LINEAR FUNCTIONS AND
THEIR APPLICATIONS IN
BUSINESS AND ECONOMICS
= WEEK 4 =
INTRODUCTION TO LINES (1)
• f: A ℝ where f(x) = x + 2 for every x A.
• Let A = {xℤ| -2 x 2}
• g: ℝ where g(x) = x + 2 for every x .
• h: ℝ ℝ where h(x) = x + 2 for every x ℝ.
• Among the functions above, it is only h that represents a line.
(See the figures on the next slide.)
GRAPHS OF f, g, and h
INTRODUCTION TO LINES (2)
• line: a length without breadth (according to Euclid in his book: The
Elements)
• A line is usually taken as extending indefinitely in both directions.
• line segment: the part of a line joining two points.
• h: ℝ ℝ where h(x) = x + 2 for every x ℝ.
• Refer to slide #2:
• The “name” of the line is h.
• Every line has an equation associated to it. In this case, h(x) = x + 2 is the
equation of the line (i.e. the equation of h). To put it another way, the
line equation is h(x) = x + 2.
FORMS OF LINE EQUATIONS
• Style 1 (slope-intercept form): y = mx + c, e.g.: y = 2x – 3
• Style 2: ax + by = c, e.g. 2x – y = 3
• Style 3 (parametric form), , e.g. , t ℝ
• In Style 1: m is called the slope (or gradient) of the line, and
c is called the y intercept of the line
• The slope, m, determines the direction of a line. See the figures on
the next slide.
ALGEBRAIC SIGNS OF THE SLOPE
m>0 m=0 m<0
RELATIVE POSITIONS OF POINTS
WITH RESPECT TO LINES
POINT A LIES ON THE LINE POINT B DOES NOT LIE ON THE LINE
• y1 = mx1 + c • y2 mx2 + c
EXAMPLE 1
• Given the line ℓ y = 10x – 7, check whether A(1,3) and B(4,30) lie
on the line.
• Answer
• So, A lies on the line (i.e. A ℓ)
• Check A(1,3): 3 = 101 – 7 3 = 10 – 7.
• Therefore, B does not line on the line (i.e. B ℓ)
• Check B(4,30): 30 = 104 – 7 (FALSE).
RELATIVE POSITIONS OF COPLANAR
LINES
• Two coplanar lines can be: a) parallel, b) intersecting, c) coincident
• Let h and k be coplanar lines, where h y = m1x + c1
and k y = m2x + c2
• h // k (h is parallel to k) m1 = m2 [Two parallel lines have equal
slopes.]
• hk (h intersects k) m1 m2 [Two intersecting lines have
different slopes.]
• hk (h is coincident with k) m1 = m2 and c1 = c2.
RELATIVE POSITIONS OF COPLANAR
LINES
h is parallel to k. h intersects k, T is the h is coincident with k.
point of intersection.
FINDING THE COORDINATES OF
INTERSECTION POINT OF TWO LINES
• Finding the coordinates of intersection point of two lines can be
viewed as the problem of finding the solution of a system of two
linear equations.
• Let h y = m1x + c1 and k y = m2x + c2 be two intersecting lines. If
A(x0,y0) is the intersection point then A lies on h and k simultaneously.
It implies that y0 = m1x0 + c1 and y0 = m2x0 + c2 must hold. By using this
pair equations, x0 and y0 can be found.
EXAMPLE 3:
FINDING THE COORDINATES OF INTERSECTION
POINT OF TWO LINES (1)
• Let h y = -x + 2 and k y = 2x – 1. Find the coordinates of hk (i.e. the
point of intersection of h and k).
• Answer
• As y = -x + 2 and y = 2x – 1 hold simultaneously, 2x – 1 = -x + 2.
• 2x + x = 2 + 1
• 3x = 3
• x=1
• Replace x in y = -x + 2 with 1. Hence, we have y = -1+2 = 1.
• So, the coordinates of hk is (1,1).
• Note: the method above is called “substitution method”.
EXAMPLE 4:
FINDING THE COORDINATES OF INTERSECTION
POINT OF TWO LINES (2)
• Let h 2x+3y=8 and k 3x - 5y = -7. Find the coordinates of hk.
• Answer (by elimination method)
• 3(2x+3y=8) 6x + 9y = 24 5(2x+3y=8) 10x + 15y = 40
• 2(3x - 5y = -7) 6x – 10y = -14 – 3(3x - 5y = -7) 9x – 15y = -
21 +
19y = 38 19x = 19
y= 2 x = 1
So, the coordinates of the intersection point is (1,2).
FORMULATING LINE EQUATIONS
• The equation of the line that passes through P(a,b) and has a gradient
of m is: y – b = m(x – a).
• The equation of the line that passes through P(x1,y1) and Q(x2,y2) is: .
• The equation of the line that passes through P(a,0) and Q(0,b) is:
EXAMPLE 5: FORMULATING LINE
EQUATIONS
• The line ℓ passes through P(2,-3)
and its slope is -0.5. Find its
equation and sketch the line.
• Answer
• y – b = m(x – a).
• y – (-3) = (-0.5)(x – 2)
• y+3 = -x/2 + 1
• y = -x/2 – 2
• or, equivalently x + 2y = -4
EXAMPLE 5: FORMULATING LINE
EQUATIONS
• The line k passes through
P(2,-3) and Q(-4,1). Find its
equation and sketch the
line.
• Answer
EXAMPLE 6: FORMULATING LINE
EQUATIONS
• The line h passes through P(-4,0)
and Q(0,2). Find its equation and
sketch the line.
• Answer
EXAMPLE 7: FORMULATING LINE
EQUATIONS
• Find the equation of the line k with the
following properties: a) it is parallel to h ,
and b) it passes through P(4,-1).
• Answer
• Parallel lines have an equal slope.
• So, the slope of k is also .
• k has a slope of and passes through P(4,-1)
• Apply the formula y – b = m(x – a)
• Hence, k
APPLICATIONS (1)
• In a competitive market, the demand and supply
schedules are respectively P = $(9 – 0.6Q)/unit and
P = $(2+0.1Q)/unit. Find the equilibrium price (P)
and quantity (Q). Sketch the lines representing the
demand and supply functions.
• Answer
• Let D and S be demand and supply functions,
respectively.
• D P = 9 – 0.6Q
• S P = 2 + 0.1Q
• By substituting, 2+0.1Q = 9 – 0.6Q
• 0.7Q = 7
• Q = 10
• P = 2 + 0.1Q = 2 + 0.110 = 3.
• Hence, the equilibrium price is $3/unit and the
equilibrium quantity is 10 units.
APPLICATIONS (2)
• The demand (D) and supply (S) functions of a good • Hence, the equilibrium price is $30/unit and the
are given by: quantity demanded at equilibrium is 10 units.
• D P = $(-2Q + 50)/unit, S P = $(Q/2 + • Answer to b)
25)/unit
• The tax shifts the supply curve upward, so the
• a) Determine the equilibrium price and quantity. equation of S is: P = $(Q/2 + 25)/unit + $5/unit.
That is, P = $(Q/2+30)/unit.
• b) Determine the effect on the market equilibrium
if the government decides to impose a fixed tax of • By substitution method, Q/2 + 30 = -2Q + 50
$5 on each good. • Q + 60 = -4Q + 100
• Answer to a) • 5Q = 40
• By substitution method, Q/2 + 25 = -2Q + 50 • Q=8
• Q+50 = -4Q + 100 • P = -2Q + 50 = -28 + 50 = 34
• 5Q = 50 • Therefore, after tax, the equilibrium price is
• Q=10 $34/unit and the quantity demanded at equilibrium
is 8 units.
• P = -2Q + 50 = -210 + 50 = 30
APPLICATIONS (3)
• Sam’s Sodas is a soft drink manufacturer • Answer
in the Seattle area. He is considering • Let BEP = x
introducing a new soft drink, called Sam’s
Silly Soda. He wants to know what kind of • Total cost (TC) = 1210 + 0.4x
impact this new drink will have on the • Total revenue (TR) = 1.5x
company’s finances. His accounting costs
are as follows. • At BEP: TR = TC (no loss nor profit
• Fixed Costs = $1,210 (total, for the month) occurs.)
• Variable Costs =$ 0.40 (per can produced) • Hence 1.5x = 1210 + 0.4x
• Sales Price = $1.50 (per can) • 1.1x = 1210
• Determine the break-even point (BEP)! • x = 1100
(Note: BEP = the quantity that must be • Therefore, to reach BEP, 1100 units
sold such that no profit nor loss occurs.) must be sold per month.
