a Chapter 6 (part 2) Example Find and classify the stationary points of the followin! _ Hence sketch their graphs. (fx) =x 4x5 (0) ffx) =2x2 + 3x2- 12k +4 Solution (a) In order to use steps 1 and 2 we need to find the first- x derivat function a (b) fx) = 2 - 4x +5 Differentiating once gives £'(x) = 2x-4 and differentiating a second time giv Step 1 The stationary points are the sof % f(x) =0 so we need to solve 2x-4=0 x=2 for all values of x, so in'p: Salma abdel aziz Page 1 01005681563 CamScanner 2 92 a> s.uaallf£"(2)=2 This number is positive, so the function has 4 minimum at x = 2. We have shown that the minimum point occurs at x = 2. The corresponding value of y is easily found by substituting this number into the function to get y=(QP-42)+5=1 so the minimum point has coordinates (2, 1). . (b) In order to use steps 1 and 2 we need to find the first- and second-order derivatives of the function f(x) = 2x3 + 3x? - 12x + 4 Differentiating once gives £'(x) = 6x? + 6x - 12 and differentiating a second time gives £%x) =12x+6 Step 1 ‘The stationary points are the solutions of the equation £(x)=0 so we need to solve 6x? + 6x 12=0 x+x-2=0 : has solution $VG=ADED 2) x= atx=-2and x= 1. Step 2 To classify these points we need to evaluate f"(-2) and £"(1). Salma abdel aziz page2 01005681563 CamScanner 2 Lis 4>sausalla ete ence 12(-2)+ 6=-18 This is negative, So there is a maximum at x = -2, When X= -2, y=2¢2))+ 3-2-1202) +4 =24 so the maximum point has coordinates (-2, 24), When £01) = 12(1) + 6= 18 This is positive, so there is a minimum at x = 1, Wh y=2(1)+3(1)?- 12(1) +4 =-3 so the minimum point has coordinates (1, -3) Minimum (+) eye oe = stePs: htt O FX) oa OFLU) -0 — : X=? @ Min @ FW < ode X=7 ze output =) aipul all Eco i azz 9 that maximize the average product of labour . 4 e of L . what do you observe ? @: alee? ta Max of Min +b nanncea1Gh2 CamScanner 2 Lis 4>sausall Calculate MPL. ant Solution ; Salma abder aziz Page3a) 2=122-067 2 0 12-421 T a _ 42b-0612 =0 dL L(12-06L)=0 12-0.6L=0 dQ SY = 12-12) >0 ae 2-20) When L=0 WhenL=0 is minimum Q(0) = 6(0)? - 0.2 (0)? = dd 00 12-121 = 12-1220) = -12 <0 When L = 20 aq? * ., When L=20 aa 0 is (maximum ) The firm should therefore employ 20 workers to achieve a maximum output Q=6(20)? — 0.2 (20)3 = 800 b) Average product of labour APL =2 L APL = 22022 L APL=6L-0.21? Salma abdel aziz Page 4 CamScanner ~ bi9e a> suaallWhich shows that it is maximum d(APL) _ wl) 6-04L=0 -0.4L=-6 L=4=15 a4 APL = 6 L-0.2 L? = 6(15) — 0.2 (15)*=45 MPL Q=61? - 0.213 a MPL =~ = 12L—0.6 1? When L=15 Qy MPL = 12(15) - 0.6 (15)? = From results we note Marginal product o: ibour Note :( Margin: oO) roduct of labour ) At the poin labour CamScanner 2TC=3Q?+60+7 a) Find the level of output that maximizes total revenue TR-= P.Q ‘Maximizes "Oral revenue b) Find the level of output that maximize profit Calculate MR and MC at this value of Q- what do you observe ? Solution: we TR=PQ From the equation P+Q =30 P=30-Q 2 TR=(30-Q)Q TR=30Q-Q? Maxim ze leas aR) _ 45 sto 4(@) a aR) _ _ a(Q) a(TR) _ 3929 =0 a(Q) a -2Q=-30 Q=15 d?(TR) W@ 7282 When Q=15 TR Aolacs eek TRhas a maximum at Q=15 b) profit = TR-TC w= GOQ- @)~G9?-60+7) De Salma abdel aziz Pages CamScanner 2 Lis 4>sausallFit =30Q-Q?- FQ? +60 +7 ag . not T= 4 24Q47 (Pwo+pe -3Q +24 =0 , Q=8 ‘When Q=8 has a maximum at Q=8 Tr (the maximum profit =} MR: TR=30Q-Q? Page7 01005681563 CamScanner + ls 4 s.usallWhen Q=8 & MC = 8+6= 14 We noted that at the point of maximum profit Marginal revenue = Marginal cost Example The spy end enand oqo of spd ge ibe Beslio Tax PaQte Demand <> supply y Ant D253 cen gilaeu Cegd! P=-3Qp +80 ‘The government decides to impose a tax per unit. Find the value of t which maximizes the government's/total tax revenue on'the assumption that equilibrium tonditions prevail in the market. rrreal << Solution - The new\supply equation is then F: Qa+8 So that | P=Q+8tt In equilibrium Q:=Qd If this common value is denoted by Q then the supply and demand equations become P=Qt8tt Salma abdel aziz ess 01005681563 CamScanner + Lis 4>sausallL~ nd Q+8+t=-3Q+80 UY = since both sides are equal to P. This canbe rearanged tg siv¢ Se Q=-3Q+72-t (ubtract 841 fom both sides) 4Q=72-t (add 30 to both sides) “8! OUP Q= 18 ~3¢ (divide both sides by 5)” Now, if the number of goods sold is Q and the governme! revenue, T, is given by , T=1Q T +aXx Rev a =P.Q =1(18- 3) (48+ 72)Q 1 =istie This then is the expression that we . c Step 1 Ata stationary point Hence the government she se a tax of $36 on each good. ‘Salma abdel aziz Page@ T 01005681563 CamScanner = lis &suaall