Basic Business Mathematics

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 Unit-I
Linear Equation and its application

Linear Equation
The linear equation have the form:
y  mx  b
Where, y=dependent variable
m=slope
x=independent variable
b=constant or intercept of y-axis.

Slope:
Slope of a straight line is the ratio of vertical change to horizontal change between two points on
the line.
y 2  y1
Slope, m=
x2  x1
In the above equation,
y=total cost
mx=total variable cost

total Variable Cost

 Variable cost per unit=
Total No of Units
Total Cost
 Average Cost=
Total No. unit
 Marginal Cost=Variable cost per unit
Marginal cost is the cost of making one additional unit.

Problem-1:
Taxi fare from an airport to a nearby town is Tk.0.80 per mile driven, plus Tk.2 for tolls. Let y
represent the fare and x the miles driven on one trip.
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 i) Write down the equation for y in terms of x.
ii) Find the fare when the distance driven is 17 miles

Solution:
i) y  0.8x  2
ii) Total fare=
y  0.8 x  2
 y  0.8  17  2
 y  15.60

Problem:2
A printer quotes the price of Tk. 1400 for printing 100 copies of report and Tk. 3000 for printing
500 copies. Assuming a linear relationship, what would be the price for printing 300 copies?
a) Here, (x,y)=(100, 1400), (500,3,000)
y2  y1 3000  1400 1600
Then, m  =  4
x2  x1 500  100 400
Equation would be,
y  4x  b
Now we compute the value of b,
1400  4(100)  b
 1400  400  b
 b  1000
So, y  4 x  1000
Price for printing is
y  4(300)  1000  2200

Problem-3
If the total factory cost, y, of making x units of a product is given by y=3x+20, and if 50 units
are made:
a) What is the variable cost
b) What is the total cost?
c) What is the variable cost per unit?
d) What is the average cost per unit?
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 e) What is the marginal cost of 50th unit?

Solution:
Given equation,
y  3x  20

a) Variable Cost=3×50=150
b) Total Cost= y  3x  20
y  3  50  20  170
150
c) Variable cost per unit= 3
50
Total Cost 170
d) Average cost per unit= = =3.40
Total No of Units 50
e) Marginal cost= Variable cost per unit=3

Problem-4
If the total factory cost, y, of making x units of a product is given by y=10x+500, and if 1,000
units are made:
a) What is the variable cost
b) What is the total cost?
c) What is the variable cost per unit?
d) What is the marginal cost of last unit?
Ans. a) 10,000; b)10,500; c)10; d)10

Problem-5
A printer quotes a price of Tk.7,500 for printing 1,000 copies of book and Tk.15,000 for printing
2,500 copies. Assuming a linear relationship and that 2,000 books are printed:
a) Find the equation relating the total cost, y to x, the number of books printed.
b) What is the variable cost?
c) What is the fixed cost?
d) What is the variable cost per book?
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 e) What is the average cost per book?
f) What is the marginal cost of the last book printed?

Solution:
a) Here, (x,y)=(1000, 7500), (2,500,15,000)
y 2  y1 15000  7500 7500
Then, m  = = 5
x2  x1 2500  1000 1500
So, the linear relationship can be written as,
y  5x  b
Now we compute the value of b,
7500  5(1000)  b
 7500  5000  b
 b  2500
Now the equation is
y  5x  2500
b) Variable cost=5×2000=10,000
c) Fixed cost=2500
10000
d) Variable cost per book= 5
2000
12500
e) Average cost per book=  6.25
2000
Total cost, y  5(2000)  2500  12500
f) Marginal cost of the last book printed=Variable cost per book=5.

Break Even Analysis:

Profit=Revenue-Cost
Break Even: i.e., neither profit nor loss.
Break even occur when Revenue=Cost, so that Profit=0
On the production side, the cost of Production or Operation is Fixed Cost + Variable cost for
number of units produced. The revenue depends on the selling price and the number of units
sold.
We assume that, the number of units are made and sold is same.

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Problem-4
A manufacturer of compact discs (CDs) has fixed cost of Tk.10,000 and variable cost of Tk.7 per
CD made. Selling price is Tk.12 per CD.
a) Find the revenue, cost and profit functions.
b) What is the profit if 2800 CDs are made and sold?
c) What is the profit if 1000 CDs are made and sold?
d) At what numbers of CDs made and sold will the manufacturer break even?
e) At what sales volume (revenue) will be break-even occur?

Solution:
Let, quantity of CDs made and sold by q
a) Revenue function, R(q)=12q………………….(i)
Cost function, C(q)=7q+10,000……………….(ii)
Profit function, P(q)=R(q)-C(q)
 P(q)  12q  (7q  10,000)
 P(q)  5q  10,000..........(iii)
b) If 2800 CDs are made and sold, the profit is
P(q)  5q  10,000
 P(2800)  5(2800)  10000  4000
c) If 1000 CDs are made and sold, the profit is
 P(1000)  5(1000)  10000  5,000
i.e., Tk. 5000 is loss.
d) At breakeven point, profit will be 0.
P(q)  0
 5q  10,000  0
 5q  10,000
10,000
q  2000CDs
5
e) The break even Tk. volume of sales (Revenue) is
R(2000)=12 (2000)=Tk.24,000

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Problem-5
A manufacturer has fixed cost of Tk120,000 and variable cost of Tk.20 per made and sold.
Selling price is Tk.50 per unit.
a) Find the revenue, cost and profit functions using q for number of units.
b) What is the profit if 10,000 units are made and sold?
c) What is the profit if 1000 units are made and sold?
d) Find the break even quantity?
e) Find the break even Tk. Value of sales (revenue)?

Solution:
Let, quantity made and sold by q
a) Revenue function, R(q)=50q………………….(i)
Cost function, C(q)=20q+120,000……………….(ii)
Profit function, P(q)=R(q)-C(q)
 P(q)  50q  (20q  120,000)
 P(q)  30q  120,000..........(iii)
b) If 10,000 units are made and sold, the profit is
P(q)  30q  120,000
 P10000)  30(10000)  120,000  300000  120000  180000
c) If 1000 units are made and sold, the profit is
 P(1000)  30(1000)  120000  90,000
i.e., Tk. 90,000 is loss.
d) Break even Quantity:
At breakeven point, profit will be 0.
P(q)  0
 30q  120,000  0
 30q  120,000
120,000
q  4000 units
30
e) The break even Tk. volume of sales (Revenue) is
R(4000)=50 (4000)=Tk.200,000
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Problem-6
A manufacturer drinking water has fixed cost of Tk.70,000 and variable cost of Tk.20 per bottle
of water. Selling price is Tk.25 per bottle.
a) Find the revenue, cost and profit functions.
b) What is the profit if 25,000 bottles are made and sold?
c) What is the profit if 10,000 units are made and sold?
d) What number of bottles made and sold will the manufacturer reach break-even?
e) At what sales volume will be break-even?

Solution:
Let, quantity made and sold by q
a) Revenue function, R(q)=25q………………….(i)
Cost function, C(q)=20q+70,000……………….(ii)
Profit function, P(q)=R(q)-C(q)
 P(q)  25q  (20q  70,000)
 P(q)  5q  70,000..........(iii)
b) If 25000 units are made and sold, the profit is
P(25000)  5(25000)  70000  55,000
c) If 10000 bottles are made and sold, the profit is
 P(10000)  5(10000)  70000  20,000
i.e., Tk. 20,000 is loss.
d) Break even Quantity:
At breakeven point, profit will be 0.
P(q)  0
 5q  70,000  0
 5q  70,000
70,000
q  14,000 units
5
e) The break even Tk. volume of sales (Revenue) is
R(14000)=25 (14000)=Tk.350,000.

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Problem-7
A company has a linear total cost function and has determined that over the next three months it
can produce 1,000 units at a total cost of Tk.3,00,000. This same manufacturer can produce
2,000 units at a total cost of Tk. 4,00,000. The units sell for Tk.180 each.
a) Determine the revenue, cost and profit functions.
b) What is the fixed cost?
c) What is the marginal cost?
d) Find the break even quantity?
e) What is the break even dollar volume of sales?

Solution:
Let, quantity made and sold by q
a) Revenue function, R(q)=180q………………….(i)
Cost function, C(q)=100q+200,000……………….(ii)
[Additional 1000 units are to made at 1,00,000. So, fixed cost 2,00,000, Variable cost
Tk.100]
Profit function, P(q)=R(q)-C(q)
 P(q)  180q  (100q  200,000)
 P(q)  80q  200,000..........(iii)
b) Fixed cost 2,00,000
c) Marginal cost=Variable cost per unit=Tk.100
d) Break even Quantity:
At breakeven point, profit will be 0.
P(q)  0
 80q  200,000  0
 80q  200,000
200,000
q  2500 units
80
e) The break even Tk. volume of sales (Revenue) is
R(2500)=180 (2500)=Tk.450,000.

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 Unit-II
Logarithm

1 1
6. log a b  ; log b a 
log b a log a b

Exercise
Find the value of x,
(i) log 5 x  3

(ii) log x 25  2

Solution:
(i)
log 5 x  3
 53  x
 x  125
(ii)
log x 25  2
 x 2  25
 x 2  52
 x5

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Problem:1

Solution:
1) log 3 81

 log 3 34  4 log 3 3  4

2) log 5 3 5
1
1 1
 log 5 5 3  log 5 5 
3 3

3) log 4 2
1
1 1
 log 4 4  log 4 4  2
log 4 4 
2 2

4) log 2 5 400

 log 2 5 16  25  log 2 5
2 4.( 5 ) 4  log 2 5 (2 5 ) 4  4 log 2 5
2 54

5) log 5 (3 5. 5 )
1 1 1 1 5
 5 5
log 5 5 3.5 2  log 5 5 3 2
 log 5 5 6  log 5 5 
6 6

Problem-2: Find the value of a?

log a 400  4
 a 4  400
 a 4  2 4  25
 a 4  2 4  ( 5 ) 4  (2 5 ) 4
a  2 5

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Problem-3

Problem-4

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Problem-5

Problem-6: Show that

L.H .S  5 log 10 5  log 10 25

 5 log 10 5  log 10 5 2
 5 log 10 5  2 log 10 5
 3 log 10 5
 log 10 5 3
 log 10 125
 RHS

Problem:7

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Problem:

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 Unit-III
Inequalities

Here we cover solve inequalities with one variable.

When dealing with inequalities, it is important to remember that if you divide or multiply by a
negative number, the direction of the inequality is changed.
Solve the inequalities and show the solution set on a number line:
(i) y  3  5 ii) 3( x  2)  6 (iii) 8  2  2x

Solution:
y 3 5
 y 33 53
 y8

3( x  2)  6
 3x  6  6
 3x  6  6  6  6
 3x  12
 x  4 [ Multiplied by 1 / 3]

8  2  2x
 2  2x  8
 2  2x  2  8  2
 2 x  6
 x  3
 x3

20 x  15 x  12 x 47
 
60 60
47 x 47
 
60 60
 x 1

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Absolute Value Inequalities

For any real number x, the absolute value or modulus of x is denoted by |x| and is defined as

The absolute value or modulus |x| of a real number x is the non-negative value of x without
regard to its sign.
 If “less than” sign used it is always joint figure
 If “greater than” then always non joint

Problem: Solve the inequalities and show the solution on a number line.

(i) 2 x  3  7

(ii) 2 x  3  7

(iii) 3 x  4  2

Solution

2x  3  7

If x is non negative,
2x  3  7
 2x  3  3  7  3
 2 x  10
 x5
If x is negative,
 (2 x  3)  7
 2 x  3  3  7  3
 2 x  4
 x  2

চলকের Position Inverse হলে all position will be inverse.

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Problem: Solve the inequalities and show the solution on a number line.
1
(i) 7
2x  1

1
(ii) 2
3x  5

1
(iii) x  1 
10
1
(iv) 5
3x  1

Solution:

1
7
2x  1
1
 2x  1 
7
If x is non negative,

1
2x  1 
7
1
 2x  1  1  1
7
8
 2x 
7
8
x
14
4
x
7
If x is negative,

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 1
 (2 x  1) 
7
1
 2 x  1 
7
 14 x  7  1
 14 x  7  7  1  7
 14 x  6
6
x
14
3
x
7
3 4
Solution: {x  R :  x  }
7 7
3 4
{ x }
7 7

0 3/7 4/7

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 Set

Definition: A set is a collection of abstract objects. The items in such a collection are called the
elements or members of the set.
Sets are usually denoted by capital letters (A, B, C, ...) .
For example, a set of natural numbers A can be identified by the notation A={1,2,3,4,5,6,7,8,9}

Universal set.
The universal set is the set of all sets. All sets are therefore subsets of the universal set.

Universal set is generally expressed by U.

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Null set: The set which has no element is called empty set. Empty set is expressed as {} or Ø

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Complement Set:

Laws/rules of Set
Commutative law/Exchange Rules

Associative Law/Joint Law

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Distributive Law

DeMorgans Law

For two sets A and B,

 n(AᴜB) is the number of elements present in either of the sets A or B.

 n(A∩B) is the number of elements present in both the sets A and B.
 n(AᴜB) = n(A) + (n(B) – n(A∩B)

Problem:
In a class total number of student is 100. Of them 65 can speak in English and 55 student can
speak in Bengali,
(i) How many student can speak both language?
(ii) How many student can speak only Bengali?
(iii)How many student can only English?

Solution:
Let, B is for students who can speak Bangla and E is the students who can speaks English.
n(U )  n( E  B)  n( E )  n( B)  n( E  B)
 100  65  55  n( E  B)
 n( E  B)  20 B=55 20 E=65

Only Bangla=65-20=45
Only Bangla=55-20=35

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Problem:
In a class, there are 32 student who can speak at least one language, 22 student can speak
Bengali, 15 student can speak English,
(i) How many student can speak both language?
(ii) How many student can speak only Bengali?
(iii)How many student can only English?

Problem:
In a class, total number of student is 100 of which 65 can speak French and 40 can speak Arabic
and 25 can speak in both language.
a) How many student only can speak Arabic?
b) How many student cannot speak any of the two language?
Solution:
Given that,
n(U)=100
F=65 A=40
n(F)=65
n(A)=40
a) Speak only Arabic=40-25=15
Speak only French=65-25=40
Speak both language=25
Cannot speak any of two language =100-(15+40+25)=100-80=20.

Problem:
In a class, total number of student is 100 of which 65 can speak Spanish and 5 student can speak
both Spanish and French. Everyone can speak at least one language. How many student only can
speak only French?

Ans. 35

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Problem:
In a class, everyone can speak at least one language, total number of student in a class is 100 of
which 40 students can speak Spanish without French, 5 student can speak both. How many
student can speak only French?

Solution:
Here, n(U)=100, n(S)=40+5=45
n(U )  n( F )  n( S )  n( F  S )
 100  n( F )  45  5
 n( F )  60

Only French =60-5=55

Problem:
A town has total population of 50,000. Out of it 28,000 read Hindustan times and 23,000 read
Times of India while 4,000 read both the papers. Indicate how many read neither Hindustan
times nor Times of India?
Suppose,
Total people = n(X u Y)
People reading Hindustan times =n(X)
People reading Times of India =n(Y)
People reading both papers = n(X n Y)
Substituting the values in,
n(X u Y) =n(X) + n(Y) - n(X n Y)
50000 = 28000 + 23000 -4000
so 3000 people do not read neither of the two papers.

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 Permutation and Combination

Permutations are the different ways in which a collection of items can be arranged. For example:
The different ways in which the alphabets A, B and C can be grouped together, taken all at a
time, are ABC, ACB, BCA, CBA, CAB, BAC.

Note that ABC and CBA are not same as the order of arrangement is different.

Total no.
n
Pr
Selected No
no.

n!
n
Pr 
(n  r )!

For example:
The different ways in which the 3 letters, taken 2 at a time, can be arranged is 3!/(3-2)! = 3!/1! =
6 ways.
1! = 1
0! = 1

Example, From ABCDE, how many ways of found a word having 3 alphabet?
5!
5
P3   60
(5  3)!

Problem:

(i) How many arrangements are there of the letters of the word ‘EQUATION’,
“AMERICA”, “FREEDOM”, “ASSASSINATION”, “ABBOTTABAD”,
“ENGINEERING”

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Solution:

‘EQUATION’

8
P8  8!=40320

AMERICA

A—2 times

7! 7  6  5  4  3  2!
7
P2    2520
2! 2!

ASSASSINATION

Total number of letters are 13, of these A is 4 times, S is 3 times, I 2 times and N is 2 times.

So,

13!
n
Pr   10810800
4!3!2!2!

ENGINEERING

Total number of letters are 11, of these E is 3 times, N is 3 times, G 2 times and I is 2 times.

So,

13!
n
Pr   10810800
4!3!2!2!

Combination

A combination is a way of selecting items from a collection where the order of selection does not
matter. Combination means “Selection of things”

For example, a captain is selected from 11 players.

The number of selections of r objects from the given n objects is denoted by nCr , and is given
by

n!
n
Cr 
(n  r )! r!
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Example: In a class total number of students 10. How many ways a captain can be selected from
the students?

10! 10! 10  9!
10
C1     10
(10  1)!1! 9! 9!

Example-2: From 20 players in how many ways a captain and a vice captain can be selected?

20! 20  19  18!
20
C2    190
(20  2)!2! 18!2

Example-3 How many ways you can answer 3 question form 5 in your exam.

5! 5  4  3!
5
C3    10
(5  2)!3! 2!3!

Example-4: If 10 people meet each other and each shakes hands only once with each of the
others, how many handshakes will there be?

10! 10  9  8!
10
C2    45
(10  2)!2! 8!2!

Similarly, 8 teams can play with each other team. How many matches will be played?

Problem

A committee will be formed from 14 students by selecting 5 members as a committee members of

which 2 member will be fixed. How many ways a committee will be formed?

Solution:

12! 12  11 10  9!
12
C3    220
(12  3)!3! 9!3  2

Problem

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A cricket team will be organized with a captain from 14 players. In how many ways a team can
be organized?

Solution, Selection of a captain is fixed, therefore

13! 13  12  11 10!

13
C10    286
(13  10)!10! 3!10!

Problem
In a class there are 10 students, how many ways they can be sited in 10 chair.

10
P10  10 !=3628800

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 Matrix
A matrix (plural: matrices) is a rectangular array of numbers, symbols, or expressions, arranged
in rows and columns written in the form-
a11 a12 a13…………………….a1n
a21 a22 a23…………………….a2n
a31 a32 a33…………………….a3n
……………………
am1 am2 am3………………….amn
It is a mXn matrix

Types of Matrix

1. Row and Column Matrix- A row matrix is a matrix with only one row. Example: B is
a row matrix of order 1 × 3

B= (1 2 3)13

A column matrix is a matrix with only one column.

C is a column matrix of order 3X1

5
 
C=  7 
9
  31

2. Square Matrix: A square matrix is a matrix with an equal number of rows and columns.
V is a square matrix of order 3 × 3

3. Diagonal Matrix

A diagonal matrix is a square matrix that has all its elements zero except for those in the
diagonal from top left to bottom right; which is known as the leading diagonal of the
matrix.

Example: B is a diagonal matrix.

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4. Unit Matrix: A unit matrix is a diagonal matrix whose elements in the diagonal are all
ones. Example: P is a unit matrix.

5. Null/Zero Matrix: A zero matrix or a null matrix is a matrix that has all its elements
zero. Example: O is a zero matrix of order 2 × 3

6. Triangular Matrix
 An upper triangular matrix is a square matrix where all the elements located below
the diagonal are zeros. For example:
1 5 6 7
 
0 2 4 8
0 0 3 9
 
0 0 0 6
 
 A lower triangular matrix is a square matrix where all the elements located above
the diagonal are zeros. For example:
1 0 0 0
 
 3 5 0 0
 5 7 3 0
 
7 0 9 6
 
7. Sub Matrix: A submatrix of a matrix is obtained by deleting any collection of rows
and/or columns.
 3 5 6
   3 5
 4 7 8   
5 6 7  4 7  22
  33
The matrix obtained by deleting one or more rows or columns or both of a matrix is called its sub
matrix.

8. Scalar Matrix: A scalar matrix is a diagonal matrix where all the diagonal elements are equal.
For example:
 3 0 0
 
0 3 0
 0 0 3
  33

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Equality of a matrix
Two matrix can be called equal if and only if every corresponding elements are equal of others
Consider the three matrices shown below.

If A = B then we know that x = 34 and y = 54, since corresponding elements of equal matrices
are also equal.
We know that matrix C is not equal to A or B, because C has more columns.

Two matrices are equal if all three of the following conditions are met:
 Each matrix has the same number of rows.
 Each matrix has the same number of columns
 Corresponding elements within each matrix are equal.

Addition and Subtraction of matrices: Let A and B be two matrices of the same order. Then
the addition of A and B, denoted by A+B, is the matrix obtained by adding corresponding entries
of A and similarly to subtract two matrices we just subtract their corresponding elements.
 0 4 5 3
If A=   and B=   then
 2 5  22  1 7  22

 0  5 4  3 5 7 
A+B=   =  
 2  1 5  7  22  3 12  22

Multiplication
 1  1  2 5
If A=   , B=  
  3 2  22  1 3  22
 1  2  1  1 1  5  (3)   1 2 
AB=     
  3  2  2  1  3  5  2  3  22   4  9  22

Problem:
A manufacturer produces three products P,Q, R which he sells in two markets. Annual sales are
indicated below:
Market Products
P Q R
I 10000 2000 20000
II 6000 20000 8000
a. If unit sales prices of P, Q, and R are respectively Tk.2.50, 1.25, and 1.50, find the total
revenue each market with the help of matrix algebra.
b. If the unit costs of the above four products are Tk 1.80, 1.20, and 0.80 respectively. Find the
gross profit, with the help of matrix algebra.
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Solution:
Total Revenue
10000 6000 
 
2.5 1.25 1.50 2000 20000 
18000 8000 
 
 2.5  10000  1.25  2000  1.5  18000 2.5  6000  1.25  20000  1.50  8000
 25000  2500  27000 15000  25000  12000
 54500 5200

Total Cost

10000 6000 
 
1.80 1.20 0.80 2000 20000 
18000 8000 
 
 1.80  10000  1.20  2000  0.8  18000 1.80  6000  1.20  20000  0.8  8000
 18000  2400  14400 10800  24000  6400
 34800 41200

Revenue
=Total Revnue-Total Cost
= 54500 5200 - 34800 41200
= 19700 10800

Problem:
A manufacturer produces three products P,Q, R, S which he sells in two markets. Annual sales
are indicated below:
Market Products
P Q R S
I 10000 2000 20000 25000
II 15000 30000 15000 10000
c. If unit sales prices of P, Q, R, and S are respectively Tk.2.50, 1.50, 2.0 and 3.0, find the total
revenue each market with the help of matrix algebra.
d. If the unit costs of the above four products are Tk 1.80, 1.20, 1.50 and 2.25 respectively. Find
the gross profit, with the help of matrix algebra.

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