LINEAR FUNCTION

INTRODUCTION
The linear function is popular in economics. It is attractive because it is simple and easy to
handle mathematically. It has many important applications.Linear functions are those whose
graph is a straight line.
A linear function has the following form
y = f(x) = a + bx
A linear function has one independent variable and one dependent variable.
The independent variable is x and the dependent variable is y.a is the constant term or
the y intercept. It is the value of the dependent variable when x = 0.
b is the coefficient of the independent variable. It is also known as the slope and gives the
rate of change of the dependent variable.

Definition of a Linear Function

A linear function is any function that graphs to a straight line. What this means
mathematically is that the function has either one or two variables with no exponents or
powers. If the function has more variables, the variables must be constants or known
variables for the function to remain a linear function.

Identifying Linear Functions

To identify linear functions, you can create a checklist of several items the function must
meet.
1. The first item the function must satisfy is that it must have either one or two real
variables. If another variable is present, it must be a known variable or constant. For
example, the function C = 2 * pi * r is a linear function because only the C and r are
real variables, with the pi being a constant.
2. The second item is that none of the variables can have an exponent or power to them.
They cannot be squared, cubed, or anything else. All variables must be in the
numerator.
3. The third item is that the function must graph to a straight line. Any kind of a curve
disqualifies the function.
So, linear functions all have some kind of straight line when graphed. The line could be going
up and down, left and right, or slanted but the line is always straight. It doesn't matter where
on the graph the function is plotted as long as the line comes out straight.

Working with Linear Functions

If you know that a function is linear, you can plot the graph using just two points. If you are
unsure, you can use three or four points to double check.
To figure out your points to plot them, set up a T-chart and start plugging in values for one of
the variables. Plug the values into the function to calculate the other variable and note it on
the T-chart. When you have filled the T-chart, go ahead and plot the points on the graph.
Then, take a ruler and make a straight line through them. All linear functions will have points
that are linked up nicely.
Graphing a linear function
To graph a linear function:
1. Find 2 points which satisfy the equation
2. Plot them
3. Connect the points with a straight line
Example:
y = 25 + 5x
let x = 1
then
y = 25 + 5(1) = 30
let x = 3
then
y = 25 + 5(3) = 40

A simple example of a linear equation

A company has fixed costs of $7,000 for plant and equuipment and variable costs of $600 for
each unit of output.
What is total cost at varying levels of output?
let x = units of output
let C = total cost
C = fixed cost plus variable cost = 7,000 + 600 x
OUTPUT

TOTAL COST

15 units

C = 7,000 + 15(600) = 16,000

30 units

C = 7,000 + 30(600) = 25,000

Combinations of linear equations

Linear equations can be added together, multiplied or divided.
A simple example of addition of linear equations
C(x) is a cost function
C(x) = fixed cost + variable cost
R(x) is a revenue function
R(x) = selling price (number of items sold)
profit equals revenue less cost
P(x) is a profit function
P(x) = R(x) - C(x)
x = the number of items produced and sold