Kutaisi International University Calculus I for Management

Prof. Dr. Dr. h.c. Florian Rupp Fall Term

Assoc. Prof. Dr. Kakha Chubinidze Week 10
Ani Kashibadze, MSc., Giorgi Mujirishvili, Anano Tamarashvili

Curve Sketching & Optimization

This exercise sheet consists of two parts: at rst additional exercises are given the solutions of which
are provided with the lecture slides and can serve you as further blueprints when solving similar tasks.
Then, the actual homework assignments are stated. Please, hand-in your results of the homework
assignments through MSTeams at the date and time specied in MSTeams.

Additional Exercises (see the lecture slides for solutions):

Exercise 10.1: Use the guidelines to sketch the curve

cos(x)
y = f (x) = .
2 + sin(x)

Exercise 10.2: A farmer has 2400 meter of fencing and wants to fence o a rectangular eld that
borders a straight river. He needs no fence along the river. What are the dimensions of the eld
that has the largest area?
Exercise 10.3: A cylindrical can is to be made to hold 1 liter of oil. Find the dimensions that will
minimize the cost of the metal to manufacture the can.
Exercise 10.4: A manufacturer√ determines that x units of a particular item will be sold when the
price is p(x) = 112 − x ln( x) hundred GEL per unit.
a) Find the revenue and marginal revenue as functions of the number of units produced and
sold.
b) Use marginal analysis to estimate the revenue obtained from producing the 12th unit. What
is the actual revenue obtained from producing the 12th unit?
Exercise 10.5: Edgar is the manager of a manufacturing rm. He determines that D(p) = 5000e−0.02p
units of the company's product will be demanded (sold) when the price is p dollars per unit.
a) Find the elasticity of demand for this commodity. For what values of p is the demand
elastic, inelastic, and of unit elasticity?
b) If Edgar decides to increase the price 3% from the current level of 40 GEL, what change in
demand should he expect?
c) Find the revenue R(p) obtained by selling q = D(p) units at p GEL per unit. For what
value of p is the revenue maximized?
Homework Assignment:

Problem 10.1: Curve sketching.

a) Use the guidelines to sketch the graph of the function f (x) = (ln(x − 1))2 . I.e. give
in particular the maximal domain of denition D ⊂ R, the x-intercepts (roots of f , all
extremal values, the intervals of incline and decline, the points of inection, the intervals of
upwards and downwards concavity, and then nally sketch the graph.
b) Find an equation of the slant asymptote. Do not sketch the curve.
−6x4 + 2x3 + 3
y = .
2x3 + x
c) Use the guidelines to sketch the curve y = 1 − x + e1+x/3 . Especially, nd an equation of
the slant asymptote.
Problem 10.2: Optimization, marginal analysis & elasticity.
a) Find the absolute maximum and absolute minimum (if any) of the given function on the
specied interval.
32
(i) f (x) = x3 + 3x2 + 1 , for x ∈ [−3, 2] , and (ii) f (x) = 20x + , for x > 0 .
x
b) You are given the price p(q) at which q units of a particular commodity can be sold and the
total cost C(q) of producing the q units. In each case:
 Find the revenue function R(q), the prot function P (q), the marginal revenue R0 (q),
and marginal cost C 0 (q). Sketch the graphs of P (q), R0 (q), and C 0 (q) on the same
coordinate axes and determine the level of production q where P (q) is maximized.
 Find the average cost A(q) = C(q) q , and sketch the graphs of A(q), and the marginal
cost C (q) on the same axes. Determine the level of production q at which A(q) is
0

minimized.
(i) p(q) = 49 − q , C(q) = 18 q 2 + 4q + 200.
(ii) p(q) = 710 − 1.1q 2 , C(q) = 2q 3 − 23q 2 + 90.7q + 151.
c) Compute the elasticity of demand for the given demand function D(p) and determine
whether the demand is elastic, inelastic, or of unit elasticity at the indicated price p.
2000
(i) D(p) = −1.5p + 25 , at p = 12 , and (ii) D(p) = , at p = 5 .
p2
Problem 10.3: Marginal analysis & elasticity in business and economics.
a) An art gallery oers 50 prints by a famous artist. If each print in the limited edition is
priced at p GEL, it is expected that q = 500 − 2p prints will be sold.
(i) What limitations are there on the possible range of the price p?.
(ii) Find the elasticity of demand. Determine the values of p for which the demand is
elastic, inelastic, and of unit elasticity.
(iii) Interpret the results of part (ii) in terms of the behavior of the total revenue as a
function of unit price.
(iv) If you were the owner of the gallery, what price would you charge for each print? Explain
the reasoning behind your decision.
b) Assume that total national consumption is given by a function C(x), where x is the total
national income. The derivative C 0 (x) is called the marginal propensity to consume.
Then S(x) = x − C(x) represents total national savings, and S 0 (x) is called marginal
√
propensity to save. Suppose the consumption function is C(x) = 8 − 0.8 − 0.8 x. Find
the marginal propensity to consume, and determine the value of x that results in the smallest
total savings.
 c) Income elasticity of demand is dened to be the percentage change in quantity purchased
divided by the percentage change in real income.
(i) Give a formula for income elasticity of demand E in terms of real income I and quantity
purchased Q.
(ii) In Georgia, which would you expect to be greater, the income elasticity of demand for
cars or for food? Explain your reasoning.
(iii) What do you think is meant by a negative income elasticity of demand? Which of the
following goods would you expect to have E < 0: used clothing, personal computers,
bus tickets, refrigerators, used cars? Explain your reasoning.
d) Suppose that the demand equation for a certain commodity is q = p1m , where a and m are
positive constants. Show that the elasticity of demand is equal to m for all values of p.
Interpret this result.
Problem 10.4: Further applications in business and economics.
a) A truck is hired to transport goods from a factory to a warehouse. The driver's wages
are gured by the hour and so are inversely proportional to the speed at which the truck is
driven. The amount of gasoline used is directly proportional to the speed at which the truck
is driven, and the price of gasoline remains constant during the trip. Introduce meaningful
variables and show that the total cost is smallest at the speed for which the driver's wages
are equal to the cost of the gasoline used.
b) A plastics rm has received an order from the city recreation department to manufacture
8000 special Styrofoam kickboards for its summer swimming program. The rm owns 10
machines, each of which can produce 30 kickboards an hour. The cost of setting up the
machines to produce the kickboards is 20 GEL per machine. Once the machines have
been set up, the operation is fully automated and can be overseen by a single production
supervisor earning 15 GEL per hour.
(i) How many of the machines should be used to minimize the cost of production?
(ii) How much will the supervisor earn during the production run if the optimal number of
machines is used?
(iii) How much will it cost to set up the optimal number of machines?
c) A monopolist is a manufacturer who can manipulate the price of a commodity and usually
does so with an eye toward maximizing prot. When the government taxes output, the tax
eectively becomes an additional cost item, and the monopolist is forced to decide how
much of the tax to absorb and how much to pass on to the consumer.
Suppose a particular monopolist estimates that when x units are produced, the total cost will
be C(x) = 78 x2 +5x+100 GEL and the market price of the commodity will be p(x) = 15− 38 x
GEL per unit. Further assume that the government imposes a tax of t GEL on each unit
produced.
(i) Show that prot is maximized when x = 25 (10 − t).
(ii) Suppose the government assumes that the monopolist will always act so as to maximize
total prot. What value of t should be chosen to guarantee maximum total tax revenue?
(iii) If the government chooses the optimum rate of taxation found in part (ii), how much
of this tax will be absorbed by the monopolist and how much will be passed on to the
consumer?
d) Suppose a company must supply N units per time period at a uniform rate. Assume that
the storage cost per unit is D1 GEL per time period and that the setup (ordering) cost is
D2 GEL. If production is at a uniform rate of m units per time period (with no items in
inventory at the end of each period), it can be shown that the total storage cost is
 
1 N
C1 = 2 D1 x 1− ,
m
where x is the number of items produced in each run.
(i) Show that the total average cost per period is
 
1 N D2 N
C = 2 D1 x 1− + .
m x

(ii) Find an expression for the number of items that should be produced in each run to
minimize the total average cost per time period.