Assignment No. 1: Solution

ALLAMA IQBAL OPEN UNIVERSITY ISLAMABAD
(Department of Business Administration)
ASSIGNMENT No. 1
Course: Applied Math for Business & Social Sciences (8405) Semester:
Autumn, 2019
Level: BBA (4 years)
Q. 1 Solve the following second-degree inequalities:

a)
b)
Q. 2 A student has £140 per month to spend on football and on

cinema. If each attendance at a football match costs £12, while
outing to the cinema costs £8,
a) Write down the equation of the budget constraint. Graph the
constraint.
b) Analyse the effect on the constraint if the price of a football
outing increases to £20.
Solution:
Total Budget = £140
Cost of each Football Match (x) = £12
Cost of each Cinema Ticket (y) = £8
Spend on Match = 12x

Spend on Cinema = 8y
Total Spend = 12x + 8y
For equation of Budget Constraint;
12x + 8y ≤ 140
Subtract 140 on both sides;
12x + 8y + 140 ≤ 0
1
12x = 140
x = 140 / 12
x = 11
8y =100
140
y = 140
80 / 8
y = 17
60
40
20
0
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
100
100
80
80
60
60
40
40
20
20
0
0 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Q. 3 A firm, which makes travel alarm clocks has a total cost

function
TC = 800 + 0.2Q.
a) If the price of the clock is £6.6, write down the equation of
the total revenue function. Calculate the number of clocks
which must be made and sold to break-even.
b) When the firm charges a price P for each alarm clock the
break-even point is Q= 160. Write down the equation for
break-even, hence calculate the price charged per clock.
Q. 4 A farmers has a field of 70 acres in which he plants

potatoes and corn. The seed for potatoes costs $20/acre, the
2
seed for corn costs $60/acre and the farmer has set aside $3000
to spend on seed. The profit per acre of potatoes is $150 and
the profit for corn is $50 an acre.
a. Write the constraints for the problem.
b. Write the profit equation.
c. Graph the constraints and find the corner points.
x = number of acres of potatoes

y = number of acres of corn.
Objective function is profit = 150 * x + 50 * y
this is the function you want to maximize.
Constraints are:
x >= 0
y >= 0
20 * x + 60 * y <= 3000
x + y <= 70
the corner points of this area will be where the maximum profit lies.
the corner points of the risible region are:
(0,50), (30,40), (70,0), (0,0)
profit at each of these corner points are:
0 * 150 + 50 * 50 = 2500 for (0,50)

30 * 150 + 40 * 50 = 6500 for (30,40)
70 * 150 + 0 * 50 = 10500 for (70,0) *****
0 * 150 + 0 * 50 = 0 for (0,0)
maximum profit is attained when all 70 acres are planted by potatoes.
All constraints need to be satisfied as well.
Constraints are:
x >= 0 = satisfied
y >= 0 = satisfied
20 * x + 60 * y <= 3000 = 20 * 70 + 60 * 0 <=3000 = 1400 <= 3000 =
satisfied
x + y <= 70 = 70 + 0 <= 70 = 70 <= 70 = satisfied.
3
All constraints were satisfied, therefore the solution looks good.
The solution is that all 70 acres should be planted by potatoes for

maximum profit, based on the information provided in the problem.
Q. 5 An insurance company provided insurance cover to

3000 trucks, 5000 buses and 4000 cars. The probabilities
of their getting involved in an accident are 0.1, 0.2 and
0.4 respectively. If an accident is reported, what is the
probability that it involves the truck?
4
Solution:
A_{1} be the event that the truck is insured
p(A_{1}) = \frac{3000}{(3000 + 5000 + 4000)} = \frac{1}{4}
A_{2} be the event that the bus is insured
p(A_{2}) = \frac{5000}{(3000+ 5000 + 4000)} = \frac{5}{12}
A_{3} be the event that the car is insured
p(A_{3}) = \frac{4000}{(3000 + 5000 + 4000)} = \frac{1}{3}
Probability of truck in an accident = 0.1 =\frac{1}{10}
Probability of bus in an accident = 0.2 = \frac{2}{10}
Probability of car in an accident = 0.4 =\frac{4}{10}
Probability of truck getting an accident =\frac{\left(\frac{1}{4} \times \frac{1}

{10}\right)}{\left(\frac{1}{4} \times \frac{1}{10}\right)}+\left(\frac{5}{12}
\times \frac{2}{10}\right)+\left(\frac{1}{3} \times \frac{4}{10}\right)
=\frac{\frac{1}{40}}{\frac{1}{40}}+\left(\frac{1}{12}\right)+\left(\frac{2}
{15})\right)
=\frac{\frac{1}{40}}{\frac{29}{120}}
=\frac{3}{29}
Result:
If an accident is reported, what is the probability that it involves the truck is

=3/29.

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ALLAMA IQBAL OPEN UNIVERSITY ISLAMABAD

(Department of Business Administration)

Q. 1 Solve the following second-degree inequalities:

Q. 2 A student has £140 per month to spend on football and on

Spend on Match = 12x

For equation of Budget Constraint;

Subtract 140 on both sides;

Q. 3 A firm, which makes travel alarm clocks has a total cost

Q. 4 A farmers has a field of 70 acres in which he plants

x = number of acres of potatoes

Objective function is profit = 150 * x + 50 * y

this is the function you want to maximize.

the corner points of the risible region are:

(0,50), (30,40), (70,0), (0,0)

profit at each of these corner points are:

0 * 150 + 50 * 50 = 2500 for (0,50)

maximum profit is attained when all 70 acres are planted by potatoes.

All constraints need to be satisfied as well.

The solution is that all 70 acres should be planted by potatoes for

Q. 5 An insurance company provided insurance cover to

A_{1} be the event that the truck is insured

p(A_{1}) = \frac{3000}{(3000 + 5000 + 4000)} = \frac{1}{4}

A_{2} be the event that the bus is insured

p(A_{2}) = \frac{5000}{(3000+ 5000 + 4000)} = \frac{5}{12}

A_{3} be the event that the car is insured

p(A_{3}) = \frac{4000}{(3000 + 5000 + 4000)} = \frac{1}{3}

Probability of truck in an accident = 0.1 =\frac{1}{10}

Probability of bus in an accident = 0.2 = \frac{2}{10}

Probability of car in an accident = 0.4 =\frac{4}{10}

Probability of truck getting an accident =\frac{\left(\frac{1}{4} \times \frac{1}

If an accident is reported, what is the probability that it involves the truck is

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