BASIC MATHEMATICS FOR ECONOMISTS
Properties of Functions
4.1 Shifting Graphs
4.2 New Functions from Old
4.3 Inverse Functions
4.4 General Functions
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4.1 Shifting Graphs
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Exercise:
Suppose the supply curve ௦ = 10 + 2 and the demand curve =
100 − . If the government imposes $1 tax per unit on the producers, find
the new supply curve function and the equilibrium.
Demand: When P = 0, Q = 100
When Q =0, P=100
Supply: When Q is 0, P= -5
When P is 0, Q = 10
10 + 2P = 100 - P
P* = 30, Q* = 70
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4.2 New Functions from Old
• Suppose that and functions with domain ______.
D is a subset of R
• The function defined by the formula = + () is called
sum of and , and we write = + .
the ___
• The function defined by the formula = − () is called
difference of and , and we write = − .
the _______
• Sums and differences of functions are often used in economic models.
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Example:
The cost of producing units of a commodity is . The cost per unit
____. If, in particular, ଷ
of output, called average cost, isC(Q)/Q
ଶ
variable cost
is a cubic cost function, then the average cost would be
ଶ ______,
D/Q where 0.
fixed cost
The is a sum of a quadratic function ଶ and the
hyperbola /.
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Example
Profit = Revenue - Cost
Let denote the revenues obtained by producing and selling units.
We then define the profit function
At the graph intersection
points, the revenue is zero
(R-C=0), break even
The cost function here is a cubic function and the revenue function is a
linear
_____ function.
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• If is a function of , and is a function of , then can be regarded
as a function of ____.
x We call as a composite function of .
= ( )
= ()
That means = = (). () is called the kernel or
_____ function, while is called the exterior function.
interior
• () is often denoted by ∘ or ∘ () (read of ).
∘ ≠ ∘
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Exercise: = ଶ , = 1 +
∘ () = _______ while ( ∘ )() = _________
(1 + x)^2 1 + x^2
Remarks:
( ∘ )() and (. )() are two different concepts.
. () is the product of and . Therefore . = () × ()
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4.3 Inverse Functions
• Recall function: ⇒ = () but not _________
necessary
⇐ = ().
Example: = ଶ
x = square root y
f^-1 = square root x
• What if we have ⇐ = ()?
• Let be a function with domain A and range B. If and only if is one-
to-one, it has an inverse function with domain B and range A. The
function is given by the following rule: for each ∈ , the value
( ) is the unique number in A such that = . Then
= ⇔ = where ∈ and ∈
• It means that _____
undoes what ____
f
did to .
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Exercise:
y + 3 = 4x
(a) Find the inverse function of 4 3 (y + 3)/4 = x
(b) The demand function is the function of , . Suppose a
specific demand function is 100 10. Find the inverse demand
function. (100 - D)/10
(c)
Inverse function exists, because 1-1 13 Inverse function does not exist, no 1-1
4.4 General Functions
A vertical line test
• A function is a rule which to each element in the domain associates
one and only one element in the range.
• is often called the image of element by function .
We _____have
can many to one
We _____
cannot have one to many
If we have one to one , then the _________, _____,exists.
inverse function
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