Math Review for ECO220Y: PART 1 of 2

For success in our course it is important that you have the skills needed to solve the
problems in both Part 1 and Part 2 of this Math Review. If you find these questions easy
then you do not need to spend much time on this. However, if your skills are rusty or
missing it is important that you work to get caught up. Both parts of this Math Review
are here to help you. Additionally our Teaching Assistants (TA’s) have office hours should
you run into difficulty when working through these problems.

1 Percentages
A percent is a fraction, ratio, or proportion multiplied by 100.
A percentage point is a unit expressing the difference between two percentages.

1. Suppose that the interest rate is currently 2.76%.

(a) What would the new interest rate be if the bank increased it by 1 percentage
point?
(b) What would the new interest rate be if the bank increased it by 1 percent?

2. Consider a data set that contains 225 observations obtained from a survey of
individuals. Three of the variables are gender, whether the individual is retired, and
income.

(a) If 56 of the observations are marked female, what percent of the data is female?
(b) If the remaining observations are marked male, what percent of the data is male?
(c) If 16% of the observations are marked retired, what number of observations is
retired?
(d) If 0.5% of the observations are marked retired, what number of observations is
retired?
(e) How many more individuals would you need to survey to increase the sample
size by 10%?
(f) How many observations would you have left if you needed to discard 20% of the
data because it was incorrectly entered?
(g) If 16% of the observations are marked retired, how many more retired
individuals would you need to survey to increase the percent retired in the data
by 4 percentage points?

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 (h) If 16% of the observations are marked retired, how many more retired
individuals would you need to survey to increase the proportion retired in the
data by 4 percent?
(i) Suppose 12% of the observations are missing a value for income. (This often
happens in real-world data as some people do not feel comfortable revealing
their income for a survey.)
i. How many individuals refused to reveal their income?
ii. Suppose that in the entire data set 48% had income less than or equal to
$50,000 and 40% had income above $50,000. Of those that responded to the
income question, what percent had income less than or equal to $50,000?
Above $50,000?

2 Equation of a Line
A line, which completely summarizes the linear relationship between x and y, is often
written in terms of the y-intercept a and the slope b.

y = a + bx (1)

The intercept (a) is the value of y when x is equal to zero.

The slope can be found by using any two points, (x1 , y1 ) and (x2 , y2 ), that a line passes
through (so long as the line is not perfectly vertical, in which case the slope is not defined:
it is infinitely steep).
y2 − y1
b= (2)
x2 − x1
One way to find the equation of a line if the y-intercept is not known is to use the
“point-slope” formula, which just requires that you know the slope of the line (b) and one
point the line passes through (x1 , y1 ):

y − y1 = b(x − x1 ) (3)

1. Find the slope and intercept of the line that passes through the points (0,0) and
(10,10) and write it in the same format as Equation 1.

(a) Sketch the line.

(b) According to the line, what happens to y when x increases from 4 to 5?
(c) According to the line, what happens to y when x increases from 5 to 6?
(d) According to the line, what happens to y when x increases from 6 to 7?

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 (e) Why did you get the same answer for (b), (c) and (d)?
(f) According to the line, what happens to y when x decreases from 10 to 9?
(g) According to the line, what is y when x is 0?

2. Find the slope and intercept of the line that passes through the points (1,2) and (2,2)
and write it in the same format as Equation 1.

(a) Sketch the line.

(b) According to the line, what happens to y when x increases from 1 to 2?
(c) According to the line, what happens to y when x increases from 1 to 100?
(d) According to the line, what is y when x is 0?

3. Find the slope and intercept of the line that passes through the points (1,2) and (2,0)
and write it in the same format as Equation 1.

(a) Sketch the line.

(b) According to the line, what happens to y when x increases from 1 to 2?
(c) According to the line, what happens to y when x increases from 0 to 1?
(d) Why did you get the same answer for (b) and (c)?
(e) According to the line, what is y when x is 0?

4. Consider the line y = 10 − x.

(a) Sketch the line.

(b) Sketch a new line that is shifted up two units.
(c) What is the equation of this new line?
(d) Sketch another new line that is the original line shifted down 3 units.
(e) What is the equation of this new line?
(f) On a new graph sketch the original line again.
(g) Sketch a new line that has a slope twice as steep but the same y-intercept.
(h) What is the equation of this new line?
(i) Sketch a new line that has a slope twice as steep but the same x-intercept.
(j) What is the equation of this new line?

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3 Inequalities, Intervals, and Absolute Values
Consider any two real numbers a and b. The following shows the possible inequalities.

a<b a is less than b a is “strictly” less than b

a≤b a is less than or equal to b a is “weakly” less than b
a>b a is greater than b a is “strictly” greater than b
a≥b a is greater than or equal to b a is “weakly” greater than b
a 6= b a is not equal to b

Intervals are sets of real numbers that correspond to line segments in geometry. The
following shows the possible intervals for any pair of real numbers a and b where a < b.

(a, b) {x|a < x < b} Open interval of all values of x such that x > a and x < b
[a, b] {x|a ≤ x ≤ b} Closed interval of all values of x such that x ≥ a and x ≤ b
[a, b) {x|a ≤ x < b} Interval of all values of x such that x ≥ a and x < b
(a, b] {x|a < x ≤ b} Interval of all values of x such that x > a and x ≤ b
(a, ∞) {x|x > a} Infinite interval of all values of x such that x > a
[a, ∞) {x|x ≥ a} Infinite interval of all values of x such that x ≥ a
(−∞, b) {x|x < b} Infinite interval of all values of x such that x < b
(−∞, b] {x|x ≤ b} Infinite interval of all values of x such that x ≤ b
(−∞, ∞) All Real numbers Infinite interval of all values of x

Rules for Inequalities:

1. If a < b, then a + c < b + c

2. If a < b and c < d, then a + c < b + d

3. If a < b and c > 0, then ac < bc

4. If a < b and c < 0, then ac > bc

1 1
5. If 0 < a < b, then a
> b

Other useful symbols:

≈ (which is sometimes written ' or ∼

=), which is read “is approximately equal to.”
For example 27.8889 ≈ 28.

±, which is read “plus or minus.” For example 4 ± 3 is 1 and 7.

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The absolute value of a number a, denoted by |a|, is the distance from a to 0 on the real
number line. Distances are always positive or 0, so we have

|a| ≥ 0 for every number a

So we can write
|a| = a if a ≥ 0
|a| = −a if a < 0
(Recall: If a is negative the -a is positive.)

Properties of Absolute Values: Suppose that a and b are any real numbers and n is an
integer.

1. |ab| = |a||b|
|a|
2. | ab | = |b|
if b 6= 0

3. |an | = |a|n

Suppose that a > 0. Then we also have 4 - 6:

4. |x| = a if and only if x = ±a

5. |x| < a if and only if −a < x < a

6. |x| > a if and only if x > a or x < −a

1. Solve the inequality 1 + x < 7x + 5. (Your final answer should be in interval format
as shown in the first column of the table above.)

2. Solve the inequalities 4 ≤ 3x − 2 < 13. (Final answer in interval format.)

3. Solve the inequalities 2x + 1 ≤ 4x − 3 ≤ x + 7. (Final answer in interval format.)

1+x
4. Solve the inequality 1−x
> 1. (Final answer in interval format.)

5. Solve |2x − 5| = 3.

6. Solve |x − 5| < 2. (Final answer in interval format.)

7. Solve |3x + 2| ≥ 4. (Final answer in interval format.)

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4 Areas
Area of a rectangle = b ∗ h where b is the length of the base and h is the height.
Area of a triangle = 12 b ∗ h where b is the length of the base and h is the height.

1. Find the total area under the line and greater than (gt) or equal to 0 (hence above
the x-axis) in Figure 1.

2. Find the total area under the line and gt or equal to 0 in Figure 2.

3. Find the total area under the line and gt or equal to 0 in Figure 3.
Figure 1 Figure 2 Figure 3
0 .05 .1 .15 .2

0 1 2 3 4
0 .2 .4 .6 .8
Density

Density

Density
0 2 4 6 8 10 -1 -.5 0 .5 1 4 4.1 4.2 4.3 4.4 4.5
u u u

4. Draw a line with slope zero that has an area under it equal to 12.

5. Find the total area under the lines and gt or equal to 0 in Figure 4.

6. Find the total area under the lines and gt or equal to 0 in Figure 5.

7. Find the total area under the lines and gt or equal to 0 in Figure 6.
Figure 4 Figure 5 Figure 6
0 .2 .4 .6 .8

.1 .2 .3

1 2 3
Density

Density

Density

.
0

-2 -1 0 1 2 0 2 4 6 8 10 0 .2 .4 .6 .8 1
r r r

8. Draw lines similar to those in Figures 4-6 that have an area under them equal to 12.
Note: Figures 7 - 9 show “density functions.” One thing that being a density
function implies is that the total area under the function is exactly 1. The “support”
of the density function in Figures 7 - 9 is [0,3]. The support refers to the range of
x-axis values which have a (non-zero) line above them. For example, in Figure 1 the
support is [0,10], in Figure 2 it is [-1,1], and in Figure 6 it is [0,1].

9. Find the shaded area in Figure 7.

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10. Find the shaded area in Figure 8.

11. Find the shaded area in Figure 9.

Figure 7 Figure 8 Figure 9
.2 .4 .6

.2 .4 .6

.2 .4 .6
Density

Density

Density
0.15 . . 2.70 0.08 2.92
0

0
0 1 2 3 0 1 2 3 0 1 2 3
u u u

12. What would you have to change 0.15 to such that the area in Figure 7 is 0.4?

13. What would you have to change 2.70 to such that the area in Figure 8 is 0.4?

14. What would you have to change 0.15 to such that the area in Figure 7 is 0.5?

15. What would you have to change 2.70 to such that the area in Figure 8 is 0.5?
Note: Figures 10 - 12 also show density functions. The support of the density
function in Figures 10 - 12 is [-3,3].

16. Find the shaded area in Figure 10.

17. Find the shaded area in Figure 11.

18. Find the shaded area in Figure 12.

Figure 10 Figure 11 Figure 12
0 .1 .2 .3 .4 .5

0 .1 .2 .3 .4 .5

0 .1 .2 .3 .4 .5
Density

Density

Density

1.36 -2.05 -2.05 2.05

-4 -2 0 2 4 -4 -2 0 2 4 -4 -2 0 2 4
r r r

19. What would you have to change 1.36 to such that the area in Figure 10 is 0.01?

20. What would you have to change -2.05 to such that the area in Figure 11 is 0.01?

21. What would you have to change 1.36 to such that the area in Figure 10 is 0.025?

22. What would you have to change -2.05 to such that the area in Figure 11 is 0.025?

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5 Summation
Sums containing many terms are often written in sigma notation, which is so named
because it uses the Greek capital letter sigma: Σ.

Definition: If am , am+1 , ..., an are real numbers and m and n are integers such that m ≤ n,
then n X
ai = am + am+1 + am+2 + ... + an−1 + an (4)
i=m

The letter i is the index (or the index of summation).

Very Simple Example: Suppose you wanted to write the sum 2 + 2 = 4 in sigma notation.
You would write
2
X
2=4 (5)
i=1

In this example a1 = a2 = 2. The index takes on two values (1 and 2) because there were
two terms in our original sum.

Very Simple Example Extended: Suppose you wanted to write the sum 2 + 2 + 2 + 2 = 8
in sigma notation. You would write
4
X
2=8 (6)
i=1

In this example a1 = a2 = a3 = a4 = 2. The index takes on four values (1, 2, 3 and 4)

because there were four terms in our original sum.

Useful Theorems Related to Sums: where c is any constant and n is a positive integer
Pn Pn
1. i=m cai = c i=m ai
Pn Pn Pn
2. i=m (ai + bi ) = i=m ai + i=m bi

Pn Pn Pn
3. i=m (ai − bi ) = i=m ai − i=m bi

Pn
4. i=1 1=n
Pn
5. i=1 c = nc
Pn n(n+1)
6. i=1 i= 2

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1. Consider the following data set and questions about it. Please note: if you think that
any of the answers requires a tremendous amount of computation, you are not
answering the question in an efficient manner (which requires using all the
information provided in the table and the information above).
i x y
1 18.1 3.8
2 32.8 7.5
3 4.9 4.2
4 22.1 6.6
5 18.7 4.0
6 44.7 5.6
7 21.6 4.1
8 10.8 6.3
9 47.2 6.4
10 10.9 4.2
11 21.2 3.3
12 8.0 2.6
13 24.5 5.4
14 32.8 1.8
15 3.2 7.9
16 28.7 1.0
17 33.4 1.1
18 41.7 5.5
19 1.9 0.3
20 46.9 8.2
21 27.2 3.6
22 0.7 8.1
23 20.4 0.5
24 47.9 2.1
25 40.7 5.9
26 35.8 9.8
27 28.0 6.7
28 39.9 1.9
29 36.1 2.5
30 45.2 7.2
Total 796.0 138.1

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 P30
(a) What is i=1 xi ?
P30
(b) What is i=1 yi ?
P30
(c) What is i=1 (xi + yi )?
P30
(d) What is i=1 (xi − 3yi )?
P3
(e) What is i=1 xi y i ?
P3 P3
(f) What is ( i=1 xi )( i=1 yi )?
(g) Are your answers equal in (e) and (f)? Why or why not?
P30
(h) What is i=29 x2i ?
P30
(i) What is ( i=29 xi )2 ?
(j) Are your answers equal in (h) and (i)? Why or why not?
P30
(k) What is i=1 (10 + 22xi − 30yi )?
P30
(l) What is i=1 ((xi − 30) + (yi − 2))?
(m) Suppose the observations represent a cross-section of small businesses. Further,
suppose x is reported in the above table in 1000’s of dollars and is a measure of
profits for the entire year (12 months). This means that for Firm 1 (the first
observation) x is 18.1, which corresponds to profits of $18,100. Suppose we
create a new variable z that is x measured in dollars (hence, z1 is $18,100).
P
What is 30 i=1 zi ?

(n) Suppose y represents 1000’s of dollars lost to theft over two years. Suppose we
create a new variable w that is an annualized value of y (average loss per year)
P
in 1000’s of dollars. What is 30
i=1 wi ?

(o) Suppose that the government is considering charging a lump-sum profit tax of
$1,000 per year per small business. If x measures each firm’s profits before this
P
profit tax, what is 30
i=1 qi where q measures profits in 1000’s of dollars after this
profit tax?
(p) Suppose that the government is considering charging a profit tax of 10% of
profits per year per small business. If x measures each firm’s profits before this
P
profit tax, what is 30i=1 qi where q measures profits in 1000’s of dollars after this
profit tax ?

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6 Pi and e
Pi, which is denoted π, is a constant equal to 3.1415927.... This particular constant is
important because the number π is the ratio of the circumference of a circle to its
diameter. π is always the same number, no matter which circle you use to compute it.

e is also a constant and it is equal to 2.7182818.... This particular constant is important

because e is the unique number with the property that the area of the region bounded by
the hyperbola y = x1 , the x-axis, and the vertical lines x = 1 and x = e is 1. It is true that
ln(e) = 1, where ln() denotes that natural logarithm function.

1. T/F (True or False): 3 < π

2. T/F: −3 > −π

3. T/F: π > e

4. T/F: π ≥ e

5. T/F: −π < −e

6. T/F: −10π < −10e

7. T/F: π + 23 > e + 23

8. T/F: 2 < e < 2.72

9. T/F: −3 > −π > −4

1 1
10. T/F: π
< e

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