1 Functions

Business applications that involve economic, financial, accounting, or statistical analysis often re-
quire the understanding of how variables relate to one another. There are three primary ways of
expressing relationships among variables: functions, graphs, and tables.

Definition 1.1. Variable: A variable is a symbol used to represent some unknown quantity.

Definition 1.2. Function: A function is a rule that takes a numerical input(s) and produces
a unique number as output. The variable that represents the input is called the independent
variable, whereas the variable that represents the output is called the dependent variable.

To express that the variable y is a function of the variable x we write,

y = f (x).

The symbol f (x) denotes “function of x” and is read as “f of x.”

Example 1.1. Suppose that we have the function y = f (x) = 2x − 1. Then the value of y at x = 3
is f (3) = 2(3)1 = 5.

Example 1.2. For f (x) = 3x3 − 4x2 − 3x + 7, find f (2) and f (−2).

In order to obtain f (2) we substitute 2 for every occurance of x in the function. We thus have

f (2) = 3(2)3 − 4(2)2 − 3(2) + 7 = 9.

Similarly, f (−2) = 3(−2)3 − 4(−2)2 − 3(−2) + 7 = −27.

Exercises:

(a) Given the function h(x) = −x2 + 6x − 11, find:

(i) h(−10) (ii) h(t) (iii) h(x − 3) (iv) h(4x − 1)
5−x
(b) If f (x) = x2 +3
, what is f (a − 3), f (a + 7).

Definition 1.3. Domain: The domain is the set of values that the independent variable is allowed
to take.

We therefore need to avoid: (i) division by zero (for rational functions), (ii) square roots of negative
numbers, (iii) logarithms of zero and logarithms of negative numbers etc in generating the domain
of the function.

Definition 1.4. Range: The range of a function is simply the set of all possible values that the
dependent variable can assume.

Example 1.3. Determine the domain of the following functions:

(a) y = 2x + 3
√
(b) y = 2x + 3

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 1
(c) y = x

x2 +x−2
(d) y = x2 −x−2

Solution:

(a) There are no values that I can’t plug in for x. Therefore the domain for x entails “All real
numbers”.

(b) We cannot have a negative inside the square root. So we set 2x + 3 ≥ 0 and solve. The result
is the required domain:

−2x + 3 ≥ 0
2x ≤3
x ≤3/2

Then the domain is “all real numbers x ≤ 3/2”.

(c) The only values that x cannot take on are those which would cause division by zero. So
x ∈ (−∞, 0) or x ∈ (0, +∞).

(d) The denominator cannot assume a zero value. So we set the denominator equal to zero and
solve.

x2 − x − 2 = 0
(x − 2)(x + 1) = 0
x=2 or x = −1

The only values that x cannot take are 2 and -1. So x ∈ (−∞, −1) or x ∈ (−1, 2) or
x ∈ (2, +∞).

Example 1.4. A leading brokerage firm charges a 6% commission on gold purchases in amounts
from $50 to $300. For purchases exceeding $300, the firm charges 2% of the amount purchased plus
$12.00. Let x denote the amount of gold purchased and let f (x) be the commission charge as a
function of x.

(a) Describe f (x).

(b) Find f (100) and f (500).

(a) The formula for f (x) depends on wether 50 ≤ x ≤ 300 or x > 300. When 50 ≤ x ≤ 300, then
the charge is 0.06x dollars. When x > 300, the charge is 0.12x + 12. The domain consists of
the values of x in one of the two intervals [50, 300] and (300, ∞). In each of these intervals,
the function is defined by a separate formula
(
0.06x for 50 ≤ x ≤ 300,
f (x) = (1)
0.02x + 12 for x > 300.

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 (b) Since x = 100 satisfies 50 ≤ x ≤ 300, we use the first formula for f (x) in (1). Thus, we have
f (100) = 0.06(100) = 6.
Since x = 500 satisfies x > 300, we use the second formula for f (x) in (1) so that we have
f (500) = 0.02(500) + 12 = 22.

Exercises

(a) Find the domain of the following functions

x−4
(i) f (x) = x2 −2x−15 Solution: Domain: All real numbers except x = −3 & x = 5
√
(ii) g(t) = 6 + t − t2 Solution: Domain: −2 ≤ t ≤ 3 or t ∈ [−2, 3].
x
(iii) h(x) = x2 −9
Solution: Domain: x < −3 & x > 3 or (−∞, −3) & (3, ∞).

(b) Let x be the proportion of the total popular vote that a Democratic candidate for president
receives in a U.S national election. Political scientists have observed that a good estimate
of the proportion of seats in the House of representatives going to Democratic candidates is
given by the function

x3
f (x) = , 0 ≤ x ≤ 1,
x3 + (1 − x)3

whose domain is the interval [0, 1]. This formula is called cube law. Compute f (0.62) and
intepret the result. Solution:

(0.62)3
f (0.62) = = 0.8128
(0.62)3 + (1 − 0.62)3

Interpretation: When a democratic presidential candidate get 62% of the popular vote,
about 81.28% of the seats in the House of representatives go to the democrats.

Definition 1.5. Composite functions: The composition of two functions f (x) and g(x) is de-
noted as:
(f ◦ g)(x) = f (g(x))

The order in which the composition is written is very important as follows.

• (f ◦ g)(x) = f (g(x)), means the function g is inside the function f .

• (g ◦ f )(x) = g(f (x)), means the function f is inside the function g.

Example 1.5. If f (x) = −4x + 9 and g(x) = 2x − 7, find:

(i) (f ◦ g)(x) = f (g(x)).

Solution : (f ◦ g)(x) = f (g(x)),

= f (2x − 7),
= −4(2x − 7) + 9 = −8x + 37.

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 (ii) (g ◦ f )(x) = g(f (x)).

Solution : (g ◦ f )(x) = g(f (x)),

= g(−4x + 9),
= 2(−4x + 9) − 7 = −8x + 11.

Example 1.6. If f (x) = 2x + 1 and g(x) = x − 3, find (f ◦ g)(5).

Solution : (f ◦ g)(x) = f (g(x)),

= f (x − 3),
= 2(x − 3) + 1 = 2x − 5.

Therefore, (f ◦ g)(5) = 2(5) − 5 = 5

Exercise:
Given that f (x) = 3x2 − x + 10 and g(x) = 1 − 20x, find each of the following.

(a) (f ◦ g)(x) Solution: 1200x2 − 100x + 12

(b) (f ◦ g)(5) Solution: 29512

(c) (g ◦ f )(x) Solution: −60x2 + 20x − 199

(d) (g ◦ g)(x) Solution: 400x-19

Definition 1.6. one-to-one function: A function y = f (x) is called a one-to-one function if no

two values of x produce the same y. Mathematically this is the same as saying,

f (x1 ) 6= f (x2 ), whenever x1 6= x2

Definition 1.7. Inverse functions: Given two one-to-one functions f (x) and g(x), if

(f ◦ g)(x) = x and (g ◦ f )(x) = x

then we say that f (x) and g(x) are inverses of each other. More specifically we will say that g(x)
is the inverse of f (x) and denote it by

g(x) = f −1 (x)

Be careful with the notation for inverses. Remember always that

1
f −1 (x) 6=
f (x)

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1.1 The process of finding the inverse of a function
The inverse of the f (x), f −1 (x), is obtained based on the following steps:

step 1: Replace f (x) with y. This is done to make the rest of the process easier.
step 2: Replace every x with a y and replace every y with an x.
step 3: Solve for y in step 2 above.
step 4: Replace y (in step 3) with f −1 (x). In other words, we’ve managed to find the inverse at
this point.
step 5: Verify your work by checking that (f ◦ f −1 )(x) = x or (f −1 ◦ f )(x) = x is true.
Example 1.7. Given f (x) = 3x − 2, find f −1 (x).
Solution:
step 1: let y = 3x − 2
step 2: Replace all x’s with y and all y’s with x.
x = 3y − 2
step 3: Solve for y:
x+2
y=
3
step 4: Replace y with f −1 (x).
x+2
f −1 (x) =
3
step 5: Verify the results. Check that (f ◦ f )(x) = x or (f −1 ◦ f )(x) = x
−1

(f ◦ f −1 )(x) = f f −1 (x)
 
 
x+2
=f
3
 
x+2
=3 −2=x
3
Similarly,
(f −1 ◦ f )(x) = f −1 [f (x)]
= f −1 [3x − 2]
3x − 2 + 2
= )=x
3
Therefore,
x+2
f −1 (x) =
3
Excercises

Find the inverse of the following functions

4x−3 x+4
√
(a) h(x) = 2 ., (b) f (x) = 5(3x − 5) (c) g(x) = 2x−5 , (d) g(x) = x−3

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1.2 Types of functions
1.2.1 Linear Functions
A linear function is a function of the form f (x) = ax + b, where a and b are real numbers. Here, a
represents the gradient of the line and b represents the y-intercept ( the vertical intercept).

– Graphs of these functions are straight lines.

Fig. 1: Graphs of a linear functions

Example 1.8. When US Environmental Protection Agency found a certain company dumping
sulfuric acid into the Mississippi River, it fined the company $125, 000, plus $1000 per day until the
company complied with the federal water pollution regulations. Express the total fine as a function
of the number x of days the company continued to violate the federal regulations.

The total fine is therefore given by the function

f (x) = 125, 000 + 1000x.

The above can be graphically represented in the Figure below

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 Fig. 2: Graph of f (x) = 125, 000 + 1000x

Example 1.9. Suppose a computer software company produces and sells new spreadsheet program
at a cost of $25 per copy and the company has a fixed costs of $10, 000 per month. Express the total
monthly cost as a function of the number of copies sold, x, and compute the cost when x = 500.

The monthly variable cost is 25x dollars. Thus

[total cost] = [fixed cost] + [variable cost],

C(x) = 10, 000 + 25x.

When sales are at 500 copies per month, the cost is

C(500) = 10, 000 + 25(500) = $22, 500.

Excercises

(a) Sketch the graph of the following function

(
7
x − 14 for − 1 ≤ x ≤ 1,
f (x) = 12
4 −2 for x > 1.

(b) Determine the intercepts of the graph of the linear function f (x) = 2x + 5.

(c) Draw a graph the linear functions: (i) f (x) = − 25 x + 3 (ii) f (x) = |x|.

1.2.2 Quadratic functions

A quadratic function is a function of the form f (x) = ax2 + bx + c, where a, b and c are constants
and a 6= 0. The domain of such a function consists of all real numbers. The graph of such function
is called parabola.

– If a is a positive number (a > 0) then the parabola opens upward and if a is a negative number
(a < 0) then the parabola opens downward as shown below.

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 (a) f (x) = x2 (b) f (x) = −x2 + 4x + 5

Fig. 3: The parabolas of two quadratic functions

Excercises

(a) Solve the following quadratic equations by (a) factorization method (b) quadratic formula.

1 2
(i) 3x2 − 6x + 2 = 0, (ii) 4x2 − 4x + 1 = 0, (iii) 2x − 3x + 5 = 0, (iv) x2 − 6x + 9 = 0.

(b) Draw a graph the quadratic functions: (a) f (x) = −x2 + 2x + 3 (b) g(y) = y 2 − 6y + 5.

1.2.3 Polynomial functions

A polynomial function f (x) is one of the form

f (x) = an xn + an−1 xn−1 + · · · + a0 ,

where n is a nonnegative whole number and a0 , a1 , · · · , an are constants.

–The highest power of x that occurs is called the degree of the polynomial.
–The following are examples of polynomial functions

f (x) = 5x3 − 3x2 − 2x + 4.

g(x) = x4 − x + 1.

The domain of a polynomial function consists of all real number.

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 Fig. 4: Graphs of polynomial functions

1.2.4 Rational function

A function expressed as the quotient of two polynomials is called rational function.
– The following are examples of polynomial functions

x2 + 1
f (x) = .
x
x+3
g(x) = 2 .
x −4
The domain of a rational function excludes all values of x for which the denominator is zero.

(a)
(b)

Fig. 5: Graphs of rational functions

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Example 1.10. Suppose a cost-benefit function is given by
50x
f (x) = , 0 ≤ x ≤ 100,
105 − x
where x is the percentage of some pollutant to be removed and f (x) is the associated cost. Find teh
costs to remove 70%, 95% and 100% of the pollutant.
The costto remove 70% is given by
50(70)
f (70) = = 100
105 − 70
Similar calculations show that
f (95) = 475 and f (100) = 1000.

1.2.5 Exponential functions

Functions of the form f (x) = abx are called exponential functions ( or power functions), where x
is the exponent and a and b are constants.

– If b > 1 then the result is exponential growth. Many physical quantities grow exponentially
(e.g. animal populations and cash in an interest-bearing account).

– If b < 1 then the result is exponential decay. Many quantities decay exponentially (e.g. the
sunlight reaching a given depth of the ocean and the speed of an object slowing down due to friction).

Examples of exponential functions and their graphs.

(a) b ≥ 1 (b) b < 1

Fig. 6: Graphs of exponential functions

Exercise: Draw a graph the following exponential functions: (a) f (x) = e2x (b) f (x) = e−x .

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1.2.6 Logarithmic functions
Are functions of the form:
f (x) = a ln(x) + b
where x is in the natural logarithm and a and b are constants.
They are only defined for positive x. For small x they are negative and for large x they are positive
but stay small.

Fig. 7: Graphs of logarithmic functions

Exercise: Draw a graph the logarithmic functions on the same axes: (a) f (x) = ln(x + 5) (b)
f (x) = 3 ln(x).

1.2.7 Trigonometric functions

Are real functions which relate an angle of a right-angled triangle to rations of two side lengths.
The most widely used trigonometric functions are the sine, cosine and tangents. Their reciprocals
are cosecant, secant and congent. For example, the general sine function is given as:

f (x) = a sin(bx + c)

,
where a ,b and c are constants.
–The parameter a is called the amplitute (affects the height of the wave), b is the amplitute (af-
fects the width of the wave) and c is the phase angle (shifts the wave to the left or right).

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 Fig. 8: Graphs of trigonometric functions

Exercise:
Draw the graphs of the following functions:
(a) f (x) = sin(x) (b) f (x) = cos(x) (c) f (x) = sec(x) (d) f (t) = 3 sin(t) (e) f (t) =
cos(4t + 1) (f) h(t)= 2 sin(t − 1).

1.3 Application of functions

Here we discuss questions in areas in which various types of functions are applied.

a) Simple Interest: Simple interest is an example of a linear function. The formula to calculate
simple interest is given by:
I = P RT
where, I=Simple Interest, P =Principal/Investment R=rate per annum (year) and T =Time
in years.
Amount = Principle + Interest earned
A = P+PRT
A = P(1+RT)

Example 1.11. John invested $1000 at two years in a bank earning a simple interest rate of
8% per annum. Determine the simple interest earned.
Solution:
P=$1000, R=8% = 0.08, T=2
Therefore,
I = P RT = 1000 × 0.08 × 2 = $160

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b) Compound interest: The subject of compound interest provides a significant application
of the exponential function.

– Compound interest computation is based on the principal which changes from time to time.
– Interest that is earned is compounded/converted into principal and earns interest thereafter.
– The principal increases from time to time.
Example 1.12. If $1000 is deposited at 6% annual interest, compounded annually, calculate
the amount at the end of n years. The compound amount at the end of the first year will be
1000 + 1000(0.06) = 1000(1 + 0.06).
A1 = |{z}
| {z }
principal interest
At the end of the second year the compound amount will be
A2 = A1 + A1 (0.06) = A1 (1 + 0.06)
|{z} | {z }
compound amount interest
= [1000(1 + 0.06)](1 + 0.06) = 1000(1 + 0.06)2 .
At the end of 3 years
A3 = A2 + A2 (0.06) = A2 (1 + 0.06)
|{z} | {z }
compound amount interest
= [1000(1 + 0.06) ](1 + 0.06) = 1000(1 + 0.06)3 .
2

After n years the compound amount will be

A = 1000(1 + 0.06)n
In this example, the interest period was 1 year. The important point to note, however, is that
at the end of each interest period the amount on the deposit grew by a factor of (1+0.06). In
general, if the interest rate is i instead of 0.06, the compound amount will grow by a factor
of (1+i) at the end of each interest period. Thus, the general formula is given by
A = P (1 + i)n ,
where P is the principal amount invested at a compound interest i per interest period for a
total of n interest periods.
If the compunding period is less than a year then the following formula is used:

 r mt
A=P 1+
m
where,
A Compound Amount
P original principal
r nominal interest rate (per year)
m frequency of conversions
t investment period/term (years)
i = r/m periodic interest rate
n = mt number of conversion periods in the investment period

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 Example 1.13. Determine the future value Kshs. 100000 which was invested for:

(a) 4 years at 4% compounded annually

(b) 5 years 6 months at 14% compouneded semi-annually.
(c) 2 years 3 months at 4% compounded quarterly
(d) 5 years 7 months at 5% compounded monthly
(e) 2 years 8 months at 9% compounded every 2 months
(f ) 250 days at 10% compounded daily.

Solution:
a) r=4%, n=4 years, (compounded annually, m=1)

A = P (1 + r)n = 100000(1 + 4%)4 = Kshs.116, 986

6
b) r=14%, n=5 years, 6 months = 5 12 = 5.5 years (compounded semi-annually, m=2)
14%
i= 2 =7%, n=2(2.5)=11
A = 100000(1 + 7%)11 = Kshs.210485

c) Profit, Cost and Revenue Functions: Many applications involve cost, revenue and profit
functions in a business set up.

• Revenue Function, R(x) - Total income from producing units.

• Cost Function, C(x) - Total cost of producing the units.
• Profit Function, P (x) - Total Income minus Total Cost.
Profit = Income - Cost

P (x) = R(x) − C(x)

Example 1.14. Suppose a toy manufacturer has fixed costs of $3000 that must be paid no
matter how many toys are produced. In addition, there are variable costs of $2 per toy. At a
production level of x toys, the variable costs are 2.x(dollars) and the total cost is given by

C(x) = 3000 + 2x( dollars).

i) Find the cost of producing 2000 toys.

ii) What additional cost is incurred if the production level is raised from 2000 toys to 2200
toys.
iii) How many toys may be produced at a cost of $5000?

Solutions

i) C(2000) = 3000 + 2(2000) = $7000.

ii) The total cost when x = 2200 is C(2200) = 3000 + 2(2200) = $7400. So the increase in
cost when production is raised from 2000 to 2200 toys is

C(2200) − C(2000) = 7400 − 7000 = $400.

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 iii) The phrase how many toys implies that the quantity x is unknown. Therefore, the answer
is found by solving C(x)=5000 for x.

3000 + 2x = 5000
2x = 200
x = 100( toys)

Exercise 1 (Simple Interest):

1. Work out the amount of simple interest for each of the following:

(a) $ 800 invested for 1 year at 6% per annum

(b) $ 1500 borrowed for 6 years at 11% per annum
(c) $ 2000 invested for 7 years at 14% p.a

2. Find the length of time for

(a) $ 1000 to be the interest on $ 5000 invested at 5% p.a

(b) $ 480 to be the interest on $ 2000 invested at 8% p.a

3. Find the rate per annum on simple interest for:

(a) $ 420 to be the interest on $ 1200 invested for 5 years.

(b) $ 72 to be the interest on $ 200 invested for 3 years

4. Find the principal required for:

(a) The simple interest to be $ 600 on money invested for 3 years at 5% p.a.
(b) The simple interest to be $ 40 on money invested for 2 years at 10% p.a.

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Exercise 2 (Compound Interest):

8. Julia saved Kshs. 5000 in a savings account which pays 12% compounded monthly. 8 months
later she saved another Kshs. 5000. Determine the amount in the account two years after
her first saving.

9. What is the nominal rate compounded monthly that will make $ 1000 become $ 20000 in five
years? Solution: 13.94%.

1. Shima invested a certain sum of money in an account that pays 5% compounded quarterly.
The account will amount to Kshs. 10000 in 27 months’ time. calculate the original principal
that was invested.

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Exercise 3 (Profit, Cost and Revenue functions):

1. A manufacturing company produces and sells tables. The cost function is given by:
√
C(x) = 4x + 120 x + 4000

where x is the number of tables. The tables are sold for $ 200 each.
Find

(a) The total cost of producing 25 tables.

(b) The total revenue and total profit from selling 25 tables.
(c) The average cost per table of 200 tables.

2. The resale value R (in dollars) of a certain type of industrial equipment has been found to
behave according to the function R(t) = 10000e−0.1t , where t is the number of years since
original purchase.

(a) Determine the original value of the piece of equipment.

(b) Determine the value of a piece of equipment after 10 years.

** End of Topic one **

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