¿
x→ 0
2
x
¿ = -∞

lim ¿ lim ¿
(46) x→ 0
+¿
( 1 1
−
x |x|)¿ = x→ 0
+¿
( 1 1
− ¿
x x )

= lim ¿
+¿
x→ 0 0 ¿ =0
Production function:
Q(t)= -t3 +8t2 +15t (units) [0 ≤ t ≤ 4]
There is no doubt Q is increasing on [0;4]
Rate of producing: Q’(t)= -3t2+ 16t + 15 (units/hour)
(Q’)’ ≡ Q’’ = -6t + 16
Q’’= 0  t ≈ 2.67
Max/min : Q’(t)

Conclusion:
According to the adjacent table, the worker performs most
efficiently at around 10:40’ wit the ratio of 36.33 units/hour and
best efficiently at 8:00 with the rate 15 units/hour
Table of variation of Q’
t 0 2.67 4
Q’’ + 0 -
Q’ 15 36.3 31
 q= 300 – p2 ≥ 0 (0≤ p ≤ √ 300)
=| |= | |= | |=
2 2
p dq p −2 p −2 p
|E| x x (−2 p)
q dp q q 300− p
2

(a) |E| = 1  2p2= 300 – p2  p2=100

p = 10

P = -10 (discard)
The demand is unit elastic when p = 10
The demand is inelastic when 0 ≤ p ¿ 10
The demand is inelastic when 10 ¿ p ≤ √ 300
(b) Revenue R= p x q = p x (300 - p2)
R= 300p – p3
R’= 300 – 3p2 = 0  p2= 100
p = 10

p = -10

Table of variation
P -10 0 10 √ 300

R’ 0 + + 0 -
R 2000
0 0
 R

2000

0
P
√ 300
10

a) |E| = |−2.5
+8 % | = |-0.31| < 1
%

 Demand is inelastic
b) The situation for economy class flights may differs. If the price’s
increased then the passengers in this sefment may choose
another transportation, suggesting
F(x,y)= x2 + y2 y
Condition: x ∈ R , y ∈ R
A real A real
number number
line line

Domain: x
D={( x , y ) I x ∈ IR , y ∈ IR }
= IR x IR ≡ IR2
F(x,y)=
1 y
x+ y

Condition: x + y ≠ 0 <=> y≠ -x
1
D={( x , y ) I y ≠−x } 1 D
-1
D -1 x

y = -x
 Practice 1:
F(x,y)=√ x+ y
1) Find the domain:
x+y ≥ 0  y ≥ -x
D={( x , y ) I y ≥−x }
2) Sketch the domain: y
- Sketch y=-x
- Choose a test point (0,1)
D
Y ≥ -x
1≥ -0 (true) x

i
y= -x
Practice 3:
•F(x,y)= 2x – 5y
•F(x,y)= x2 + xy3
First – order partial derivative with respect to x
fx= ∂∂ xf = 2 x 1 + 0 = 2 fx= 2x + y3 x 1= 2X + Y3
consider y as constant consider y as constant

fy= ∂f
∂y = 0 – 5 = -5 fy= 0 + 3XY2
consider x as constant consider x as constant

j
1/ f(x,y)= √ x−2 y 3/ f(x,y)= √ x−2 y
1
fx =
( x−2 y )' x
2 √ x−2 y = 2 √ x−2 y fx= (2xy√)'xyx = 2 √yxy
f=
( x−2 y )' y
y 2 √ x−2 y = 2 √ −2
x−2 y = −1
√ x−2 y fy= (2xy√)'xyy = 2√xxy
1
2/ f(x,y)= 2 x +3 y 4/f(x,y)= x+2y
−(2 x+ 3 y)' x −2
fx = (2 x+3 y ) 2 = (2 x+ 3 y )
2 fx= 1
−(2 x+ 3 y)' y −3
fy = (2 x +3 y )
2 = (2 x+ 3 y )2 fy= 2y x ln2

Practice 4:
1/ f(x,y)= √ x−2 y
1
2/ f(x,y)= 2 x +3 y
3/ f(x,y)= √ x−2 y
4/f(x,y)= x+2y
 Practice 5:
F(x,y)= 2x3+xy2

fx= 6x2 + y2 =>fxx = (fx)x = 12x

fy= 0 + 2xy= 2xy => fyy = (fy)y = 2x
fxy= (fy)x = (2xy)’x = 2y
fyx= (fx)y = (6x2 + y2)y = 0 + 2y = 2y
z= 2x2 + y2 -12x -8y + 50
(a) Zx = 4x – 12; zy =2y-8
Find the stationary point by solving
{zz =4=2x−12=0
x

y y−8=0
{ x=3
y=4

=> (x=3, y = 4) is the stationary point

(b) Zxx = 4: zyy = 2; zxy = 0
 ∆ = 4x2 - 02 = 8 ¿ 0 => (3,4) is the minimax for Zxx >0
 2)Find and classify the stationary points of the following
functions: f(x, y) = x3 + 3xy2 – 3x2 – 3y2 + 10

f(x, y) = x3 + 3xy2 – 3x2 – 3y2 + 10

(1) Find the stationary points
{
2 2
f x =3 x +3 y −6 x=0
f y =6 xy−6 y =6 y ( x−1)=0 x=1

y = y1= 0
X=1: (1)  3 + 3y2 – 6 = 0  y2= 1  y = -1
x=0
2
Y=0: (1)  3x – 6x = 0  3x(x-2) = 0 
x=2

 (1,1), (1, -1), (0,0), (2,0) are the stationary points

fxx= 6x – 6; fyy= 6x-6; fxy=6y

∆
(x, y) fxx fyy fxy Conclusion
(1, 1) 0 0 6 -36 A saddle point
(1, -1) 0 0 -6 -36 A saddle point
(0, 0) -6 -6 0 36 A local point
(2, 0) 6 6 0 36 A local point
 Q=100 – 2 x 10 + 12 + 100
= 192
P 10 −5
Qp= -2 => Ep = Q x Qp = 192 x (-2) = 48
PA 12
QP = 1 => EpA = Q x Q = 192 x 1 = 0.025
A PA

(2) Q > 0 => substitutable

PA

%change∈demand
Ey = %change ∈income = 0.52
 %change in demand = 0.53 x 5 % = 2.6%
 Normal
Y > 1: superior
 xs

Practice 1:
Write down expressions for the first – order partial derivatives,
∂z
∂x
and ∂z
∂y
, for
(a) z = x2 + 4y5 (b) z = 3x3 – 2ey
(c) z = xy + 6y (d) z = x6y2 + 5y3
(a) z = x2 + 4y5 (b) z = 3x3 – 2ey
zx= 2x zx= 9x2
zy= 20y4 zy= -2ey
(c) z= xy + 6y (d) z = x6y2 + 5y3
Zx= y Zx= 6x5y2
Zy= x + 6 zy= x6 x 2y + 15y2
= 2x6y + 15y2
Use the small increments formula to estimate the change in
Z= x2y4 – x6 + 4y
When
(a) X increases from 1 to 1.1 and y remains fixed at 0
(b) X remains fixed at 1 and y decreases from 0 to -0.55;
(c) X increases from 1 to 1.1 and y decreases from 0 to -0.5.
a)X increases from 1 to 1.1 and y remains fixed at 0
• x =1 , ∆ x=0.1
0

• y =0 , ∆ y=0
0

 ∆ z ≈ z x (1,0)x ∆ x+ z y (1,0) x ∆ y
4 5
z x =2 x y +6 x ; zy =(1,0)=4

 ∆ z ≈−6 x 0.1+4 x 0=−0,6

(b) X remains fixed at 1 and y decreases from 0 to -0.55;

• x =1 , y =0
0 0

•∆ x=0 , ∆ y=−0.5
z x =−6+ 4 x−0.5 = -1
(c) X increases from 1 to 1.1 and y decreases from 0 to -0.5.
• x =1 , y =0
0 0

•∆ x=0.1, ∆ y =−0.5
Find and classify the stationary points of the following functions:
3 3
f ( x , y )=x y −3 x −3 y

x=1
• f x =3 x 3−3=0  x=-1

y=1
•f 3
=3 y −3=0 
y=-1
y

•f xx =6 x , f yy=6 y , f xy =0

Classify: minimum/maximum/minimax
 x0 , y0 f xx f yy f xy ∆
Conclusion
(1, 1) 6 6 0 36 A local minimum
(1, -1) 6 -6 0 -36 A minimax/saddle point
(-1, 1) -6 6 0 -36 A minimax/saddle point
(-1, -1) -6 -6 0 36 A local maximum
=> (1,1), (1, -1), (-1,1),(-1,-1) are 4 stationary points

Profit = Revenue – Cost

= (pA x qA + pB x qB) – (600 + 4(qA + qB))
= ((100 - qA)qA + (84 - qB) qB – (600+ 4(qA + qB))
Profit P = (100 – qA)qA + (84 – qB) – 600 – 4(qA + qB)
= 1000qA - pA2 + 1000qB2 + 100 <=> qA = 48

{
96
qA= =48
{ Pq =100−2 q A−4=0
A

Pq =84−2 qB −4=0
B
<=>
2
80
q B = =40
2

=> Profit is maximized when qA = 48 and qB = 40

An individual’s utility function is given by:
2 2
U =260 x 1 +310 x2 +5 x 1 x 2−10 x 1−x 2

Where x 1 is the amount of leisure measured in hours per week and x 2 is earned
income measured in dollars per week. Find the value of x 1 and x 2 which maximize U
. What is the corresponding hourly rate of pay?
Step 1: Find the candidate

{U x =260+ 5 x 2−20 x 1=0

1

U x =310+ 5 x 1−2 x 2=0

2
=¿ x 1=138 , x 2=500

Hence, U is maximized when x 1= 138 hours

x 2= 500 dollars
Step 2: You do not need to proceed this step
Ux 1 x1 = -20; Ux x =
2 2 2; Ux
1 = 5 => ∆ = 40 - 52 = 15 > 0
x2

Since ∆ >0 and U x x < 0, it is clear that U is maximized when x 1= 138, x 2= 500
1 2
A monopolist produces the same product at two factories. The cost
functions for each factory are as follows:
2
TC 1 =8 Q 1∧TC 2 =Q2

The demand function for the good is

P=100−2 Q

Where Q=Q +Q . Find the values of Q and Q which maximize profit.

1 2 1 2

Revenue = Q x P + Q x P
1 1 2 2

P1=P2=P

Price: P=100−2 Q
Profit= Revenue – Total cost
=[ ] – [TC1 + TC2]
Profit= Revenue – Total cost
π=( PQ1 + P Q2)−¿ Q22)

¿ [ 100−2 x (Q1 +Q1) ] (Q 1 +Q 2 ¿−8 Q1−Q 22

¿ 100 Q 1+100 Q2−2Q21−4 Q1 Q2−2Q 22−8 Q1−Q22

2 2
¿ 92 Q 1+ 100Q2 −2Q 1−4 Q1 Q2−3 Q2

{ {
8
π Q =92 Q1−4 Q1−4 Q2=0 =¿ Q2= =4
1
2
π Q =100−4 Q1−6 Q2=0
2 Q1=19

Conclusion:
Hence profit is maximized when Q = 4 and Q = 19 2 1

Given the demand function

Q=100−5 P−P2A + 0.005Y 3

Where P=10 , P =20∧Y =100, find the income elasticity of demand and explain
A

why this is a superior good.

Give your answer correct to two decimal places
Q (P=15, PA = 20, Y = 100) = 5525
Qy = 0.005 x 3Y2 = 0.015Y2
=> Qy(Y = 200) = 0.015 x 1002= 150
So the income elasticity of demand
100
Ey = 5525 x 150 = 2.71
Since EY > 1, the good is superior good
Given the utility function U ( x x )=x x . Determine the values of marginal
1, 2
1 /4
1
3 /4
2

utilities U and U when x = 100, x = 200. Hence estimate the change in

x1 x2 1 2

utilities when x decreases from 100 to 99 and x increases from 200 to 201.
1 2

1 1 /4 3 /4
U x = x1 x 2 =¿
1
4