CHAPTER 10

Integration
Integration can be thought of as the opposite of differentiation but is
also a method for finding the area under a graph. It is an important
mathematical technique, which will be familiar if you have done A-level
maths. In this chapter we look at techniques for integrating standard
functions, including integration by substitution and by parts and
at economic applications including calculation of consumer surplus.
./



1. The Reverse of Differentiation

If we have a function y(x), we know how to find its derivative

tiation. For example:

dy
dx

by the process of differen-

y(x) = 3x2 + 4x 1
dy

= 6x + 4
dx
Integration is the reverse process:
dy
When you know the derivative of a function, dx
, the
process of finding the original function, y, is called
integration.

For example:

dy
= 10x 3
dx
y(x) = ?

If you think about how differentiation works, you can probably see that the answer could be:
y = 5x2 3x
However, there are many other possibilities; it could be y = 5x2 3x+1, or y = 5x2 3x20,
or . . . in fact it could be any function of the form:
y = 5x2 3x + c
where c is a constant. We say that (5x2 3x + c) is the integral of (10x 3) and write this
as:
The
integral
of

with
respect
to x

Z
(10x 3) dx =
173

5x2 3x + c

174

10. INTEGRATION

c is referred to as an arbitrary constant or a constant of integration. More generally:

Integration is the reverse of differentiation.
If f 0 (x) is the derivative of a function f (x), then the
integral of f 0 (x)Zis f (x) (plus an arbitrary constant):
f 0 (x)dx = f (x) + c

1.1. Integrating Powers and Polynomials

In the example above you can see that since differentiating powers of x involves reducing the
power by 1, integrating powers of x must involve increasing the power by 1. The rule is:
Integrating Powers of x:
Z

xn dx =

1
xn+1 + c
n+1

(n 6= 1)

It is easy to check that this rule works by differentiating:



d
1
n+1
x
+ c = xn
dx n + 1
You can also see from this that the rule doesnt work when n = 1. But it works for other
negative powers, for zero, and for non-integer powers see the examples below.
We can apply this rule to integrate polynomials. For example:
Z
Z
2
(4x + 6x 3)dx =
(4x2 + 6x 3x0 )dx
1
1
= 4 x3 + 6 x2 3x1 + c
3
2
4 3
2
=
x + 3x 3x + c
3
It is easy to make mistakes when integrating. You should always check your answer by differentiating it to make sure that you obtain the original function.
Examples 1.1: Integrating Powers and Polynomials
(i) What is the integral of x4 2x + 5?
Z
1
(x4 2x + 5)dx = x5 x2 + 5x + c
5
(ii) Integrate 2

t5
.
5
Z 

t5
2
5


dt = 2t

t6
+c
30

10. INTEGRATION

(iii) If

175

dy
= (2 x)(4 3x), what is y?
dx
Z
y =
(2 x)(4 3x)dx
Z
=
(8 10x + 3x2 )dx = 8x 5x2 + x3 + c

(iv) Integrate 1 +

10
.
z3
Z 

10
1+ 3
z

Z
dz =

1 + 10z 3 dz

= z + 10
= z

(v) If f 0 (x) = 3 x what is f (x)?

Z
f (x) =
Z
=

1 2
z +c
2

5
+c
z2

3 xdx
1

3x 2 dx

2 3
= 3 x2 + c
3
3
2
= 2x + c
(vi) Integrate the function 3ax2 + 2tx with respect to x.
Z
(3ax2 + 2tx)dx = ax3 + tx2 + c
(In this example there are several variables or parameters. We say with respect to x
to clarify which one is to be treated as the variable of integration. The others are then
treated as constants.)

Exercises 10.1: Integrating

Powers
and Polynomials
Z
Z
Z
(1) Find: (a) 8x3 dx (b)
(2z z 3 + 4)dz (c)
(1 + 3t8 )dt

Z
Z  2
18
q
4 dq
(d)
(a + bx)dx (e)
2
q

(2) Integrate (a) 5x1.5 (b) 4z

(3) What is the integral of z 3a1 with respect to z?
(4) If g 0 (p) = p , what is g(p)?

176

10. INTEGRATION

1.2. Economic Application

Suppose we know that a firms marginal cost of producing output y is 8y + 3, and also that
the firm has a fixed cost of 10. Then we can integrate the marginal cost function to find the
firms total cost function:
C 0 (y) = 8y + 3
C(y) = 4y 2 + 3y + c
As usual, integration gives us an arbitrary constant, c. But in this case, we have another
piece of information that tells us the value of c the cost of producing zero output is 10:

C(0) = 10

c = 10

C(y) = 4y + 3y + 10
1.3. More Rules for Integration
Remember the rules for differentiating logarithmic and exponential functions (Chapter 6):
dy
1
y = ln x
=
dx
x
dy
ax
y=e

= aeax
dx
By reversing these we can obtain two more rules for integration:
Z
1
dx = ln x + c
x
Z
1
eax dx = eax + c
a
(The first of these rules tells us how to integrate xn when n=1, which we couldnt do before.)
Examples 1.2:


Z 
Z 
3
1
(i)
6x +
dx =
6x + 3
dx = 3x2 + 3 ln x + c
x
x
Z


1
1 3x
(ii)
4e2x + 15e3x dx = 4 e2x + 15
e
+ c = 2e2x 5e3x + c
2
3
Looking at the examples above you can also see that the following general rules hold. In fact
they are obvious from what you know about differentiation, and you may have been using
them without thinking about it.
Z
Z
af (x)dx = a f (x)dx
Z

Z
(f (x) g(x))dx =

Z
f (x)dx

g(x)dx

The rules for integrating x1 and ex can be generalised. From the Chain Rule for differentiation
we can see that, if f (x) is a function, then:
d
f 0 (x)
d  f (x) 
(ln f (x)) =
and
e
= f 0 (x)ef (x)
dx
f (x)
dx

10. INTEGRATION

177

Reversing these gives us two further rules:

Z 0
f (x)
dx = ln f (x) + c
f (x)
Z
f 0 (x)ef (x) dx = ef (x) + c

To apply these rules you have to notice that an integral can be written in one of these forms,
for some function f (x).
Examples 1.3:
Z
2
(i)
xe3x dx We can rewrite this integral:
Z
Z
1
2
2
xe3x dx =
6xe3x dx and apply the 2nd rule above with f (x) = 3x2
6
1 3x2
=
e +c
6
Z
1
(ii)
dx Applying the 1st rule directly with f (y) = y + 4:
y+4
Z
1
dy = ln(y + 4) + c
y+4
Z
z+3
(iii)
dz
2
z + 6z 5
Z
2z + 6
= 21
dz
(f (z) = z 2 + 6z 5)
2
z + 6z 5
= 21 ln(z 2 + 6z 5) + c

Exercises 10.2: Integrating Simple Functions


Z
Z 
4
3x
2
(1) Find: (a) 10e dx (b)
9y
dy
y
Z
Z
1
3
(d)
t2 et dt (e)
dq
2q 7

Z 
(c)

1
1
+
z z2


dz

(2) If f 0 (t) = 1 e6t , what is f (t)?

(3) Integrate: 4x2 2 x + 8x3 .

(4) If a firm has no fixed costs, and its marginal cost of producing output q is
(9q 0.8 2), find the firms total cost function C(q).
(5) Find the integral with respect to x of xa + eax + xa , assuming 1 < a < 1.
Further Reading and Exercises
Jacques 6.1
Anthony & Biggs 25.3

178

10. INTEGRATION

2. Integrals and Areas

In economics we often use areas on graphs to measure total costs and benefits: for example to evaluate the effects of imposing a tax. Areas on graphs can be calculated using integrals.
2.1. An Economic Example

Marginal Cost
.
0
.... C (q)
...

The area under a firms marginal cost curve

between q0 and q1 represents the total cost of
increasing output from q0 to q1 : it adds up the
marginal costs for each unit of output between
q0 and q1 .

..
....
....
.
.
.
...
....
....
.
.
.
.
....
....
....
.
.
.
...
.....
.....
.
.
.
.
.
.
.......
.......
.........
.
.
.
.
.
.
.
.
...
............
................

q0

So, the area represents: C(q1 ) C(q0 ).

q1

To calculate this area we could:

Integrate the marginal cost function C 0 (q) to find the function C(q)
Evaluate C(q) at q0 and q1 to obtain C(q1 ) C(q0 )
Note that C(q) will contain an arbitrary constant, but it will cancel out in C(q1 ) C(q0 ).
(The constant represents the fixed costs not needed to calculate the increase in costs.)
We write this calculation as:
Z

q1

Area = C(q1 ) C(q0 ) =

C 0 (q)dq

q0

2.2. Definite Integration

Z

f (x)dx
a

represents the area under the graph of f (x) between

a and b.
It is called a definite integral.
a and b are called the limits of integration.
To calculate it, we integrate, evaluate the answer
at each of the limits, and subtract.

The type of integration

that we did in the previous section is known as indefinite integration.
R
For example, (4x + 1)dx = x2 + x + c is an indefinite integral. The answer is a function of x

10. INTEGRATION

179

containing an arbitrary constant. In definite integration, in contrast, we evaluate the answer

at the limits.
Examples 2.1: Definite Integrals
Z 4
(i)
(4x + 1)dx
1

This integral represents the area under the graph of the function f (x) = 4x + 1 between
x = 1 and x = 4.
Z 4

4
It is conventional to
(4x + 1)dx = 2x2 + x + c 1
use square brackets here
1




= 2 42 + 4 + c 2 (1)2 1 + c
= (36 + c) (1 + c)
= 35
From now on we will not bother to include the arbitrary constant in a definite integral
since it always cancels out.
25

Z
(ii)

3 y dy

25

3 y dy =

25

3y 2 dy

i
3 25
2y 2
9

 

3
3
=
2 25 2 2 9 2

= 250 54
= 196
Z
(iii)

a

3+
1

2
q


dq where a is a parameter.

Z a
2
3+
dq = [3q + 2 ln q]a1
q
1
= (3a + 2 ln a) (3 1 + 2 ln 1)
= (3a + 2 ln a) 3
= 3a 3 + 2 ln a

(iv) For a firm with marginal cost function M C = 3q 2 + 10, find the increase in costs if
output is increased from 2 to 6 units.
Z 6
C(6) C(2) =
(3q 2 + 10)dq
2

=
=
=
=

 3
6
q + 10q 2




63 + 60 23 + 20
276 28
248

180

10. INTEGRATION

2.3. Economic Application: Consumer and Producer Surplus

p

The diagram shows a market demand function. When

the market price is p0 , the quantity sold is q0 and
Area A represents net consumer surplus.

....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
.....
......
......
......
......
......
......
......
.......
.......
.......
.......
.......
........
........
........
..........
..........
..

If the inverse demand function is p = D(q), we can

calculate Consumer
Surplus by:
Z

p0

q0

Demand

D(q)dq p0 q0

CS =

0
Area(A+B)

Area B

q0

p
Supply

p0

....
....
....
...
.
.
...
...
....
....
.....
.
.
.
.
.....
.....
......
......
......
.
.
.
.
.
.
......
......
......
.......
......
.
.
.
.
.
.
........
........
.........
.........
..........
.
.
.
.
.
.
.
.
.
.
.
........
..........................

Similarly, Area C represents net producer surplus.

If the inverse supply function is p = S(q), we can
calculate Producer Surplus
Z by:
q0

P S = p0 q 0

Area(C+D)

S(q)dq
0
Area D

D
q0

Exercises 10.3: Definite Integrals

Z
(1) Evaluate the definite integrals: (a)

(2x + 1)dx

(b)

e3x dx

(2) For a market in which the inverse demand and supply functions are given by:
pd (q) = 24 q 2 and ps (q) = q + 4, find:
(a) the market price and quantity (b) consumer surplus (c) producer surplus.
(3) Evaluate the definite integrals:
Z 1
Z 2
2
(x 3x + 2)dx,
(x2 3x + 2)dx,
0

(x2 3x + 2)dx.

Explain the answers you obtain by sketching the graph of y = x2 3x + 2.

Further Reading and Exercises
Jacques 6.2. In particular 6.2.3 looks at investment, another economic application
of definite integrals.
Anthony & Biggs 25.1, 25.2 and 25.4

10. INTEGRATION

181

3. Techniques for Integrating More

Complicated Functions

The rules in sections 1.1 and 1.3 only allow us tointegrate quite simple functions. They dont
tell you, for example, how to integrate xex , or 3x2 + 1.
Whereas it is possible to use rules to differentiate any sensible function, the same is not
true for integration. Sometimes you just have to guess what the answer might be, then check
whether you have guessed right by differentiating. There are some functions that cannot be
integrated algebraically: the only possibility to is to use a computer to work out a numerical
approximation.1
But when you are faced with a function that cannot be integrated by the simple rules, there
are a number of techniques that you can try one of them might work!
3.1. Integration by Substitution
Consider the integral:
Z

(3x + 1)5 dx

We know how to integrate powers of x, but not powers of (3x+1). So we can try the following
procedure:
Define a new variable:
Differentiate:

dt
=3
dx

t = 3x + 1
1
dt = 3dx dx = dt
3

Use these expressions to substitute for x and dx in the integral:

Z
Z
1
5
(3x + 1) dx = t5 dt
3
Integrate with respect to t, then substitute back to obtain the answer as a function
of x:
Z
1
1 6
t5 dt =
t +c
3
18
1
=
(3x + 1)6 + c
18
You can check, by differentiating, that this is the integral of the original function. If you do
this, you will see that integration by substitution is a way of reversing the Chain Rule (see
Chapter 6).
Thinking about the Chain Rule, we can see that Integration by Substitution works for integrals that can be written in a particular form:

1The function ex2 /2 , which is important in statistics, is an example.

182

10. INTEGRATION

When an integralZ can be written in the form:

dt
f (t) dx
dx
where t is some function of x
then it can be
Z integrated byZsubstituting t for x:
dt
f (t) dx = f (t)dt
dx
Sometimes you will be able to see immediately that an integral has the right form for using
a substitution. Sometimes it is not obvious - but you can try a substitution and see if it works.
Note that the logarithmic and exponential rules that we found at the end of section 1.3 are
a special case of the method of Integration by Substitution. The first example below could
be done using those rules instead.
Examples 3.1: Integration by substitution
Z
2
(i)
xe3x dx For this integral we can use the substitution t = 3x2 :
t = 3x2

dt = 6xdx
Z

Substituting for x and dx:

3x2

xe

e3x xdx

et 61 dt

dx =
=
=

Z
(ii)

1 t
6e

+ c = 16 e3x + c

(3x2 + 1)5 dx

This example looks similar to the original one we did, but unfortunately the method
does not work. Suppose we try substituting t = 3x2 + 1:
t = 3x2 + 1

dt = 6xdx
r

To substitute for x and dx we also need to note that x =

Z
Z
1
2
5
(3x + 1) dx = t5 q
dt
6 t1
3

t1
. Then:
3

Doing the substitution has made the integral more difficult, rather than less.
Z
(iii)

4y
p

y2 3

dy

Here we can use a substitution t = y 2 3:

t = y 2 3 dt = 2ydy
Z
Z
4y
1
p
Substituting for y and dy:
dy =
2p
2ydy
2
2
y 3
y 3
Z
1
=
2t 2 dt
p
1
= 4t 2 + c = 4 y 2 3 + c

10. INTEGRATION

183

Exercises 10.4: Integration by Substitution

(1) Evaluate the following integrals using the suggested substitution:
Z
(a)
x2 (x3 5)4 dx
t = x3 5
Z
(b)
(2z + 1)ez(z+1) dz
t = z(z + 1)
Z
3

(c)
dy
t = 2y + 3
2y + 3
Z
x
(d)
dx
t = x2 + a where a is a parameter
2
x +a
Z
1
(e)
dq
t = 2q 1
(2q 1)2
Z
p+1
(f)
dp
t = 3p2 + 6p 1
2
3p + 6p 1
(2) Evaluate
the following integrals
by substitution
Z
Z
Z or otherwise:
2q 3 + 1
2
6
(a) (4x 7) dx (b)
dq (c)
xekx dx (k is a parameter.)
q 4 + 2q

3.2. Integration by Parts

Remember the Product Rule for differentiation:

d 
u(x)v(x) = u(x)v 0 (x) + u0 (x)v(x)
dx
Integrating this we get:
Z
Z
0
u(x)v(x) = u(x)v (x)dx + u0 (x)v(x)dx
and rearranging gives us the following formula:

Integration by Parts:
Z
u (x)v(x)dx = u(x)v(x) u(x)v 0 (x)dx
0

R 0
Hence if we start with an integral that can be written in the form
u (x)v(x)dx we can
R
evaluate it using this rule provided that we know how to evaluate u(x)v 0 (x)dx.
Examples 3.2: Integration by Parts
Z
(i)
xe5x dx Suppose we let v(x) = x and u0 (x) = e5x .
u0 (x) = e5x
v(x) = x

u(x) =

1 5x
5e

v 0 (x) = 1

184

10. INTEGRATION

Applying the formula:

Z
Z
0
u (x)v(x)dx = u(x)v(x) u(x)v 0 (x)dx
Z
Z
5x
5x
1
xe dx = 5 xe 15 e5x dx
5x
1
5 xe

1 5x
25 e

+c

(Check this result by differentiation.)

Z
(ii)

(4y + 1)(y + 2)3 dy

Let v(y) = 4y + 1 and u0 (y) = (y + 2)3 :

u0 (y) = (y + 2)3
v(y) = 4y + 1

u(y) =

1
4 (y

+ 2)4

(If this is not obvious to you

it could be done by substitution)

v 0 (y) = 4

Applying the formula:

Z
Z
u0 (y)v(y)dy = u(y)v(y) u(y)v 0 (y)dy
Z
Z
4
3
1
(4y + 1)(y + 2) dy = 4 (4y + 1)(y + 2) (y + 2)4 dy
=

1
4 (4y

+ 1)(y + 2)4 15 (y + 2)5 + c

Z
(iii)

ln x dx
This is a standard function, but cannot be integrated by any of the rules we have so
far. Since we dont have a product of two functions, integration by parts does not seem
to be a promising technique. However, if we put:
u0 (x) = 1

u(x) = x

v(x) = ln x v 0 (x) =

1
x

and apply the formula, we obtain:

Z

u (x)v(x)dx = u(x)v(x) u(x)v 0 (x)dx

Z
Z
1
ln x dx = x ln x x dx
x
Z
= x ln x 1.dx
= x ln x x + c

Again, check by differentiating.

Exercises
Z 10.5: Use integration
Z by parts to find:
(1)
(x + 1)ex dx (2) 2y ln y dy

10. INTEGRATION

185

3.3. Integration by Substitution and by Parts: Definite Integrals

3.3.1. Integration by Substitution. If we want to find:
Z 1
2x
dx
2
0 x +8
we could integrate by substituting t = x2 + 8 to find the indefinite integral, and then evaluate
it at the limits. However, a quicker method is to substitute for the limits as well:
t = x2 + 8 dt = 2xdx
x=0 t=8
x=1 t=9
Hence:
1

Z
0

2x
dx =
2
x +8

x2

=
8

1
2xdx
+8

1
dt
t

= [ln t]98
= ln 9 ln 8 = ln 1.125
3.3.2. Integration by Parts. Similarly, the method of integration by parts can be modified
slightly to deal with definite integrals. The formula becomes:
Z b
h
ib Z b
u0 (x)v(x)dx = u(x)v(x)
u(x)v 0 (x)dx
a

(1 x)ex dx

Consider, for example:

0

u0 (x) = ex
u(x) = ex
v(x) = 1 x v 0 (x) = 1

We can integrate by parts using:

Applying the formula:
Z

(1 x)e dx =

(1

x)ex

i1

Z
+

ex dx

 1
= 1 + ex 0
= e2
Exercises 10.6: Definite Integrals
Z

(1) Integrate by substitution: (a)

(2x + 1) dx
0

Z
(2) Integrate by parts:

4ze2z dz

Further Reading and Exercises

Anthony & Biggs 26.1, 26.2 and 26.3

(b)
1

e1+3y dy

186

10. INTEGRATION

4. Integrals and Sums

Suppose a firm with marginal cost curve C 0 (q) increases its output from 50 units to 120. The total
increase in cost is given by the integral of the marginal cost curve:
Z 120
C 0 (q)dq
C(120) C(50) =

Marginal Cost
0
.... C (q)
....

...
....
.
.
.
...
....
....
.
.
.
.
...
....
.....
.
.
.
.
.
.....
.......
........
.
.
.
.
.
.
.
.......
...........
................

50

120

50

We can think of this as the sum of all the marginal

costs of the units of output between 50 and 120, so:
Z 120
C 0 (q)dq C 0 (51) + C 0 (52) + + C 0 (120)

50

So we can see that:

Z

120

C (q)dq
50

100
X

C 0 (q)

q=51

These two expressions are only approximately equal because we have a continuous marginal
cost curve, allowing for fractions of units of output.
In general, we can think of integrals as representing the equivalent of a sum, used when we
are dealing with continuous functions.

4.1. Economic Application: The Present Value of an Income Flow

Remember from Chapter 3 that when interest is compounded continously at annual rate i,
the present value of an amount A received in t years time is given by:
Aeit
Suppose you receive an annual income of y for T years, and that, just as interest is compounded continuously, your income is paid continuously. This means that in a short time
1
1
period length t, you will receive yt. For example, in a day (t = 365
) you would get 365
y.
In an infinitesimally small time period dt your income will be:
ydt
which has present value:
yeit dt
Then the present value of the whole of your income stream is given by the sum over the
whole period:
Z
T

V =

yeit dt

We can calculate the present value in this way even if the income stream is not constant
that is, if y = y(t).

10. INTEGRATION

187

Examples 4.1: The Present Value of an Income Flow

(i) An investment will yield a constant continuous income of 1000 per year for 8 years.
What is its present value if the interest rate is 2%?
Z 8
V =
1000e0.02t dt
0



1 0.02t 8
e
= 1000
0.02
0
= 50000(e0.16 + 1) = 7393
(ii) A worker entering the labour market expects his annual earnings, y, to grow continuously according to the formula y(t) = 12000e0.03t where t is length of time that he
has been working, measured in years. He expects to work for 40 years. If the interest
rate is i = 0.05, what is the present value of his expected lifetime earnings?
Z
V

40

y(t)eit dt

40

12000e0.03t e0.05t dt
0
Z 40
= 12000
e0.02t dt



1 0.02t 40
= 12000
e
0.02
0
 0.02t 40
= 600000 e
0


= 600000 e0.8 + 1 = 330403

Exercises 10.7: The present value of an income flow

(1) What is the present value of a constant stream of income of 200 per year for 5
years, paid continuously, if the interest rate is 5%?
(2) A worker earns a constant continuous wage of w per period. Find the present
value, V , of his earnings if he works for T periods and the interest rate is r. What
is the limiting value of V as T ?
Further Reading and Exercises
Jacques 6.2.4.
Anthony & Biggs 25.1, 25.2 and 25.4

188

10. INTEGRATION

Solutions to Exercises in Chapter 10

Exercises 10.1:
(1) (a) 2x4 + c
(b) z 2 14 z 4 + 4z + c
(c) t 37 t7 + c
(d) ax + 12 bx2 + c
3
(e) q6 + q63 + c
(2) (a) 2x2.5 + c
(b) 43 z 3/2 + c
1 3a
(3) 3a
z +c

(4) +1 p+1 + c
Exercises 10.2:
3x
(1) (a) 10
3 e +c
3
(b) 3y 4 ln y + c
(c) ln z z1 + c
3
(d) 13 et + c
(e) 12 ln(2q 7) + c
(2) f (t) = t 16 e6t + c
(3) 43 x3 43 x3/2 4x2 + c
(4) C(q) = 5q 1.8 2q
1
1
(5) a+1
xa+1 + a1 eax + 1a
x1a + c
Exercises 10.3:

4
(1) (a) 23 x3 + x 1 = 45

1
(b) 13 e3x 1 = 13 (e3 e3 ) = 6.68
(2) (a) q = 4, p = 8

4
(b) 24q 13 q 3 0 32 = 42 23

4
(c) 32 12 q 2 + 4q 0 = 8
1

(3) 13 x3 32 x2 + 2x 0 = 56
1 3 3 2
2
1
3 x 2 x + 2x 1 = 6
1 3 3 2
2 2
3 x 2 x + 2x 0 = 3
Between x = 1 and x = 2 the graph is below the x-axis. So the area between the
graph and the axis here is negative.

(b) dt
(2z + 1)dz
R =
et dt = et + c = ez(z+1) + c
(c) dt = 2dy
R 3

1
2y + 3 + c
1 dt = 3t 2 + c = 3
2t 2

(d) dt
R 1= 2xdx1
1
2
2t dt = 2 ln t + c = 2 ln(x + a) + c
(e) dt
2dq
R =
1
1
1
dt
= 2t
+ c = 4q2
+c
2t2
(f) dt
R 1=1 (6p +1 6)dp = 6(p + 1)dp
t 6 dt = 6 ln t + c
= 16 ln(3p2 + 6p 1) + c
(2) (a) t = 4x 7, dt = 4dx
1
7
28 (4x 7) + c
4
(b) t = q + 2q, dt = (4q 3 + 2)dq
1
4
2 ln(q + 2q) + c
(c) t = kx2 , dt = 2kxdx
1 kx2
2k
e
+c
Exercises 10.5:
(1) u0 = ex , v = x + 1
xex + c
(2) u0 = 2y, v = ln y
y 2 ln y 21 y 2 + c
Exercises 10.6:
(1) (a) t = 2x + 1

 
1 4 5
8 t  1 = 78
1
1
t 4
3 e 2 = 3

(b) t = 1+3y
e4 e2
0
2z
(2) u = e , v = 4z

1 
1
2ze2z 0 + e2z 0 = 1 3/e2

Exercises 10.7:
 1 0.05t 5
R5
(1) 0 200e0.05t dt = 200 0.5
e
0
0.25
= 4000(1 e
) = 884.80
RT
(2) V = 0 wert dt
Exercises 10.4:

T


= w 1r ert 0 = wr 1 erT
(1) (a) Rdt = 3x2 dx
V wr as T
1 5
1
t4 13 dt = 15
t + c = 15
(x3 5)5 + c

2This Version of Workbook Chapter 10: September 15, 2003

10. INTEGRATION

189

Worksheet 10: Integration, and

Further Optimisation Problems


Integration
(1) Evaluate the following integrals:
Z
Z
(a) (x 3)(x + 1)dx
(b)

e5y dy

Z
(c)

2z + 3
dz
z2

(2) Evaluate the following integrals, using a substitution if necessary:

Z
Z
Z 1
y3
z3
9

(a) (3x + 1) dx
(b)
dy
(c)
dz
y 2 6y + 1
z2 + 1
0
(3) A competitive firm has inverse supply function p = q 2 + 1 and fixed costs F = 20.
Find its total cost function.
(4) An investment will yield a continuous profit flow (t) per year for T years. Profit
at time t is given by:
(t) = a + bt
where a and b are constants. If the interest rate is r, find the present value of the
investment. (Hint: you can use integration by parts.)
(5) The inverse demand and supply functions in a competitive market are given by:
72
pd (q) =
and ps (q) = 2 + q
1+q
(a) Find the equilibrium price and quantity, and consumer surplus.
(b) The government imposes a tax t = 5 on each unit sold. Calculate the new
equilibrium quantity, tax revenue, and the deadweight loss of the tax.
Further Problems
(1) An incumbent monopoly firm Alpha faces the following market demand curve:
Q = 96 P,
where Q is the quantity sold per day, and P is the market price. Alpha can produce
output at a constant marginal cost of 6, and has no fixed costs.
(a) What is the price Alpha is charging? How much profit is it making per day?
(b) Another firm, Beta, is tempted to enter the market given the high profits that
the incumbent, Alpha, is making. Beta knows that Alpha has a cost advantage:
if it enters, its marginal costs will be twice as high as Alphas, though there will
be no fixed costs of entry. If Beta does enter the market, is expects Alpha to act
as a Stackelberg leader (i.e. Beta maximizes its profits taking Alphas output
as given; Alpha maximizes its profits taking into account that Beta will react
in this way). Show that under these assumptions, Beta will find it profitable to
enter, despite the cost disadvantage. How much profit would each firm earn?
(c) For a linear demand curve of the form Q = abP, show that consumers surplus
1 2
is given by the expression CS = 2b
Q . Evaluate the benefit to consumers of
increased competition in the market once Beta has entered.

190

10. INTEGRATION

(2) A monopolist knows that to sell x units of output she must charge a price of P (x),
where P 0 (x) < 0 and P 00 (x) < 0 for all x. The monopolists cost of producing x is
C (x) = A + ax2 , where A and a are both positive numbers. Let x be the firms
profit-maximizing output. Write down the first- and second-order conditions that
x must satisfy. Show that x is a decreasing function of a. How does x vary with A?
(3) An Oxford economic forecasting firm has the following cost function for producing
reports:
C (y) = 4y 2 + 16
where y is the number of reports.
(a) What are its average and marginal cost functions?
(b) At what number of reports is its average cost minimized?
(c) Initially the market for economic forecasts in Oxford is extremely competitive
and the going price for a report is 15. Should the firm continue to produce
reports? Why or why not?
(d) Suppose the price rises to 20. How many reports will the firm supply? Illustrate diagrammatically and comment on your answer.
(e) Suddenly all competitor forecasting firms go out of business. The demand for
reports is such that p = 36 6y, where p is the price of a report. How many
reports will the Oxford firm produce? What profit will it earn?
(4) The telecommunications industry on planet Mercury has an inverse demand curve
given by P = 100 Q. The marginal cost of a unit of output is 40 and fixed costs
are 900. Competition in this industry is as in the Cournot model. There is free entry
into and exit from the market.
(a) How many firms survive in equilibrium?
(b) Due to technical advance, fixed costs fall to 400 from 900. What happens to the
number of firms in the industry?
(c) What is the effect on price of the fall in fixed costs? Explain your answer.
(5) Students at St. Gordons College spend all their time in the college bar drinking
and talking on their mobile phones. Their utility functions are all the same and are
given by U = DM O2 , where D is the amount of drink they consume, M is the
amount of time they talk on their mobile phones and O is the amount of time each
other student spends on the phone, over which they have no control. Both drink
and mobile phone usage cost 1 per unit, and each students income is 100.
(a) How much time does each student spend on the phone and how much does each
drink?
(b) What is the utility level of each student?
(c) The fellows at the college suggest that mobile phone usage should be taxed at
50 pence per unit, the proceeds from the tax being used to subsidize the cost
of fellows wine at high table. Are the students better off if they accept this
proposal?
(d) The economics students at the college suggest that the optimal tax rate is twice
as large. Are they right? What other changes might the students propose to
improve their welfare?