Calculus for Economics, Commerce and Management

Assignment 1 - Objective (Solutions)

(1) You are given three sets.

A = {1, 2, 3, 4, 5}, B = {0, 2, 4, 6, 8}, C = {1, 2, 3, 4, 5, 6, 7, 8, 9, 10}.

Which of the following statements is true?

ˆ B ⊆ C.
ˆ A ⊆ C.
ˆ A ⊆ B.
ˆ B ⊆ A.

Ans. A ⊆ C.

(2) Which one of the following sets does 1 NOT belong to?

ˆ [1, 2].
ˆ [1, 2).
ˆ (1, 2].
ˆ (0, 2).

Ans. (1, 2].

(3) Which among the following sets is equal to R \ [0, 1]?

ˆ (−∞, 0) ∪ (1, ∞).

ˆ (−, ∞, 0] ∪ [1, ∞).
ˆ (−∞, 0) ∪ [1, ∞).
ˆ (−∞, 0] ∪ (1, ∞).

(4) A boy tries to write a sequence a1 , a2 , a3 , . . . as follows.

a1 = 2.
If the last term written currently is a multiple of 2, that is, it is an even number, then he adds 1 to
it to get the next term.
f the last term written currently is not a multiple of 2, that is, it is an odd number, then he adds -1
to it to get the next term.
What is a5 equal to?

ˆ 0
ˆ 1

1
 ˆ -1
ˆ 2

Ans. 2

2
 Calculus for Economics, Commerce and Management
Assignment 2 - Objective (Solutions)

(1) Let a ∈ R, 0 < a < 1. Then limn→∞ an =?

ˆ 0
ˆ 1
ˆ a
Ans. 0
(2) Let a ∈ R, 0 < a < 1. Then limn→∞ a1/n =?
ˆ 0
ˆ 1
ˆ a
Ans. 1
(3) Let a ∈ R, a > 1. Then limn→∞ an =?
ˆ 0
ˆ 1
ˆ a
ˆ ∞
Ans. ∞
(4) Let a ∈ R, a > 1. Then limn→∞ a1/n =?
ˆ 0
ˆ 1
ˆ a
ˆ ∞
Ans. 1
√ √ √ √ √
(5) Consider the sequences an = n+1− n and bn = n( n + 1 − n), n ∈ N. Then
ˆ Both {an } and {bn } are convergent sequences.
ˆ {an } is a convergent sequence but {bn } is a divergent sequence.
ˆ {an } is a divergent sequence but {bn } is a convergent sequence.
ˆ Both {an } and {bn } are divergent sequences.
Ans. Both {an } and {bn } are convergent sequences.

1
 Calculus for Economics, Commerce and Management
Assignment 3 - Objective (Solutions)

(1) A firm’s turnover y, measured in millions of rupees after t years, is given by y = 8e0.09(t−1) . The
turnover at the end of 1 year of trading is
ˆ 8 millions
ˆ 1 million
ˆ 6 millions

Ans. 8 millions
(2) The demand function for a product is given by P = 90 − 0.05Q. The units of the product demanded
when d = −1 is
ˆ 200
ˆ 450
ˆ 900
ˆ 90

Ans. 900
(3) Let y = x2 + 2x − 3 denote the demand y versus price x relation. Find the values of price (if any)
when demand is zero.
ˆ x=0
ˆ x=1
ˆ x=2
ˆ x=3

Ans. x = 1
(4) The supply and demand functions are given respectively as follows
P = Q2s + 12Qs + 32, P = −Q2d − 4Qd + 200.
Then the equilibrium price and quantity are respectively
ˆ P = 120, Q = 5
ˆ P = 130, Q = 5
ˆ P = 140, Q = 6
ˆ P = 150, Q = 6

Ans. P = 140, Q = 6

1
 Calculus for Economics, Commerce and Management
Assignment 4A - Objective (Solutions)

1
(1) For the function f (x) = x−1
, which of the following is true?

ˆ limx→0 f (x) exists.

ˆ limx→0 f (x) does not exist but limx→0+ f (x) exists.
ˆ limx→0 f (x) does not exist but limx→0− f (x) exists.
ˆ Both limx→0+ f (x) and limx→0− f (x) do not exist.

Ans. limx→0 f (x) exists.

1−x2
(2) Consider limx→1 1−x
,x 6= 1. Then

ˆ The limit does not exist.

ˆ The limit exists and is equal to 0.
ˆ The limit exists and is equal to 1.
ˆ The limit exists and is equal to 2.

Ans. The limit exists and is equal to 2.

√
(3) Consider limx→0 x+1−1


x
, x 6= 0. Then

ˆ The limit does not exist.

ˆ The limit exists and is equal to 2.
√
ˆ The limit exists and is equal to 2.
√
ˆ The limit exists and is equal to 1 + 2.

Ans. The limit exists and is equal to 2.

1
 Calculus for Economics, Commerce and Management
Assignment 4B - Subjective (Solutions)

(1) [3 marks]
Show that the indicated limit does not exist.
|x|
lim
x→0 x

Solution. We know that (

x
|x| x
= 1, x>0
= −x
x x
= −1, x<0
Thus we get
|x| |x|
lim+ = lim+ 1 = 1 and lim− = lim− −1 = −1.
x→0 x x→0 x→0 x x→0

Hence limx→0 |x|

x
does not exist.

(2) [4 marks] (Question discarded due to lack of clarity and 4 marks will be awarded by default to
all students.)
Consider a production function of a product with input L, defined as Q(L) = bL, L > 0, where b is
a constant.
Let w be the unit input price. Write the cost function and the profit function. Find the points at
which they are continuous/discontinuous.

(3) [3 marks]
A sales person earns a basic monthly salary of Rs. 800 and a commission at the rate of 15% of his
monthly sales and a bonus of Rs. 1,000, if his sales exceeds by Rs. 10,000 in that month. He is also
given a super bonus of Rs. 2,500 if his sales exceeds Rs. 15,000 in that month. Write the income
function of sales and find the points at which it is continuous/discontinuous.
Solution. Let x denote the sales and y(x) denote the income. Then we get

15
800 + 100 x,
 x ≤ 10000
15
y(x) = 800 + 100 x + 1000, 10000 < x ≤ 15000
 15
800 + 100 x + 1000 + 2500, x > 15000


Then it can be checked that the following limits exist and

lim y(x) 6= lim y(x) and lim y(x) 6= lim y(x).

x→10000+ x→10000− x→15000+ x→15000−

So y(x) is discontinuous at 10000 and 15000. Also since y(x) is linear in the intervals (−∞, 10000),
(10000, 15000) and (15000, ∞), it is continuous on those intervals.

1
 Calculus for Economics, Commerce and Management
Assignment 5A - Objective (Solutions)

(1) State whether True or False. The function f (x) = |x| is differentiable at x = 0.

ˆ True
ˆ False

Ans. False

(2) Define the function f : (0, π) → R as f (x) = tan x, for x 6= π/2 and f (π/2) = 0. Then

ˆ f is differentiable at all x ∈ (0, π)

ˆ f is differentiable at all x 6= π/2 and NOT differentiable at x = π/2

Ans. f is differentiable at all x 6= π/2 and NOT differentiable at x = π/2

p
(3) Let f (x) = x2 + 1 and g(x) = x2 − 3x + 2. Then the function f /g is well defined and differentiable
on

ˆ R
ˆ R \ {2, 3}
ˆ R \ (2, 3)
ˆ R \ [2, 3]

Ans. R \ [2, 3]

1
 Calculus for Economics, Commerce and Management
Assignment 5B - Subjective (Solutions)

(1) Suppose that an individual’s post-tax income y is related to his pre-tax income x as
4
y = 100 + x.
5
(a) [1 mark] Find a relation between his tax T and his pre-tax income x.
Solution. The tax T as a function of pre-tax income x is given as
4 x
T (x) = x − y(x) = x − 100 − x = − 100.
5 5
(b) [1 mark] Find the marginal tax-rate.
Solution. The marginal tax is
1
M T (x) = T 0 (x) = .
5
So the marginal tax-rate is M T (x) × 100% = 20%.
(c) [1 mark] Find the average tax-rate of an individual with pre-tax earning Rs. 1000.
Solution. The average tax is given as
T (x) 1 100
AT (x) = = − .
x 5 x
1 1 1
So when the pre-tax earning is x = 1000, the average tax is AT (1000) = 5
− 10
= 10
. So the
average tax-rate is AT (1000) × 100% = 10%.

(2) Let a firm’s total cost C be a function of Q, the quantity produced, and be given by

C(Q) = Q3 − 4Q2 + 12Q.

(a) [3 marks] Find the average cost AC and the marginal cost MC. When is AC=MC?
Solution. The average cost is

C(Q) Q3 − 4Q2 + 12Q

AC(Q) = = = Q2 − 4Q + 12.
Q Q
The marginal cost is
M C(Q) = C 0 (Q) = 3Q2 − 8Q + 12.
Then we have

AC(Q) = M C(Q) ⇐⇒ Q2 − 4Q + 12 = 3Q2 − 8Q + 12 ⇐⇒ 2Q2 − 4Q = 0 ⇐⇒ Q = 0, 2.

So if we assume that the firm produces some quantity Q > 0, we get AC = M C if and only if
the quantity produced is Q = 2 units.

1
 (b) [3 marks] If the cost function changes to

C(Q) = Q3 − 4Q2 + 12Q + 10,

what effect will it have on AC and MC?

Solution. Now the cost function is C(Q) = Q3 − 4Q2 + 12Q + 10. Then the average cost is

C(Q) Q3 − 4Q2 + 12Q + 10 10

AC(Q) = = = Q2 − 4Q + 12 + .
Q Q Q
The marginal cost is
M C(Q) = C 0 (Q) = 3Q2 − 8Q + 12.
10
Thus the marginal cost M C(Q) will the same while the average cost AC(Q) will increase by Q
.

(3) [2 marks]
The demand function of a certain product is such that the total amount received in sales is always
the same, regardless of the quantity sold. Write the functional relation between the demand and
the price and calculate the elasticity of demand.
Solution. Let the total amount received be a constant A > 0. Let the demand Q be a function of
the price P . Then we get Q(P ) × P = A, that is, Q(P ) = PA . This gives dQ
dP
= −A
P2
. So the elasticity
of demand is
dQ P −A P −1
d = × = 2 × = 2 × P 2 = −1.
dP Q P A/P P

(4) [4 marks]
Find the income elasticity of Q for the following functions relating demand Q to income y.

(i) Q = ay + b (ii) Q = ay b

where a, b > 0 are fixed. Further analyze the behaviour of elasticity as the income changes.
Solution.
dQ dQ y ay
(i) We have Q(y) = ay + b. So dy
= a. Therefore the elasticity is d = dy
· Q
= ay+b
.
We then have
1
d = > 0, since a, b > 0 and we consider income y > 0.
1 + b/ay

Further limy→∞ d = 1, that is, as the income increases to infinity, the elasticity tends to 1.
dQ
(ii) We have Q(y) = ay b . So dy
= aby b−1 . Therefore the elasticity is

dQ y y
d = · = aby b−1 · b = b.
dy Q ay
Thus the elasticity is a constant b.

(5) Let the demand Q and price P be related as P = 60 − 0.5Q.

2
(a) [2 marks] Express d purely in terms of P and then in terms of Q.
Solution. We have Q = 60−P
0.5
= 120 − 2P . So dQ
dP
= −2.

dQ P −2P −2P
d = · = = .
dP Q Q 120 − 2P
Also, we then get
−2P −120 + Q
d = = .
Q Q
(b) [1 mark] Calculate d when Q = 100.
Solution. d = −120+Q
Q
= −20
100
= −0.2.
(c) [2 marks] (Question discarded. 2 marks will be awarded by default to all students.)
Calculate the demand when d = −1.5 and P = 200.

3
 Calculus for Economics, Commerce and Management
Assignment 6A - Objective (Solutions)

(1) Consider the function f (x) = x sin x. Then

ˆ f has a local maximum at nπ

2
, for all n ∈ Z.
(2n+1)π
ˆ f has a local maximum at 2
, for all n ∈ Z.
(4n+1)π
ˆ f has a local maximum at 2
, for all n ∈ Z.
(4n+3)π
ˆ f has a local maximum at 2
, for all n ∈ Z.
(4n+1)π
Ans. f has a local maximum at 2
, for all n ∈ Z.

(2) Consider the function g(x) = x3 − 3. Then

ˆ g has a unique point of local minimum, which is not a point of global minimum.
ˆ g has a unique point of local maximum, which is not a point of global maximum.
ˆ g has a point of global maximum and a point of global minimum.
ˆ g has no point of local minimum or local maximum.

Ans. g has no point of local minimum or local maximum.

(3) Consider the function h(x) = x3 − 6x2 + 11x − 6. Then

ˆ h has one point of local maximum and one point of local minimum.
ˆ h has one point of global maximum and one point of global minimum.
ˆ h has two points of local maximum and no point of local minimum.
ˆ h has two points of local minimum and no points of locam maximum.

Ans.

(4) h has one point of local maximum and one point of local minimum.

1
 Calculus for Economics, Commerce and Management
Assignment 6B - Subjective (Solutions)

(1) [4 marks]
Find the local maxima/minima and global maxima/minima, if any of the following functions. (Full
marks awarded for finding just the local maxima/minima.)

(a) f (x) = x23x+1

Solution.
(1) (Using Second Derivative Test) We have

(x2 + 1)(3) − (3x)(2x) −3x2 + 3

f 0 (x) = =
(x2 + 1)2 (x2 + 1)2

and
(x2 + 1)2 (−6x) − (−3x2 + 3)(4x)(x2 + 1) (x2 + 1)(−6x) − (−3x2 + 3)(4x) 6x3 − 18x
f 00 (x) = = = .
(x2 + 1)4 (x2 + 1)3 (x2 + 1)3

So
−3x2 + 3
f 0 (x) = 0 ⇐⇒ =0 ⇐⇒ x2 = 1 ⇐⇒ x = ±1.
(x2 + 1)2
Further f 00 (−1) = 12
8
= 23 > 0 and f 00 (1) = −12
8
= −3
2
< 0. So by second derivative test, f has a
local minimum at -1 and a local maximum at 1. Note that f (−1) = −3 2
and f (1) = 32 .
(2) (Using First Derivative Test) We have

0 (x2 + 1)(3) − (3x)(2x) −3x2 + 3

f (x) = = 2
(x2 + 1)2 (x + 1)2

So
−3x2 + 3
f 0 (x) = 0 ⇐⇒ =0 ⇐⇒ x2 = 1 ⇐⇒ x = ±1.
(x2 + 1)2
Consider any 0 < h < 1. Then

3 − 3(−1 − h)2 3 − 3(1 + h)2

f 0 (−1 − h) = = <0
((−1 − h)2 + 1)2 ((1 + h)2 + 1)2

and
3 − 3(−1 + h)2 3 − 3(1 − h)2
f 0 (−1 + h) = = > 0.
((−1 + h)2 + 1)2 ((1 − h)2 + 1)2
Thus by First Derivative Test, f has a local minimum at -1. Further

3 − 3(1 − h)2
f 0 (1 − h) = >0
((1 − h)2 + 1)2

1
 and
3 − 3(1 + h)2
f 0 (1 + h) = < 0.
((1 + h)2 + 1)2
Thus by First Derivative Test, f has a local maximum at 1.
3
Note that |f (x)| = |x+1/x| , for all x 6= 0. Clearly |f (0)| = 0 < 3/2. We now prove that for all
x 6= 0,
3 3 3 1
− ≤ ≤ ⇐⇒ x+ ≥ 2.
2 x + 1/x 2 x
Consider x > 0. Then clearly x+1/x > 0. Suppose 0 < x+1/x < 2. This gives 0 < x2 +1 < 2x,
that is, x2 − 2x + 1 < 0, which says (x − 1)2 < 0. This is not possible. Thus x + 1/x ≥ 2. Now
consider x < 0. Then −x > 0 and we get −x − 1/x < 2. Since the sign of x and x + 1/x are
always the same, combining the above observations, we get |x + 1/x| ≥ 2.
(b) f (x) = x + x1
Solution. We have
1 2
f 0 (x) = 1 − and f 00 (x) = .
x2 x3
So
1
f 0 (x) = 0 ⇐⇒ =1 ⇐⇒ x2 = 1 ⇐⇒ x = ±1.
x2
Further f 00 (−1) = −2 < 0 and f 00 (1) = 2 > 0. So by second derivative test, f has a local
maximum at -1 and a local minimum at 1. Also f (−1) = −2 and f (1) = 2. Since f (−1) < f (1),
we conclude that -1 is not a point of global maximum and 1 is not a point of global minimum.
Also since, on R, every point of global maximum (minimum) is a point of local maximum
(minimum), f has no global maxima or minima.

(2) [3 marks] (Incorrect question. 3 marks will be awarded by default to all students.)
Let the demand curve of a firm be P = f (Q), where f is differentiable with f 0 (Q) 6= 0. Let the
maximum of the total reverser of the firm be at a price P0 . Show that d (P0 ) = −1.

(3) [3 marks]
The average cost of a firm is
1
A(Q) = 15 − 6Q + Q2 + ,
Q
where Q is the input. Find the total cost and the marginal cost curves.
Solution. The average cost is A(Q) = T (Q)
Q
, where T (Q) is the total cost. So the total cost is
T (Q) = QA(Q) = Q − 6Q + 15Q + 1. The marginal cost is M (Q) = T 0 (Q) = 3Q2 − 12Q + 15.
3 2

(4) [4 marks]
The demand function for a goods is given by the relation P = 50 − 2Q, while the total cost is given
by T C = 16 + 2Q.

(a) Find appropriate relations and compare the graphs of total profit with total cost and find the
break-even points for the firm.
Solution. The total revenue function is

T R(Q) = P Q = 50Q − 2Q2 .

2
 So the total profit function is

T P (Q) = T R(Q) − T C(Q) = 50Q − 2Q2 − 16 − 2Q = 48Q − 2Q2 − 16.

So the break-even is achieved when

√ √
2 2 24 ± 576 − 32 24 ± 544
T P (Q) = 0 ⇐⇒ 2Q −48Q+16 = 0 ⇐⇒ Q −24Q+8 = 0 ⇐⇒ Q = = .
2 2
√
Thus the break-even points are Q = 12 ± 136.
(b) Compare the levels at which profit and revenue are maximized.
Solution. We have (T P )0 (Q) = 48 − 4Q. So

(T P )0 (Q) = 0 ⇐⇒ 48 − 4Q = 0 ⇐⇒ Q = 12.

Further (T P )00 (Q) = −4 and so (T P )0 (12) = −4 < 0. Thus the total profit is maximized at
Q = 12.
Now (T R)0 (Q) = 50 − 4Q. So
25
(T R)0 (Q) = 0 ⇐⇒ 50 − 4Q = 0 ⇐⇒ Q = .
2
Further (T R)00 (Q) = −4 and so (T R)00 (25/2) = −4 < 0. Thus the revenue is maximized when
Q = 25/2.

(5) [6 marks]
Prove the following relations.

(a) M R = P 1 + 1d .

Solution. We consider the price P to be a function of quantity Q. Thus we have the total
revenue T R = P Q. So
   
d(T R) dP Q dP 1
MR = =Q +P =P · +1 =P +1 .
dQ dQ P dQ d

(b) If profit is maximum at Q0 , then M R = M C at Q0 .

Solution. We consider the total revenue T R to be a function of the quantity Q. So the profit
function is Π = T R − T C. If the profit is maximum at Q0 , we get

dΠ d(T R) d(T C)
(Q0 ) = 0 =⇒ (Q0 ) − (Q0 ) = 0 =⇒ M R(Q0 ) − M C(Q0 ) = 0.
dQ dQ dQ

(c) M C = ACmin .
Solution. We consider the total cost T C to be a function of the quantity Q. Then T C =
(AC)Q. This gives
d(AC)
MC = Q + AC.
dQ
d(AC)
So if Q0 = ACmin , then dQ
(Q0 ) = 0 and hence M C(Q0 ) = AC(Q0 ) = ACmin .

3
 Calculus for Economics, Commerce and Management
Assignment 7

(1) The function f (x) = x sin x is

ˆ concave in (2nπ, (2n + 1)π) and convex in ((2n − 1)π, 2nπ), for all n ∈ Z.
(4n+1)π
(4n+2)π (4n+3)π

ˆ convex in 4nπ
2
, 2
and concave in 2
, 2 , for all n ∈ Z.
ˆ has no inflection point in R.
ˆ has finitely many inflection points in R.

Ans. concave in (2nπ, (2n + 1)π) and convex in ((2n − 1)π, 2nπ), for all n ∈ Z.

(2) The function g(x) = ax2 + bx + c, where a, b, c ∈ R are constants, has

ˆ a unique point of inflection, for any a, b, c ∈ R.

ˆ no point of inflection, for any a, b, c ∈ R.
ˆ no point of inflection, for a = 0 and any b, c ∈ R.
ˆ infinitely many points of inflection, for a = 0 and any b, c ∈ R.

Ans. no point of inflection, for a = 0 and any b, c ∈ R.

(3) The function h(x) = x3 + 3x2 − 2x + 5 is

ˆ convex in (−3, −2) and concave in (0, 1).

ˆ concave in (−2, 0) and convex in (0, 2).
ˆ concave in (−3, −2) and convex in (0, 1).
ˆ convex in (−2, 0) and convex in (0, 2).

Ans. concave in (−3, −2) and convex in (0, 1).

(4) The function k(x) = tan x

(2n+1)π
ˆ has a point of inflection at 2
, for all n ∈ Z.
ˆ has a point of inflection at nπ, for all n ∈ Z.
ˆ is convex on (2n−1)π , (2n+1)π


2 2
, for all n ∈ Z.
ˆ is concave on (2n−1)π , (2n+1)π


2 2
, for all n ∈ Z.

Ans. has a point of inflection at nπ, for all n ∈ Z.