Topic 1: Straight Line

Equation & Application

● Deduce the straight line equation and plot the graph

for the information given below:
1. m = 1.5; pass through point (2,3)
2. Pass through point (1,4) and (5,1)
3. Y intercept = 2; m = 1
4. Plot the graph from No. 1,2,3
 3.

5. The quantity demanded of a product is 50 when P = 0.

If the demand (Q) increases by 5 units for every unit
decrease in price, write down the demand function in
P = f(Q)
6. A company will not produce any goods if the price is
exactly $20. They will start to produce 1 item for every
$1.5 increase in price. a) Write down the supply
function. b) At what price point will the company
produce 25 units?

7. Determine Ed for these condition:

a. Demand is unit elastic
|Ed| = 1
b. Demand is inelastic
|Ed| is less than 1
 c. Demand is Elastic
|Ed| is more than 1

● Given the demand function of a laptop P = 600 - 0.5Q

8. Determine Ed when:
a. P = 300
b. P = 200
c. P = 100

9. If the price of laptop increased by 5% from P = 200,

calculate the change of quantity demanded.
10. Graph the demand function of P = 600 - 0.5Q

11. Given​ ​a​ ​demand​ ​function:​ ​Q​ ​=​ ​5000​ ​–2.5P,​ ​if​ ​price
increases​ ​5%​ ​from​ ​750​, calculate the change in
quantity demanded
12. The quantity demanded of a product is 30 when P = 0.
If the demand (Q) decrease by 5 units for every unit
increase in price, write down the demand function in
P = f(Q)
 Topic 2: Simultaneous Application

● Clothing companies will only supply the shoes if the

price is higher than $40. For every $2.5 increase in price,
the company will increase the output by 1 unit. At the
same time, the buyer will not buy the shoes if the price
is $110. For every $3 increase in price, the buyer will
reduce the quantity demanded by 1 unit. Based on the
information:

1. Write down the demand and supply function in P = f(Q)

2. Calculate equilibrium price and quantity.
3. Calculate consumer and producer surplus
● If the government stipulates $12 as tax:
4. Write down the new supply function
5. Calculate the new equilibrium price and quantity

● You have a water bottle factory with initial investment

of $50.000 in order to run the business. For every
goods produced, you pay $5, and sell the water bottle
to customers for $10.

6. What is your Total Revenue equation?

7. What is your Total Cost equation?
8. How many water bottles do you need to sell in order to
reach break-even point?

● The demand and supply function for a product are

given by:
Pd + 2Qd = 40
Ps = 10 + Qs
The government intervenes and applies a price ceiling
of $15.

9. What is the effect on quantity demanded? Calculate

the surplus or shortage of the product.
10. Calculate the profit of black marketers if they operate
in the market.
11. Create the graph and show the area of black
marketers’ profit.
● The demand and supply function for a product are
given by:
Pd + 3.5Qd = 60
Ps = 25 + 1.5Qs
12. The government gave a subsidy of $8. Which function
is affected by the subsidy? Write the new function.
Supply Function = 17 + 1.5Qs
13. The government imposed tax of $4. Which function is
affected by the tax? Write the new function.
 Supply Function = 29 + 1.5Qs
14. How much is the tax distribution for consumers?
15. How much is the tax distribution for producers?

Topic 3: Non-Linear
Function and Application
6. 2log25 x 5log3 x 3log32 =
7. The following equation : 8x2 – 38x + 17 = 0 will have two
roots (X1 and X2). Calculate X1 + X2.
X1 + X2 = -b/a = 38/8 = 4.75

8. Log p = A ; Log q = B ; Log p3q2 = ?

9.
10.

11. In​ ​Java ​region,​ ​the​ ​number​ ​of​ ​population​ ​aged 60​ ​and​
​over (in​ ​thousands)​ ​is​ ​expected​ ​to​ ​grow according​ ​to​ ​the​
​equation​ ​P =​ ​125.5​​e​0.012t​, Where t = year​ ​2012. ​Calculate​ ​the​
​number​​in​year ​2042!
12. Econometrician​ ​believes​ ​that​ ​the​ ​number​ ​of chicken​
​population​ ​in​ ​Micronesian​ ​can​ ​be modeled​ ​in​ ​time​ ​series(t)​
​within​​the exponential​​function​​of​​following​​equation
N = 32525​​e​0.04t where​​N = number​​of​​chicken​​at​​certain​​year.​
​This related​​observation​​was​​started​​in​​1975.
Based​ ​on​ ​the​ ​preceding​ ​exponential​ ​function,​ ​when will​ ​the​
​Micronesian​​have​​the​​population​​of 204,000 chickens?
● The demand function for a good is given by the equation
Q + 1 = 200/P and the supply function is a linear function
P = 5 + 0.5Q.

13. Write the demand function in the form P = f(Q).

14. Sketch the supply and demand functions on the same

diagram for — 1 < 0 < 20. From the graph estimate the
equilibrium point. Confirm your answer algebraically.

15. Find the function of P = f(Q) from the information known

below:
Q = 1 ; P = 10
Q = 3 ; P = 38
Q = 7 ; P = 166
Topic 4: Linear Programming
1. What are the decision variables of this case?
2. Write down the objective function.
3. What are the constraints if we want to solve this
problem with linear programming?
4. Create the solution graph.
5. How many packs of wheat and corn that the farmer
needs to plant in order to maximize his income?
● A store wants to liquidate 200 of its shirts and 100 pairs
of pants from last season. They have decided to put
together two offers, A and B. Offer A is a package of
one shirt and a pair of pants which will sell for $30.
Offer B is a package three shirt and pair pants, which
will sell for $50. The store does not want to sell less
than 20 packages of Offer A and less than 10 of Offer
B. How many packages of each do they have to sell to
maximize the money generated from the promotion?

6. What are the decision variables of this case?

7. Write down the objective function.
 8. What are the constraints if we want to solve this
problem with linear programming?
9. Create the solution graph.
10. How many offer A and B that the store needs to plant
in order to maximize
his income?

PROTRAC Inc. produces two

lines of heavy equipment. Using economic forecasts for next
month, PROTRAC’s marketing manager has judged that
during that period it will be possible to sell as many E-9s of
F-9s as the firm can produce.

Management must now recommend a production target for

next month. That is, how many E-9s and F-9s should be
produced?
Information known:
1. PROTRAC will make a profit of $5000 on each E-9 that
is sold and $4000 on each F-9.

2. Each product is put through machining operations in

both department A and department B.

3. For next month’s production, these two departments

have 150 and 160 hours of available time, respectively.
Each E-9 uses 10 hours of machining in department A
and 20 hours of machining in department B, whereas
each F-9 uses 15 hours in department A and 10 Hours in
department B.

4. Testing of finished products is performed in a third

department. Each E-9 is given 30 hours of testing and
each F-9 is given 10. The total testing hours cannot fall
below 135.

5. In order to maintain the current market position, top

management has decreed the operating policy that it is
necessary to build at least one F-9 for every three E-9s
produced.
6. A major customer has ordered a total of at least five
E-9s and F-9s (in any combination whatever) for next
month, and so at least that many must be produced.

Exercise
11. What are the decision variables of this case?
12. Write down the objective function.
13. What are the constraints if we want to solve this
problem with linear programming?
14. Create the solution graph.
15. How many offer A and B that the store needs to plant
in order to maximize his income?
 Topic 5: Financial Mathematics

1. A savings account of $70,000 earns simple interest at

5% per annum. Calculate the future value of the
account after 3 years.
$80,500

2. How much Rp5,000,000 in 3 years from now worth

today? Assuming i = 8%
Rp4,032,258

3. You have an account balance of Rp100,000,000 in Bank

ABC. The bank offers 5% interest compounded
annually. How much do you have after 5 years?
Rp127,628,156

4. 3 years from now, you want to buy a notebook that

cost Rp25,000,000. You decided to deposit your money
in an investment saving next year. The saving interest is
7% compounded annually. How much money do you
need to save today?
Rp20,407,447

5. Today you have a savings account of Rp50,000,000

with 10% interest per annum, compounded monthly.
How much money do you have after 3 years?
6. Suppose you need Rp100,000,000 in the next 5 years.
Today you save an amount of money in a bank with
12% interest per annum, compounded daily. How much
money do you need to save today?

7. You save Rp220,000,000 in a bank for three months.

The bank offers 9% per annum interest rate,
compounded monthly. Indonesian government
imposes a final tax for the interest income by 20%.
After six months, how much interest do you get?
8. For instance, you need Rp15,000,000 in the next two
years to travel. If a bank offers a fixed interest rate 10%
per annum (compounded quarterly, excluded interest
tax 20%), how much money should you deposit now?

9. Find the APR on a loan corresponding to 9.25%

compounded daily, quarterly, and semi-annually.
10. A business project requires an initial investment of
Rp100 millions, and is expected to generate a series of
cash flow within a 5 years period. The required return
for the project is 11%. Calculate the NPV for the project.
The information of cash flow is on the table below:

Year Net Cash Flow

0 -100

1 20

2 30

3 70

4 50
Should we run the project or not?
11. A bank offers a fixed saving interest rate 10% per
annum (compounded monthly, excluded interest tax
20%). You save every end of the month Rp1,000,000
each for 18 months, how much money do you get after
18 months?
12. Suppose you want to have Rp80,000,000 two years
from now. A bank offers 8% interest rate per annum
compounded monthly. You save money every month in
order to achieve your goal. How much money should
you save every beginning of the month?

13. You borrowed money from a bank for Rp50,000,000 to

expand your business. You pay the loan monthly for
two years. If the bank requires a return of 12% per
annum from the loan, how much money should you
pay to the bank every end of the month?
14. You save Rp5,000,000 every beginning of the month
for 10 years. The bank offers 3% interest per annum,
compounded monthly. How much money will you have
after 10 years?

15. Now you are 20 years old. You want to retire at the age
of 60 and get Rp200,000,000 per year (for 5 years
after you retire (receive money in the beginning of the
year). An investment account offers 8% interest per
annum. How much money should you save every
beginning of the year (for 40 years) until you are
retired in order to have your retirement fund?