POSTS AND TELECOMMUNICATIONS INSTITUTE OF

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Chapter 1:
Functions and Applications

ADVANCED MATHEMATICS FOR ECONOMICS

Department of Mathematics, Faculty of Fundamental

Science 1

Hanoi - 2024

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Chapter 1: Functions and Applications

1 1.1 Functions and Graphs

2 1.2 Limits

3 1.3 Continuous Functions

2 / 43 Chapter 1: Functions and Applications

Chapter 1: Functions and Applications

1 1.1 Functions and Graphs

2 1.2 Limits

3 1.3 Continuous Functions

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1.1.1 Functions and Graphs

Definition
Let A and B be nonempty subsets of R. A function f from A to
B, denoted by f : A → B, is a rule that assigns to each element x
in A exactly one element, called f (x), in B.

Figure 1.1: Interpretations of the function f (x).

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 x: the independent variable.
A: the domain of the function.
The range of f is the set of all possible values of f (x) as
variable x throughout the domain.
Rule: If a function f is described by a formula, then the
domain of f is taken to be the set of all real numbers x for
which f (x) is defined.

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 Example 1: Find the domain and range of each of the following
functions.
√
a) f (x) = 3x + 2 − 1.
3
b) g(t) = .
t−2

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 Functions Used in Economics
The demand function D(x) for the commodity is the price
p = D(x) that must be charged for each unit of the
commodity if x units are to be sold (demanded).
The supply function S(x) for the commodity is the unit price
p = S(x) at which producers are willing to supply x units to
the market.
The revenue R(x) obtained from selling x units of the
commodity that is given by

R(x) = xp(x).

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 The cost function C(x) is the cost of producing x units of the
commodity.
The profit function P (x) is the profit obtained from selling x
units of the commodity.

P (x) = R(x) − C(x).

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 Example 2: Market research indicates that consumers will buy x
thousand units of a particular kind of coffee maker when the unit
price is
p(x) = −0.27x + 51
dollars. The cost of producing the x thousand units is

C(x) = 2.23x2 + 3.5x + 85

thousand dollars.
a) What are the revenue and profit functions, R(x) and P (x),
for this production process?
b) For what values of x is production of the coffee makers
profitable?

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 Composition of Functions
Given two functions f : A → B and g : B → C. The composite
function g ◦ f is defined by

g ◦ f : A → C, (g ◦ f )(x) = g(f (x)).

Example 3: Given the functions f (x) = x2 + 1 and g(x) = 1/x.

a) Find f ◦ g and state its domain.
b) Find g ◦ f and state its domain.

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 The Graph of a Function
The graph of a function f consists of all points (x, f (x)) where x
is in the domain of f .

Figure 1.2: The graph of f (x) = −x2 + x + 2.

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1.1.2 Functional Models

Mathematical Modeling for Solving Practical Problems

1. Formulation
Make enough simplifying assumptions.
Use knowledge from a variety of different areas to identify
key variables and establish equations relating those variables.
2. Analysis of the Model
Use mathematical methods to analyze or “solve” the
mathematical model.
3. Interpretation
Gauge the accuracy of the model and make predictions.

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 4. Testing and Adjustment
Gather new data to check the accuracy of any predictions
inferred from the analysis.
If the predictions are not confirmed by the new evidence, the
assumptions of the model are adjusted and the modeling
process is repeated.

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 Example 4: A manufacturer can produce printer paper at a cost
of $2 per ream. The paper has been selling for $5 per ream, and
at that price, consumers have been buying 4,000 reams a month.
The manufacturer is planning to raise the price of the paper and
estimates that for each $1 increase in the price, 400 fewer reams
will be sold each month.
a) Express the manufacturer’s monthly profit as a function of
the price at which the reams are sold.
b) What price corresponds to maximum profit? What is the
maximum profit?

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 Market Equilibrium
The market is said to be in equilibrium if supply equals
demand.
Market equilibrium occurs precisely at the production level
xe , where S(xe ) = D(xe ).
The corresponding unit price pe is called the equilibrium
price; that is,
pe = D(xe ) = S(xe ).
When the market is not in equilibrium, it has a shortage
when demand exceeds supply and a surplus when supply
exceeds demand.

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 Figure 1.3: Market equilibrium occurs when supply equals demand.

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 Example 5: Producers will supply x units of a certain
commodity to the market when the price is p = S(x) dollars per
unit, and consumers will demand (buy) x units when the price is
p = D(x) dollars per unit, where
385
S(x) = 2x + 15 and D(x) = .
x+1
a) Find the equilibrium production level and the equilibrium
price.
b) Where does the supply curve cross the y axis? Describe the
economic significance of this point.

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Chapter 1: Functions and Applications

1 1.1 Functions and Graphs

2 1.2 Limits

3 1.3 Continuous Functions

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1.2.1 Intuitive Introduction to the Limit
x−1
Consider the function f (x) = .
x2 − 1

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 The following table gives values of f (x) for values of x close to 1,
but not equal to 1

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 Intuitive Definition of a Limit
Let f be a function defined on some open interval that contained
c, except possibly at c itself. We say that the limit of f (x), as x
approaches c, is L, and write

lim f (x) = L
x→c

if we can make the values of f (x) arbitrarily close to L by taking

x to be sufficiently close to c but not equal to c.

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1.2.2 Properties of Limits

If lim f (x) and lim g(x) exist, then

x→c x→c
1) lim [f (x) + g(x)] = lim f (x) + lim g(x),
x→c x→c x→c
2) lim [f (x) − g(x)] = lim f (x) − lim g(x),
x→c x→c x→c
3) lim [kf (x)] = k lim f (x) for any constant k,
x→c x→c
h ih i
4) lim [f (x)g(x)] = lim f (x) lim g(x) ,
x→c x→c x→c

f (x) lim f (x)

5) lim = x→c if lim g(x) ̸= 0,
x→c g(x) lim g(x) x→c
x→c
h ip h ip
6) lim [f (x)]p = lim f (x) if lim f (x) exist.
x→c x→c x→c

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 Limits of Polynomials and Rational Functions
If p(x) and q(x) are polynomials, then
i) lim p(x) = p(c),
x→c
p(x) p(c)
ii) lim = if q(c) ̸= 0.
x→c q(x) q(c)

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 Example 7: Find the indicated limit if it exists
a) lim (x5 − 6x4 + 7)
x→0
x2 + 5x + 4
b) lim
x→−4 x2 + 3x − 4
√
x+2−3
c) lim
x→7 x−7

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 The Squeeze Theorem
If f (x) ≤ g(x) ≤ h(x) when x is near c (except possibly at c) and

lim f (x) = lim h(x) = L,

x→c x→c

then
lim g(x) = L.
x→c

1
Example 8. Find lim x2 sin .
x→0 x

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1.2.3 Limits Involving Infinity

Limits at Infinity
Let f be a function defined on some interval (a, +∞). We say
that the limit of f (x), as x approaches positive infinity, is L
or the limit of f (x), as x increases without bound, is L, and
write
lim f (x) = L
x→+∞

if the values of f (x) can be made as close to L as we like by

taking x sufficiently large.

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 Figure 2.1: lim f (x) = L.
x→+∞

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 Let f be a function defined on some interval (−∞, a). We say
that the limit of f (x), as x approaches negative infinity, is L
or the limit of f (x), as x decreases without bound, is L, and
write
lim f (x) = L
x→−∞

if the values of f (x) can be made as close to L as we like by

taking x sufficiently large negative.

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 Figure 2.2: lim f (x) = L.
x→−∞

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 If k is a positive constant, then
1 1
lim k
= 0 and lim k = 0.
x→+∞ x x→−∞ x

Example 8: Find the indicated limit if it exists

x3 + 5x
a) lim
x→∞ 2x3 − x2 + 4
√

b) lim 9x2 + x − 3x
x→∞
√
x2 − 9
c) lim
x→−∞ 2x − 6

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 Infinite Limits
Let f be a function defined on an open interval containing c,
except possibly at c itself.
We say that the limit of f (x), as x approaches c, is positive
infinity and write
lim f (x) = +∞
x→c

if the values of f (x) can be made arbitrarily large by taking x

sufficiently close to c but not equal to c.
We say that the limit of f (x), as x approaches c, is negative
infinity and write
lim f (x) = −∞
x→c

if the values of f (x) can be made arbitrarily large negative by

taking x sufficiently close to c but not equal to c.

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 Infinite Limits at Infinity
The notation lim f (x) = −∞ is used to indicate that the
x→+∞
values of f (x) can be made arbitrarily large by taking x
sufficiently large.
Similar meanings are attached to the following symbols:

lim f (x) = −∞, lim f (x) = +∞, lim f (x) = −∞.

x→+∞ x→−∞ x→−∞

−x3 + 3x + 2
Example 9: Find lim .
x→−∞ x−1

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1.2.4 One-Sided Limits
We say that the left-hand limit of f (x), as x approaches c, is
equal to L and write

lim f (x) = L
x→c−

if we can make the values of f (x) arbitrarily close to L by

taking x to be sufficiently close to c and x < c.
We say that the right-hand limit of f (x) as x approaches c is
equal to L and write

lim f (x) = L
x→c+

if we can make the values of f (x) arbitrarily close to L by

taking x to be sufficiently close to c and x > c.
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 Note: Similar definitions can be given for the one-sided infinite
limits.

Example 10: Find lim+ f (x), lim− f (x) where

x→3 x→3

2x2 − x if x < 3
f (x) = .
3−x if x ≥ 3

3x + 5 3x + 5
Example 11: Find lim+ , lim− .
x→4 x − 4 x→4 x − 4

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 Existence of a Limit
The two-sided limit lim f (x) exists if and only if the two one-sided
x→c
limits lim+ f (x) and lim− f (x) both exist and are equal, and then
x→c x→c

lim f (x) = lim+ f (x) = lim− f (x).

x→c x→c x→c

Example 12: Determine whether lim f (x) exists, where

x→1

 x2 − 1
if x < −1
f (x) = .
 xx2 +
−3
1
if x ≥ −1

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Chapter 1: Functions and Applications

1 1.1 Functions and Graphs

2 1.2 Limits

3 1.3 Continuous Functions

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1.3.1 Definitions and Properties

Definitions
A function f is continuous at a point c if

lim f (x) = f (c).

x→c

A function is discontinuous at a point c if it fails to be

continuous at c.

 x2 − x
if x ̸= 1
Example 13: Let f (x) = 2 .
 1x − 1 if x = 1
Is f continuous at 1?

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 Continuity from the Right and from the Left
A function f is continuous from the right at c if

lim f (x) = f (c).

x→c+

A function f is continuous from the left at a if

lim f (x) = f (c).

x→c−

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 Properties
1) If f and g are continuous at c and k is a constant, then the
following functions are also continuous at c:
f
f + g, f − g, kf, f g, if g(a) ̸= 0.
g

2) If g is continuous at b and lim f (x) = b, then

x→c

lim g(f (x)) = g(b).

x→c

3) If f is continuous at c and g is continuous at f (c), then the

composite function g ◦ f is continuous at c.

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1.3.2 Continuity on an Interval

Definitions
A function f is continuous on an open interval if it is
continuous at every point in the interval.
A function f is continuous on [a, b] if it is continuous at every
point in (a, b) and is continuous from the right at a and is
continuous from the left at b.
A function f is continuous on [a, b) if it is continuous at every
point in (a, b) and is continuous from the right at a.
Continuity on other types of intervals are defined in a similar
fashion.

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 Theorem
The following types of functions are continuous on their domains:
polynomials, rational functions, root functions, trigonometric
functions, exponential functions, logarithmic functions.

Example 14: For what value of the constant k is the following

function continuous on R?

kx2 + 2x if x < 2
f (x) =
x3 − kx if x ≥ 2

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1.3.3 The Intermediate Value Theorem

Theorem
Suppose that f is continuous on [a, b] and let N be any number
between f (a) and f (b), where f (a) ̸= f (b). Then there exists a
number c in (a, b) such that f (c) = N.

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 √
Example 15: Show that the equation 3
x = 1 − x has a solution
in (0, 1).

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