Functions 1 / 19[width=center,respectlinebreaks]

I. Lazopoulos

Introduction

Functions

Linear Functions
Graphical Solutions

Functions
Quadratic
Functions

Polynomials

Power Functions

Exponential
Functions
Natural Exp
Functions
Natural Logarithmic
Function

Properties of
Lecture 2
Functions
Inverse Functions

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 Content and Objectives
Functions 2 / 19[width=center,respectlinebreaks]

I. Lazopoulos

• Polynomial Functions
Introduction

Functions

Linear Functions • General Characteristics of Functions

Graphical Solutions

Quadratic
Functions • Power Functions
Polynomials

Power Functions

Exponential
• Exponential and Logarithmic Functions
Functions
Natural Exp
Functions
Natural Logarithmic
• Properties of Functions
Function

Properties of
Functions • Inverse Functions
Inverse Functions

I Reading: ch4 (excluding pp129-134), ch5 (excluding sections 5.4

& 5.5)

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 Functions
Functions 3 / 19[width=center,respectlinebreaks]

I. Lazopoulos ◃ One variable is a function of another if the former variable depends on the
latter - this dependence is also illustrated by graphs (e.g. Laffer curve)
Introduction

Functions
Definition
Linear Functions
Graphical Solutions A (real-valued) function f of a real variable x with domain D is a rule x 7→ f (x)
Quadratic that assigns a unique real number f (x) to each real number x in D; the set of all
Functions possible values f (x) is called the range of f
Polynomials

Power Functions ◃ Denote y the value of f at x so y = f (x); y is the dependent (endogenous)

Exponential and x the independent (exogenous) variable
Functions
Natural Exp
◃ The domain of function f is the set of all possible values of x, whereas the
Functions
range is the corresponding values of y
Natural Logarithmic
Function

Properties of Example: If y = x3 + 1, the function is the rule x 7→ x3 + 1 that assigns the

Functions number x3 + 1 to each value of x
Inverse Functions
◃ A function’s domain described by an algebraic formula consists of all the
values of the independent variable for which the formula gives a unique
value, unless another domain is explicitly specified
√
Example: Find
√ the domains (i) f (x) = 1/(x + 3), (ii) g(x) = 2x + 4, (iii)
h(x) = 3/( x + 1 − 3)
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 Graphs
Functions
◃ If f a function with domain D, the 4set
/ 19[width=center,respectlinebreaks]
of all values f (x) that the function
I. Lazopoulos assumes is called the range of f
Introduction

Functions

Linear Functions
Graphical Solutions

Quadratic
Functions

Polynomials
Example: The cost of producing x units of a commodity is
Power Functions
C(x) = 1000 + 300x + x2 . Compute C(0), C(100) and C(101) − C(100)
Exponential
Functions ◃ The axes of a Cartesian coordinate system (xy-plane) separate the plane
Natural Exp
Functions
into four quadrants
Natural Logarithmic • Any point P can be represented by a unique ordered pair (x, y) where x = a
Function
and y = b; the coordinates of P (i.e. (a, b) 6= (b, a) unless a = b)
Properties of
Functions
Inverse Functions

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 Graphs con’t
Functions 5 / 19[width=center,respectlinebreaks]

I. Lazopoulos
Definition
The graph of a function f is the set of all ordered pairs (x, f (x)), where x
Introduction belongs to the domain of f
Functions
Example: Find the following points on the f (x) = x2 − 4x + 3 and sketch it
Linear Functions
x 0 1 2 3 4
Graphical Solutions
f (x) 3 0 -1 0 3
Quadratic
Functions

Polynomials

Power Functions

Exponential
Functions
Natural Exp
Functions
Natural Logarithmic
Function

Properties of
Functions
Inverse Functions

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 Linear Functions
Functions 6 / 19[width=center,respectlinebreaks]

I. Lazopoulos
Definition
A linear equation is of the form (a, b are constants)
Introduction

Functions
y = b + ax
Linear Functions
Graphical Solutions
• b (intercept) is the value of y when x is zero
Quadratic
Functions • a (slope) measures ∆y (direction and magnitude) when x increases by 1 unit
Polynomials

Power Functions
f (x + 1) − f (x) = a(x + 1) + b − ax − b = a
Exponential
Functions
Natural Exp
Functions
Natural Logarithmic
Function

Properties of
Functions
Inverse Functions

I The equation of the straight line passing through (x1 , y1 ) with slope a is
y − y1 = a(x − x1 )
I The equation of the straight line passing through (x1 , y1 ) and (x2 , y2 )
where x1 6= x2 and a = (y2 − y1 )/(x2 − x1 ) is
y2 − y1
y − y1 = (x − x1 )
x2 − x. 1 . . . . . . . . . . . . . . . . . . .
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 Graphical Solutions
Functions 7 / 19[width=center,respectlinebreaks]
◃ As coordinates of any point on a line satisfy the equation of that line, the
I. Lazopoulos point of intersection of two lines should satisfy both equations; solution of a
2x2 system
Introduction

Functions
Examples:
Linear Functions (a)
Graphical Solutions

Quadratic
Functions

Polynomials

Power Functions

Exponential
Functions
Natural Exp
Functions
Natural Logarithmic
Function
Linear Inequalities
Properties of
Functions
Inverse Functions (b) A consumer’s budget set, where m is income, x, y the quantities and p, q
the corresponding prices of two goods, the budget set
B = {(x, y) : px + qy ≤ m, x ≥ 0, y ≥ 0}

(c) Consider the general linear demand Qd = a − bP and supply Qs = c + dP

schedules where a, b, c, d are positive parameters. What is the equilibrium
price and quantity?
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 Quadratic Functions
Functions A quadratic function is of the form (a, b, c8 /are constants with a 6= 0)
19[width=center,respectlinebreaks]

I. Lazopoulos f (x) = ax2 + bx + c

Introduction
( √ )
1
• y = 0 for x1,2 = 2a
−b ± b2 − 4ac
Functions

Linear Functions • If a < 0, y has a maximum at −b/(2a)

Graphical Solutions
• If a > 0, y has a minimum at −b/(2a)
Quadratic
Functions

Polynomials

Power Functions

Exponential
Functions
Natural Exp
Functions
Natural Logarithmic
Function

Properties of
Functions
Inverse Functions

Example: A monopolist’s total cost and demand are C = aQ + bQ2 and

P = c − dQ, respectively, where Q ≥ 0 output and a, b, c > 0, d ≥ 0 are
constants. What is the Q level to maximise profits π?

c−a (c − a)2
QM = , πM =
2(d + b) 4(d + b)
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 Quadratic Functions con’t
Functions 9 / 19[width=center,respectlinebreaks]
The firm will only produce a positive output
c−a
I. Lazopoulos
(a) If c > a, the firm will produce QM = 2(d+b)
to maximise profits
Introduction
(b) If c ≤ a, the firm will not produce any output (Q = 0, π = 0)
Functions

Linear Functions
Graphical Solutions

Quadratic
Functions

Polynomials

Power Functions

Exponential
Functions
Natural Exp
Functions
Natural Logarithmic
Function

Properties of
Functions
• If d = 0 then P = c the firm is perfectly competitive
Inverse Functions

QC = (P − a)/(2b), π C = (P − a)2 /(4b)

Using QC to solve for P we obtain the supply equation P = a + 2bQ

• When P < a, the price is too low for the firm to earn any profit; it produces
zero output and makes zero profit
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 Polynomials
Functions 10 / 19[width=center,respectlinebreaks]
A cubic function is of the form (a, b, c, d are constants with a 6= 0)
I. Lazopoulos

f (x) = ax3 + bx2 + cx + d

Introduction

Functions

Linear Functions
Graphical Solutions

Quadratic
Functions

Polynomials

Power Functions

Exponential
Functions
Natural Exp
Functions
Natural Logarithmic
Function
All functions we have studied so far are examples of Polynomials
Properties of
Functions
Inverse Functions Definition
The function P (x), where a0 , a1 , . . . an and an 6= 0, is called the General
Polynomial of degree n
P (x) = an xn + an−1 xn−1 + · · · + a1 x + a0

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 Power Functions
Functions 11 / 19[width=center,respectlinebreaks]

I. Lazopoulos
Definition
A general power function is defined for x > 0 where A and r constants
Introduction

Functions f (x) = Axr

Linear Functions
Graphical Solutions
◦ Function is undefined for many values of r when x < 0 (e.g. r = 1/2)
Quadratic
Functions ◦ Function is undefined if r ≤ 0 when x = 0
Polynomials

Power Functions • f (1) = A for any r

{
Exponential 0 for r > 0
Functions • f(0)=
undetermined for r < 0
Natural Exp
Functions
Natural Logarithmic
Function

Properties of
Functions
Inverse Functions

Exercise: Solve the following equations for x: (i) 22x = 8; (ii) 33x+1 = 1/81; (iii)
2
10x −2x+2 = 100
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 Exponential Functions
Functions 12 / 19[width=center,respectlinebreaks]
◃ A quantity that increases (or decreases) by a fixed factor per unit of time,
I. Lazopoulos say a, is said to increase (or decrease) exponentially
Introduction
f (t) = Aat exponential function (a > 0)
}
Functions f (t) = Aat
⇒ f (t + 1) = Aat+1 = af (t)
Linear Functions f (t + 1) = Aat+1
Graphical Solutions
◦ f (t) is increasing in t when a > 1
Quadratic
Functions ◦ f (t) is decreasing in t when 0 < a < 1
Polynomials Since f (0) = A, then f (t) = f (0)at
Power Functions

Exponential
Functions
Natural Exp
Functions
Natural Logarithmic
Function

Properties of
Functions
Inverse Functions Example: Population Growth
The population P in Europe in 1960 (base year) was 606m and 657m in 1970;
grew by 51m over 10 years. If population growth is described by a linear function
then P = 606 + 5.1t but a constant increase of 5.1m per year is unreasonable
(t ≤ −119 population would be negative).
According to estimates, European population grew at a proportional rate of
r = 0.45% per year during that period so that the population t years after 1960
would have been P (t) = P (0)(1 + r)t . . . . . . . . . . . . . . . . . . . .
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 Exponential Functions con’t
Functions 13 / 19[width=center,respectlinebreaks]

I. Lazopoulos Example: Compound Interest

A savings account of A that increases by p% interest each year will have grown
Introduction after t years to A(1 + p/100)t - exponential function with base (1 + p/100)
Functions

Linear Functions Example: Continuous Depreciation

Graphical Solutions
Each year the value of assets decreases, i.e. depreciates. If the value of an asset is
Quadratic
Functions
P0 at t = 0 and it depreciates at a constant rate r% per year, the value of the
asset after t years will be P0 (1 − r/100)t - exponential function with base
Polynomials
(1 − r/100)
Power Functions

Exponential
Functions
Natural Exp
Functions
Definition
Natural Logarithmic The general exponential function with base a > 0 (the factor by which f (x)
Function
changes when x increases by 1)
Properties of
Functions
Inverse Functions
f (x) = Aax
For each unit increase in x:
(i) If a = (1 + p/100) where p > 0, then f (x) will increase by p %
(ii) If a = (1 − p/100) where 0 < p < 100, then f (x) will decrease by p %

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 Natural Exponential Functions
Functions 14 / 19[width=center,respectlinebreaks]
◃ Each base a gives a different exponential function
I. Lazopoulos

Introduction
Definition
Functions
The exponential function f (x) = ex , where e ≈ 2.72, is called the natural
exponential function
Linear Functions
Graphical Solutions
I f (x) = ex possesses the property of being its own derivative!
Quadratic ( )
1 m
Functions To find the economic meaning of e, consider the function f (m) = 1 + m
Polynomials m 1 2 3 4 ... 1000 ... ∞
Power Functions f (m) 2 2.23 2.3703 2.4414 ... 2.7169 ... 2.7182 . . . ≡ e
Exponential Consider a £1 principal deposited to a banker that pays ( 100% )interest
1 m
Functions compounded with frequency m per year then f (m) = 1 + m will be the
Natural Exp
Functions value of the £1 at the end of the year
Natural Logarithmic
Function
◃ When interest is compounded continuously during the year then
Properties of
limm→∞ f (m) = e
Functions I Thus e can be interpreted as the year-end value to which a principal of £1
Inverse Functions
will grow if the interest rate of 100% per annum is compounded
continuously
I A principle of £A compounded continuously at an annual interest rate p for
t years has an end value [( ) ]
( r )mt 1 w rt
lim f (m) = A 1 + =A 1+ = Aert
m→∞ m w
where w = m/r and therefore w → ∞ as m → ∞
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 Natural Logarithmic Function
Functions
◃ We are often interested to find how15many
/ 19[width=center,respectlinebreaks]
years it will take for a principle
I. Lazopoulos £A continuously compounded at r to reach a given value V ; solve
Aert = V with respect to t
Introduction

Functions
I In general, if eu = x, then u is the natural logarithm of x and we write
u = ln x
Linear Functions
Graphical Solutions

Quadratic
Definition
Functions
For any x > 0, its natural logarithm ln x is the unique solution of the equation
Polynomials

Power Functions
eln x = x
Exponential Thus, ln x is the power of e you need to get x
Functions
Natural Exp
Functions Example: Find the numbers (i) ln 1, (ii) ln e, (iii) ln(1/e), (iv) ln 4, (v) ln(-6)
Natural Logarithmic
Function
Rules for the ln function where x, y are positive real numbers
Properties of
Functions • ln(xy) = ln x + ln y
Inverse Functions
• ln(x/y) = ln x − ln y
• ln xp = p ln x
I For each positive number x, the number ln x is defined by eln x = x ⇒
u = ln x is the solution of the equation eu = x
◃ The natural logarithm of x, defined for all x > 0, is given by g(x) = ln x
with a graph of f (x) = ex reflected off the 450 line
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 Properties of Functions
Functions How changes in a function relate to shifts16 /in19[width=center,respectlinebreaks]
its graph
I. Lazopoulos

Introduction

Functions

Linear Functions
Graphical Solutions

Quadratic
Functions

Polynomials

Power Functions

Exponential
Definition
Functions If y = f (x) is replaced by (c is a constant):
Natural Exp
Functions (i) y = f (x) + c, the graph shifts upwards (downwards) by c units if c > 0
Natural Logarithmic
Function (c < 0)
Properties of (ii) y = f (x + c), the graph moves by c units to the left (right) if c > 0 (c < 0)
Functions
Inverse Functions (iii) y = cf (x), the graph stretches (shrinks) vertically if c > 1 (0 < c < 1);
reflected about the x-axis if c < 0
(iv) y = f (−x), the graph is reflected about the y-axis

Example: A demand D = 100 − P and supply S = 10 + 2P functions give the

equilibrium P = 30 and Q = 70. A change in supply to S ′ = 16 + 2P leads to
the new equilibrium P ′ = 28 and Q = 72
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 Properties of Functions con’t
Functions 17 / 19[width=center,respectlinebreaks]

I. Lazopoulos
Example: Use the graph of x2 to sketch the graphs of the following functions:
(i) y = x2 + 1; graph of x2 shifts up by 1
Introduction (ii) y = (x + 3)2 ; graph of x2 moves 3 units to the left
Functions (iii) y = 3 − (x + 1)2 ; graph of x2 turns upside down and shifts to (-1,3)
Linear Functions
Graphical Solutions

Quadratic
Functions

Polynomials

Power Functions

Exponential
Functions
Natural Exp
Functions
Natural Logarithmic
Function If functions f and g defined on a set of real numbers:
Properties of
Functions
• h(x) = f (x) + g(x) or j(x) = f (x) − g(x) (e.g. PG and UG students over
Inverse Functions
time)
• m(x) = f (x) ∗ g(x) or n(x) = f (x)/g(x) (product and quotient)
• If y = f (x) and z = g(y) then z = g(f (x)) or z = f ◦ g (composite
function of x)
2
Example: z = (x3 + x2 )50 , z = e−(x−µ)

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 Inverse Functions
Functions
• The demand quantity D for a commodity18 / 19[width=center,respectlinebreaks]
depends on its price per unit P
I. Lazopoulos such that D = 30/P 1/3 (i.e. D = 10 when P = 27), or D = f (P )
Introduction
• The producer wants to know the inverse demand function P = (30/D)3
(i.e. P = 27 when D = 10), or P = g(D)
Functions
◃ f is the inverse of g, and g is the inverse of f
Linear Functions
Graphical Solutions • If f a function with domain Df = A, for each x ∈ A there is a unique f (x),
Quadratic the range of f is the set B = Rf = {f (x) : x ∈ A}
Functions
◃ f is one-to-one in A provided that, whenever x1 and x2 both lie in A with
Polynomials
x1 6= x2 , then f (x1 ) 6= f (x2 ) (strictly increasing/decreasing in A)
Power Functions

Exponential
Functions
Natural Exp
Functions
Natural Logarithmic
Function

Properties of
Functions
Inverse Functions

Definition
Let f be a function with domain A and range B. If and only if f is one-to-one, it
has an inverse function with domain B and range A.
Function g is given by: for each y ∈ B, the value g(y) is the unique number
x ∈ A such that f (x) = y, then: g(y) = x ⇔. y. =. f. (x),
. . . .for
. . all
. .x. .∈. A,. y ∈
. B
. . .
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 Inverse Functions con’t
Functions 19 / 19[width=center,respectlinebreaks]

I. Lazopoulos It follows that

Introduction
g (f (x)) = g(y) = x and f (g(y)) = f (x) = y
Functions
√
Linear Functions Example: Find the inverse of y = 4x − 3 and y = 5 x + 1
Graphical Solutions

Quadratic • It is convenient to use the same variable as argument in both f and g

Functions

Polynomials
I For two inverse functions f and g, provided the scales of the coordinate axis
are the same, the graphs of y = f (x) and y = g(x) are symmetric about the
Power Functions
line y = x
Exponential
Functions
Natural Exp
Functions
Natural Logarithmic
Function

Properties of
Functions
Inverse Functions

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