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Lecture 1

Introducing QABE
School of Economics, UNSW

Contents
1 Introduction 1
1.1 Tuition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2 Assessment 4

3 Miscellany 4
3.1 On the lecture materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 This is NOT the Course Outline . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Studying at university . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

4 Functions of One Variable 6

5 What is a Function? 7
5.1 Some Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Functions are not functions! . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Domain and Range . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

6 Functions 8
6.1 Common Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.2 Combining Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.3 Composite Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

7 Special Functions 11
7.1 Inverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.2 Exponential & Logarithmic . . . . . . . . . . . . . . . . . . . . . . . . . . 13

1 Introduction
Welcome to Quantitative Analysis for Business and Economics (QABE). QABE deals
with the fundamentals of mathematics for business and economics. It replaces the old
course Quantitative Methods A, and reflects our goal of continual course improvement.
For those of you who have studied QMA in the past, there are similarities but also
differences between the two courses.
You may be wondering if all the material taught in QABE will be applicable to you.
The short answer is that all of it will be applicable, but not always immediately. That
is, the course material has been chosen to reflect the core mathematical skills that you
will need for further study in the quantitative courses, particularly those taught by the

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ECON 1202/ECON 2291: QABE c
School of Economics, UNSW

School of Economics. We have students studying marketing and hospitality, through to


economics and econometrics. The spectrum of disciplines requires a range of mathemat-
ical tools. For this reason, we will try to point to applications of our mathematics for
your further studies wherever possible, drawing on business and economic scenarios and
problems to bring out the relevance of the techniques we’ll be learning.
Finally, so that we can keep this course improving all the time, we’d appreciate
your feedback. So if you have an idea for an improvement, please send an email to the
lecturer-in-charge to let us know.
All the best with your studies. We hope that you enjoy the course!

Agenda

1. Introductions

2. How do I learn in QABE?

3. Assessment

4. Futher help

5. A few notes on studying at university

6. Functions of one variable

Introductions

1. Who is your lecturer?

2. Who is the lecturer-in-charge?

3. Who is your tutor?

1.1 Tuition
lectures (2hr per week) Introduce and emphasise key points from the course, see
worked examples, ask one or two questions; prepare by reading the lecture notes,
reading over reference chapters;

tutorials (1hr per week from week 2) Core place of learning, developing understanding,
making mistakes, asking many questions;

pitstop (many hrs per week from week 3) Back-up for tutorials, further explanation,
further inquiry;

consultation (3hrs per week) Clarifying lecture material, discussing course-program


related issues (LIC), focussed tuition.

1.2 Materials
online Go to

https://moodle.telt.unsw.edu.au

... click on ‘ECON1202-Quantitative Analysis’. Lecture notes, course-outline, past


exams, contact information;

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ECON 1202/ECON 2291: QABE c
School of Economics, UNSW

textbooks 1. (required) Haeussler, Paul & Wood, ‘Introductory Mathematical Anal-


ysis: for Business, Economics and the Life and Social Sciences’, Addison
Welsey, 12th Edition, 2008. (HPW);
2. (strongly recommended) Knox, Zima & Brown, ‘Mathematics of Finance’,
McGraw-Hill Book Company, 2nd Edition, 1999. (KZB);
3. (other) see course outline.

More help?

pass (many hrs per week from week 3) “Peer Assistance Support Scheme”: Peer assisted
study groups, run by second and third year students;

education development unit (edu) (UNSW Business School) Learning and language
support; workshops etc., Room G07, Ground Floor, ASB Building, West Lobby;

the learning centre (UNSW) Free and confidential learning support for students;

Is this for you?

Assumed knowledge A level of knowledge equivalent to achieving a


mark or at least 60 in HSC Mathematics. Students who have taken
General Mathematics will not have achieved the level of knowledge
which is assumed for this course.

From the (intro) Calculus lectures...

d p ax
ya = x e
dx
d p 2x
yb = e +x
dx
Z b
yc = k(1 − ex ) dx
a
Z  
x 3
yd = 5e − x +−2
dx (x 6= 0).
x
—————————————————————-

Refresher Resources
See revision text in the Reserve section of the library (also available at the UNSW
bookshop):

• Managing Mathematics: A Refresher Course for Economics and Com-


merce Students by Judith Watson, 2nd Edition, 2002.

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ECON 1202/ECON 2291: QABE c
School of Economics, UNSW

2 Assessment
Marks Break-down

• Passing the course requires 50% or higher!

• See Course-outline for further information.

Item %
Online quizzes (4 × 2%) 8
In-tutorial tests (3 × 10%) 30
Tutorial participation 5
Final exam 57
Total 100

3 Miscellany
3.1 On the lecture materials
Using lecture resources

• In the notes – look for chapter references in the margins;

• At the end look for key words of interest that you should revise;

• Note special text like,

Definition | The fundamental theorem of first-year


The amount of work w undertaken by a student is inversely related to the dif-
ference between the total session time T and time elapsed in the session t,
1
w(t) ∝ (1)
T −t

—————————————————————-

• Examples appear in the notes with a box for working,

Example:
The world is experiencing exponential growth in population, but declining eco-
nomic stocks of energy, fresh water and food. Solve.

• Or words of caution to make sure you don’t fall into common traps,

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ECON 1202/ECON 2291: QABE c
School of Economics, UNSW

The Fundamental Theorem of First-year is fundamental for a


reason.

here

3.2 This is NOT the Course Outline


—————————————————————-

Read the Course Outline!

Check (and re-check) the course-outline for information provided and


more (see list below).

• Special consideration (e.g. illness);

• Student misconduct and plagiarism policy;

• Contact details of key people;

• Syllabus – what we’ll be studying, with chapter references.

3.3 Studying at university


—————————————————————-

Some advice

1. Attend classes – the ‘turning up’ philosophy to education;

2. Use a diary/palm-pilot/organiser/calendar/scraps-of-paper, write in assessments,


put down reminders;

3. Make a habit of opening the textbook and reading it weekly;

4. Ask questions – lots of them;

5. Introduce yourself to someone else in a tutorial or lab.

—————————————————————-

And finally...

you
developed

all people on earth

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ECON 1202/ECON 2291: QABE c
School of Economics, UNSW

• Proportion of world’s population living in a developed country = 18.7%;


• Proportion of Australians who have attained a tertiary degree (or higher) = 17.8%;
• Proportion of world’s population living in a developed country AND in tertiary
education, 0.187 × 0.178 = 3.3%

some useful tags


<keyword> ¡chap ref¿

Example: ¡title¿
¡problem¿

Definition | ¡title¿
¡content¿

¡title¿ ¡content¿

4 Functions of One Variable


To begin with, we will go back over some fundamental concepts and terminology of the
vast world of functions. Following which, we will meet some particular kinds of functions
that will keep cropping up in this course, and most likely, in the rest of your studies.
Note: Notation We will use a particular notational convention for functions, such in the fol-
lowing example:
f (x) = x2 + 4,
It should be noted that there is nothing special about ‘f ’ (or ‘x’ for that matter), they
are just labels. As we note below, we could just have correctly chosen to name all of our
‘representative’ functions as ‘blah’ with input ‘words’, (giving say, blah(words), which
would be read, ‘the function blah of words’). However, this might get confusing, and so
we will follow the very established convention of using the function title f (x), or perhaps
y(x).

—————————————————————-

Agenda

1. Function review;
2. Special functions;
3. Exponential and Logarithms;
4. Limits.

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ECON 1202/ECON 2291: QABE c
School of Economics, UNSW

5 What is a Function?
—————————————————————- HPW 2.1

Definition | Function
A function is a rule that assigns to each input number exactly one output
number.
—————————————————————-

Example: A linear function


Consider what is meant by the simple linear function f (x) = 1 + 0.5x.

5.1 Some Definitions


============================================================

1. The name of the function is irrelevant. Consider,


shrimp − 1
f ish(shrimp) = ;
2
... still a valid function!

2. Often we talk in terms of dependent and independent variables, or alternatively,


in terms of the value and argument respectively:

Example: Dependent, Independent


Identify the dependent and independent terms, and the value and argument of
the function H(a, b) = a2 + 2b + 3.

5.2 Functions are not functions!


============================================================

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ECON 1202/ECON 2291: QABE c
School of Economics, UNSW

1. Functions are part of a broader class called relations. Functions are the special
case – they give one output value for a given input value.

2. For this reason, they are also called a mapping, or a transformation.

One of these is a function, one isn’t!



3
f (x) = x2 3
f (x) = x
2 2
1 1
0 0
-1
x -1
x
-2 -2
-3 -3
-3 -2 -1 0 1 2 3 -3 -2 -1 0 1 2 3

5.3 Domain and Range


============================================================

Definition | Domain and Range


The domain of a function is the set of all x values over which the function
‘makes sense’ (works!). The range of a function, is the set of all possible f (x)
values, given the domain.

Example:
2
Find the domain of the function, y(x) = x2 +3x−4
.

6 Functions
6.1 Common Functions
============================================================
HPW 2.2

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ECON 1202/ECON 2291: QABE c
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Definition | The Constant Function


A constant function is of the form:

f (x) = c

where c is a constant.
3
f (x) = 2
2
1
0
-1
x
-2
-3
-3 -2 -1 0 1 2 3

Definition | The Polynomial Function


A polynomial function is of the form:

f (x) = cn xn + cn−1 xn−1 + · · · + c1 x1 + c0

where cn . . . c0 are constants.


3
f (x) = x2
2
1
0
-1
x
-2
-3
-3 -2 -1 0 1 2 3

==========================================================

Definition | The Rational Function


A rational function is of the form:

p1 (x)
f (x) =
p2 (x)

where p1 and p2 are polynomial functions.


x2 −6
3
f (x) = x+6
2
1
0
-1
x
-2
-3
-3 -2 -1 0 1 2 3

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ECON 1202/ECON 2291: QABE c
School of Economics, UNSW

Definition | The Absolute Function


An absolute value function is of the form:

f (x) = |g(x)|

where g(x) is some function and | · | indicates ‘positive value’.



3
f (x) = | x|
2
1
0
-1
x
-2
-3
-3 -2 -1 0 1 2 3

6.2 Combining Functions


============================================================ HPW 2.3
Suppose we have two functions, f (x) = 3x + 2, and p(x) = x3 − 3, then we will be inter-
(x)
ested to solve: f (x) + p(x), or f (x) − p(x), or f (x) × p(x), or even fp(x) .

Definition | Function Combination


In general, we have,

sum (f + g)(x) = f (x) + g(x) ,


difference (f − g)(x) = f (x) − g(x) ,
product (f g)(x) = f (x) · g(x) ,
f (x)
quotient ( fg )(x) = for g(x) 6= 0 .
g(x)

==========================================================

Example: Combining functions


f
Suppose f (x) = 2x2 − 3x − 2 and g(x) = x − 2, and let h(x) = g (x), then
show that (h − g)(x) = x + 3.

6.3 Composite Functions


============================================================
Now suppose we don’t want a combination, but we want to construct a process of more
than one function,

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ECON 1202/ECON 2291: QABE c
School of Economics, UNSW

x f (x) y g(y) z

that is,

x h(x) z

Definition | Composite Function


If f and g are functions, the composite function of g and f is the function
g ◦ f,
(g ◦ f )(x) = g(f (x)) ,
and the domain of g ◦ f is the values of x in the domain of f such that f (x)
is in the domain of g.

==========================================================

Example: Composite functions√


Let p(x) = x2 − 2, and h(x) = 5x + 1 (for x ≥ 0). Find (p ◦ h)(2).

7 Special Functions
7.1 Inverse
============================================================
HPW 2.4
Now suppose that instead of,

x f (x) y

we want to go back the other way, that is,

x ? y

or in other words, if
f (x) = y ,
then what we are after is the function,

f −1 (y) = x .

where f −1 is the inverse function of f .


==========================================================

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ECON 1202/ECON 2291: QABE c
School of Economics, UNSW

Example:
x
Suppose f (x) = 2 + 1, find f −1 .

==========================================================

A function may not an inverse function

Example:
x2 +1
Suppose f (x) = 5 , find f −1 (x).

==========================================================
Let’s try that out, suppose x = 2:

(2)2 + 1
f (x) = f (2) = =1
5
... and the other way around,
p
f −1 (x) = f −1 (1) = (5)(1) − 1 = ±2

???!!! we received two answers back: +2, or −2

A function has an inverse if and only if it is a one-to-one function.

Definition | One-to-one Function


A function is one-to-one if for all a and b, if a 6= b, then f (a) 6= f (b).

Note: Inverse or reciprocal? You’ll have noted that the way that we represent the inverse
of a function, f −1 (x) looks a lot like how we might represent the reciprocal of a number,
x−1 . So the question is, ‘how do I know what is being talked about?’ The context will be

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ECON 1202/ECON 2291: QABE c
School of Economics, UNSW

most helpful, and the way that the inverse is presented should give some indication. For
instance, to represent the reciprocal of the function f (x) we would normally write,
1
[f (x)]−1 = ,
f (x)

rather than when we just want the inverse we would write,

f −1 (x) ,

see the difference? However, suppose you were confronted with,



z(x) = x2 + 2 x + 4f −1 x ,

what would you understand this to mean? It is clearly a bit ambiguous, with ambiguity
due to the lack of any indication of whether f is a function (which has been written in the
equation without its input value), or if it is just another variable that is taken reciprocally
( f1 ).
To avoid such ambiguity, good practice is always to make the inputs to functions very clear
(write them in), unless there are many inputs, in which case, make it clear that you are
just going to write the function name (‘for convenience, we shall write f (a, b, c, d, e, f ) as
just f ’) and be sure not to confuse things in the expression.

7.2 Exponential & Logarithmic


We will have much more to say about exponential functions in coming weeks, since they
provide an easy way to talk about various kinds of time-dependent processes. Be sure to HPW 4.1,
4.2
do a number of exercises in exponential and logarithmic functions since it is quite likely
that either you have forgotten the rules associated with them, or are meeting them for
the first time. It will be of great benefit if the rules and manipulation of these types of
functions comes quickly to hand.
==========================================================

Definition | Exponential

f (x) = ax
(A selection of ) Important rules:

am an = am+n
am
= am−n
an
(am )n = amn

3
f (x) = 2x
2
1
0
-1
x
-2
-3
-3 -2 -1 0 1 2 3

==========================================================

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ECON 1202/ECON 2291: QABE c
School of Economics, UNSW

Definition | Logarithmic
Where b is the base,
f (x) = logb x
(A selection of ) Important rules:

logb (mn) = logb m + logb n


m
logb ( ) = logb m − logb n
n
logb (mr ) = r logb m
logb 1 = 0

3
f (x) = log10 x
2
1
0
-1
x
-2
-3
-3 -2 -1 0 1 2 3

Note: logb x is like saying, ‘what power must I raise b to, to obtain x?’
==========================================================
The connection between logarithms and exponentials...
Definition | A very nice rule

logb x = y corresponds to by = x

log x = y
b

==========================================================

Revise!

1. Go over the lecture notes, chapter refs, tutorial problems,

be sure you can do them(not just read them).

2. Go over the lecture notes, chapter refs, tutorial problems,

be sure you can do them(not just read them).

3. Go over the lecture notes, chapter refs, tutorial problems,

be sure you can do them(not just read them).

Lecture 1 14