Chapter 4:Non-Linear Functions and Applications

Worked Example 4.7: Figure 4.8 : TR for a monopolist, modeled by a quadratic: Slides 2, 3 Plotting the graph of TR = 50Q - 2Q2 : Slides 4,5,6 Estimating the roots from the graph (i.e. where TR = 0): Slide 7 Estimating the maximum from the graph (max. TR): Slide 8,9 Worked Example 4.15 : Figure 4.17: Population growth model: Slide 10 Graphing exponential population growth: Slides 11, 12, 13 Estimate the population in given years graphically: Slide 14 Calculate the population in given years algebraically: Slide 15 Estimate the year in which the population reaches given numbers graphically: Slide 16 Figure 4.17: Slide 17

Copyright2001 Teresa Bradley and John Wiley & Sons Ltd

Determine the equation for Total Revenue

for a monopolist, given the demand function P = 50 - 2Q

TR = (Price per unit) x Number of units (i.e...., Quantity) TR = P x Q ... (4.1) The price, P, is determined by the demand function: P = 50 - 2Q Therefore, substitute (50 - 2Q) for (P) in the equation (4.1), for TR TR = (P )Q = (50 - 2Q )Q TR = 50Q - 2Q2

Copyright2001 Teresa Bradley and John Wiley & Sons Ltd

Total Revenue: TR = 50Q - 2Q2 (for a monopolist, given the demand function P = 50 - 2Q)

Question: Plot the graph of the TR function for Q = 0 to Q = 25 From the graph (i) Estimate the values of Q at which TR = 0 (ii) Estimate the maximum value of TR

Copyright2001 Teresa Bradley and John Wiley & Sons Ltd

Plot TR = 50Q - 2Q2

over the interval Q = 0 to Q = 25
Calculate a table of points Table 4.5 Points for TR = 50Q - 2Q2 Q TR = 50Q - 2Q2 0 TR = 50(0) - 2(0)2 = 0 5 TR = 50(5) - 2(5)2 = 200 10 TR = 50(10) - 2(10)2 = 300 15 TR = 50(15) - 2(15)2 = 300 20 TR = 50(20) - 2(20)2 = 200 25 TR = 50(25) - 2(25)2 = 0 30 TR = 50(30) - 2(30)2 = -300 (not economically meaningful)

Copyright2001 Teresa Bradley and John Wiley & Sons Ltd

Worked Example 4.7: TR = 50Q - 2Q2 : Plotting the graph

Plot the points:
300 250 200

150
100 50 0 0 5 10 15 20 25

- 300

Copyright2001 Teresa Bradley and John Wiley & Sons Ltd

Worked Example 4.7: TR = 50Q - 2Q2:

Join the points in a smooth curve:

350 300 250 200 150 100 50 0 0 5 10 15 20 25

Construction of Figure 4.8

Copyright2001 Teresa Bradley and John Wiley & Sons Ltd

Worked Example 4.7: TR = 50Q - 2Q2: ( Estimating the roots graphically )

The roots are the points of intersection with the horizontal axis This function crosses the horizontal axes are Q = 0 and Q = 25 (roots): But, on the horizontal axis TR = 0. Hence, TR = 0 at Q = 0 and at Q = 25

240

TR = 50 Q - 2 Q 2

TR
120

Roots TR = 0

Figure 4.8
0 0 5 10 15 20 25 30

Copyright2001 Teresa Bradley and John Wiley & Sons Ltd

Worked Example 4.7: TR = 50Q - 2Q2 How to estimate the maximum TR from the graph.

In Worked Example 4.5, we deduced that the horizontal-coordinate of the maximum point is half-way between the roots: So, in this example, the Q-coordinate of the maximum point is midway between Q = 0,Q = 25 Hence, the maximum occurs at Q = 12.5. (confirmed in Fig. 4.8below) and, when Q = 12.5 the maximum TR is 312.5. TR
360 312.5

Maximum revenue TR = 50 Q - 2 Q
2

240

Figure 4.8
120

Q
0 0 5 10 12.5 15 20 25 30

Copyright2001 Teresa Bradley and John Wiley & Sons Ltd

Total Revenue TR = 50Q - 2Q2:: Summary

From the graph, the maximum TR = 312.5, when Q = 12.5 From the graph, TR = 0 at Q = 0 and Q = 25 (roots)
360
TR= 312.5 240

Maximum

120

Roots

0 0 5 10 Q = 15 12.5 20 25 30

Figure 4.8 Total revenue function TR = 50Q - 2Q2

Copyright2001 Teresa Bradley and John Wiley & Sons Ltd

Worked Example 4.15

Unlimited population growth model:
The population in a village was 753 in 1980 The population in the future years is is expected to grow according to the equation:
P 753e 0.03t

Question: (a) Plot the projected population from t = 0 (1980) to t = 30 (2010) (b) Estimate the population in 1990 and 2000 from the graph. Confirm these answers algebraically (c) In what year will the population reach 1750

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(a) Plot the graph for population for years 1980 to 2010
Calculate several point over the required range, then plot the graph

t 0

(year) (1980)

P = 753 e 0.03 753 874.86 1016.4 1180.9 1372.1 1594.1

5
10 15 20 25 30 Table 4.12

(1985)
(1990) (1995) (2000)

(2005)
(2010)

1852.1

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Worked Example 4.15

(a) Graph of exponential population growth
Plot the points

2250 1750 1372

1016
753 250 1980

1985

1990

1995

2000

2005

2010

Construction of Figure 4.17

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Worked Example 4.15 (a) Graph of population growth

Join the points
2250

1750
1372 1016

753
250 1980

1985

1990

1995

2000

2005

2010

Construction of Figure 4.17

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Worked Example 4.15(b) Graphical solution

Select the year from the horizontal axis Draw a vertical line from this point to the graph Draw a horizontal line from the point on the graph across to the vertical axis (or population axis) Read off the population for the selected year Population
2250
1750

population in year 2000 = 1372 population in year 1990 = 1016

753 250 1980 1985 1990 1995 2000 2005 2010

Year
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Worked Example 4.15(b) Algebraic solution

The population in any year is calculated from the equation

P 753e 0.03t

where t = 0 at the beginning of 1980

To calculate the population in 1990, (a) determine the value of t: t = 1990 - 1980 = 10 (b) substitute t = 10 into the equation for population P 753e 0 . 03 (10 ) = 1016.4 (million) Similarly, in 2000 (a) t = 20 (b) Population = 1372 (million)

Copyright2001 Teresa Bradley and John Wiley & Sons Ltd

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Worked Example 4.15(c)

Start with the population of 1750, on the vertical axis Draw a horizontal line across to the graph From this point on the graph, drop a vertical line down to the horizontal axis Read off the year. The population is 1750 in the year 2008 approximately
2250

population =

1750

753 250 1980

1985

1990

1995

2000

2005

2010

Year
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Worked Example 4.15

Graph of exponential population growth

Graphical solutions: summary

2250 1750 1372 1016 753

250 1980

1985 1990

1995

2000

2005 2010

Figure 4.17
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