Let’s Dig Deeper!

You have seen that evaluating expressions means substituting the values for the
unknown variables and then simplify by performing the given operations. It is possible
to work backwards to find the value of the unknown variable given the total value of
the expression. In this section you will be able to:

Solve single linear equations with one unknown variable.

Use the summation sign ∑.
Perform basic mathematical operations on algebraic expressions that involve
inequality signs.

Solving Simple Equations

When an algebraic expression is equal to a certain number or to another expression,

i.e. the two concepts are written on either side of an equality sign, is called as an
equation.
Take this simplification exercise as an example of an equation:
3𝑥 + 14𝑥 − 5𝑥 = 12
The expressions on either side of the equality sign are equal, but 𝑥 is cannot be
computed from the information given.

A linear equation is one where the highest degree (power) of the variable involved is
only 1, e.g. there may be terms in 𝑥 but not 𝑥 2 , 𝑥 −1 etc.

Let us work through this example before setting out the rules in solving single linear
equations.

Example 1.1

You go into a foreign exchange bureau to buy US dollars for your holiday. You
exchange £200 and receive $343. When you get home, you discover that you have
lost your receipt. How can you find out the exchange rate used for your money if you
know that the bureau charges a fixed £4 fee on all transactions?
Solution:
The amount to be exchanged after allowing for the fixed fee:

£200 − £4 = £196
Let x be the exchange rate of pounds into dollars. Therefore,

343 = 196𝑥
343
=𝑥
196

1.75 = 𝑥

Thus, the exchange rate is $1.75 per pound.

This example shows the fundamental principle that one can divide both sides of an
equation by the same number.

Example 1.2

If 62 = 34 + 4𝑥 what is 𝑥?

Solution:

62 − 34 = 34 − 34 + 4𝑥 Subtracting 34 from both sides

28 = 4𝑥 Simplify
28 4𝑥
= Divide both sides by 4
4 4

7=𝑥 Simplify
This example shows the principle that one can subtract the same amount from both
sides of an equation.

The basic principle for solving equations is to get rid of the terms on the side where
the unknown variable is. To do so, same number or algebraic term can be added,
subtracted, multiplied or divided on both sides of an equation. Arithmetical operations
such as finding the square root of both sides of an equality sign may also be
performed.

Example 1.3
96
Solve for 𝑥 if 4 = .
𝑥

Solution:
96
𝑥∙4 = ∙𝑥 Multiply 𝑥 on both sides to get rid of
𝑥
the 𝑥 on the denominator.
4𝑥 = 96 Simplify.
4𝑥 96
= Divide both side by 4.
4 4

𝑥 = 24 Simplify.
Example 1.4

Solve for x if 6𝑥 2 + 12 = 162.

Solution:
6𝑥 2 + 12 − 12 = 162 − 12 Subtract 12 on both sides.
6𝑥 2 = 150 Simplify.
6𝑥 2 150
= Divide through by 6.
6 6

𝑥 2 = 25 Simplify.
√ 𝑥 2 = √25 Take the square root.
𝑥 = 5 or − 5 Simplify.
Example 1.5

A firm has to pay fixed costs of £1,500 plus another £60 for each unit produced. How
much can it produce for a budget of £4,800?

Solution:

budget = total expenditure on production

Therefore, if 𝑥 is output level

4,800 = 1,500 + 60𝑥

4,800 − 1,500 = 1,500 − 1,500 + 60𝑥 Subtract 1,500 from both sides.
3,300 = 60𝑥 Simplify.
3,300 60𝑥
= 60 Divide by 60.
60
55 = 𝑥 Simplify.
Example 1.6

You sell 500 shares in a company via a stockbroker who charges a flat ₱2000
commission rate on all transactions under ₱100,000. Your bank account is credited
with ₱69,200 from the sale of the shares. What price were your shares sold at?

Solution:
Let price per share be 𝑥. Therefore,

69,200 = 500𝑥 − 2,000

69,200 + 2,000 = 500𝑥 − 2,000 + 2,000 Add 2,000 to both sides.
71, 200 = 500𝑥 Simplify.
71,200 500𝑥
= Divide both sides by 500.
500 500

142.40 = 𝑥 Simplify.
Therefore, the share price is ₱142.40.
 Check Your Progress 1

1. If 𝑞 = 560 – 3𝑝 solve for 𝑝 when 𝑞 = 314.

2. You get paid travelling expenses according to the distance you drive in your car
plus a weekly sum of £21. You put in a claim for 420 miles travelled and receive an
expenses payment of £105. What is the payment rate per mile?

3. A firm faces the marginal revenue schedule 𝑀𝑅 = 80 − 2𝑞 and the marginal

cost schedule 𝑀𝐶 = 15 + 0.5𝑞 where q is quantity produced. You know that a firm
maximizes profit when 𝑀𝐶 = 𝑀𝑅. What will the profit-maximizing output be?

The Summation sign ∑

The summation sign ∑ is a Greek letter, pronounced as “sigma”, which can be used
as a shorthand means of expressing the sum of a number of different terms added
together. There are two ways in which it can be used.

The first is when one variable increases its value by 1 in each successive term, as the
example below illustrates.

Example 1.7

A new firm sells 30 units in the first week of business. Sales then increase at the rate
of 30 units per week. If it continues in business for 5 weeks, its total cumulative sales
will therefore be

(30 × 1) + (30 × 2) + (30 × 3) + (30 × 4) + (30 × 5)

You can see that the number representing the week is increased by 1 in each
successive term. We can instead write this expression as
5

𝑠𝑎𝑙𝑒𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 = ∑ 30𝑖

𝑖=1

This means that one is summing all the terms 30𝑖 for values of 𝑖 from 1 to 5. To
evaluate an expression containing a summation sign, one may still have to calculate
the value of each term separately and then add up.

If the number of weeks 𝑛 of the business was not known we could instead write
𝑛

𝑠𝑎𝑙𝑒𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 = ∑ 30𝑖

𝑖=1
Example 1.8

Evaluate
6

∑(20 + 3𝑖 )
𝑖=3

Solution:

Note that in this example 𝑖 starts at 3. Thus,

6

∑(20 + 3𝑖 ) = [20 + 3(3)] + [20 + 3(4)] + [20 + 3(5)] + [20 + 3(6)]

𝑖=3
= (20 + 9) + (20 + 12) + (20 + 15) + (20 + 18)
= 29 + 32 + 35 + 38
= 134

The second way in which the summation sign can be used requires a set of data
where observations are specified in numerical order.

Assume that a researcher finds a random group of twelve students and observes their
weight and height as shown in Table 1.1.

We represent the height as 𝐻𝑖 and 𝑊𝑖 for the weight of student 𝑖, then the total weight
of the first 6 students may be presented as
6

∑ 𝑊𝑖
𝑖=1

In this method 𝑖 refers to the number of the observation and so the value of 𝑖 is not
incorporated into the actual calculations. Staying with the same example, the average
weight of the first 𝑛 students could be specified as
𝑛
1
∑ 𝑊𝑖
𝑛
𝑖=1

When no superscript or subscripts are shown with the ∑ sign it usually means that all
possible values are summed.

Table 1.1
Student
1 2 3 4 5 6 7 8 9 10 11 12
no.
Height
178 175 170 166 168 185 169 189 175 181 177 180
(cm)
Weight
72 68 58 52 55 82 55 86 70 71 65 68
(kg)
For example, a price index is constructed by working out how much a weighted
average of prices rises over time. One method of measuring how much, on average,
prices rise between year 0 and year 1 is to use the Laspeyre price index formula

∑ 𝑝 1𝑖 𝑥𝑖
∑ 𝑝 0𝑖 𝑥𝑖

where 𝑝 1𝑖 is the price of the good 𝑖 in year 1, 𝑝 0𝑖 is the price of the good 𝑖 in year 0
and 𝑥𝑖 is the percentage of the consumer expenditure on good 𝑖 in year 0. If all
goods are in the index then ∑ 𝑥𝑖 = 100 by definition.

Example 1.9

Table 1.2
Percentage of 0 1
Prices, year 0 (𝑝 𝑖 ) Prices, year 1 (𝑝 𝑖 )
Expenditure (𝑥𝑖 )
Durable goods 9 200 216
Food 17 80 98
Alcohol and tobacco 11 70 92
Footwear and clothing 7 120 130
Energy 8 265 270
Other goods 11 62 71
Rents, rates, water 12 94 98
Other services 25 52 60
100

Given the figures in Table 3.2 for prices and expenditure proportions, calculate the
rate of inflation between year 0 and year 1 and compare the price rise of food with the
weighted average price rise.

Note: All the prices are in £.

Solution:

Note that in this example we are just assuming one price for each category of
expenditure. In reality, of course, the prices of several individual goods are included in
a price index. It must be stressed that these are prices not measures of expenditure
on these goods and services.
The weighted average price increase will be

∑ 𝑝 1𝑖 𝑥𝑖 (216 × 9) + (98 × 17) + (92 × 11) + (130 × 7) + (270 × 8) + (71 × 11) + (98 × 12) + (60 × 25)
=
∑ 𝑝 0𝑖 𝑥𝑖 (200 × 9) + (80 × 17) + (70 × 11) + (120 × 7) + (265 × 8) + (62 × 11) + (94 × 12) + (52 × 25)
1,944 + 1,666 + 1,012 + 910 + 2,160 + 781 + 1,176 + 1,500
=
1,800 + 1,360 + 770 + 840 + 2,120 + 682 + 1,128 + 1,300
11,149
=
10,000
= 1.115
This means that, on average, prices in year 1 are 111.5% of prices in year 0, i.e. the
inflation rate is 11.5%. The price of food went up from 80 to 98, i.e. by 22.5%, which
is greater than the inflation rate. Adjusted for inflation, the real price increase for food
is

1.225
100 ( − 1) = 100(1.099 − 1) = 9.9%
1.115

Check Your Progress 2

1. Assume that the expenditure and price data given in Example 1.9 above all still
hold except that the price of alcohol and tobacco rises to £108 in year 1. Work
out the new inflation rate and the new real price increase in the price of food.

2. Refer to Table 1.1 on the previous page and write an expression for the average
height of the first 𝑛 students observed and evaluate for 𝑛 = 6.

It is possible to work backwards to discover the value of an unknown variable

when the total value of the expression is given. You can add, subtract, divide,
multiply or even take square roots of both sides of the equation to get rid of the
terms on the side of the unknown variable.
Summation which is denoted by the Greek letter sigma ∑ is a shorthand way
of expressing the sum of a number of different terms added together.

Chapter 3 pages 47-75 of Rosser, Mike (2003). Basic Mathematics for Economists
(2nd Edition). Routledge, New Fetter Lane, London