MAT 501:Mathematics for Decision Making

LINEAR EQUATIONS

Here we will consider in some detail the algebra and geometry of linear
equations and functions in two variables, (that is, equations and functions
whose graphs in a coordinate plane are straight lines).We will establish a
formal relationship between mathematics and its use in business and
economics.
Economics studies the relationship between different parts of an
economic system; for example, the relationship between the price of a
good and quantity demanded, between personal income and consumption,
between production and costs. These relationships may be described by
both qualitative and quantitative means.
Qualitatively, the relationship between price and quantity demanded may
be described by the statement 'as price increases, quantity demanded
decreases'. This verbal statement, however, is not precise as it does not
tell us by how much quantity demanded decreases when price increases.
It is, therefore, necessary to establish a quantitative relationship between
price and quantity demanded. The simplest quantitative relationship is the
straight line or linear function
Linear Equations are equations whose terms (the parts separated by
plus, minus, and equal signs) are a constant, or a constant times one
variable to the first power. Or,

Linear equation is an equation between two variables that gives a

straight line when plotted on a graph.

Thus,
2x – 3y = 7 is a linear equation because it consists of the constant 7, the
term 2x (which is the constant 2 times x to the first power), and -3y,
which is also a term consisting of a constant times one variable to the first
power. From this example, it should be clear that the general form of a
linear equation is
Ax + By = C
Where A, B, and C are constants with A and B not both zero.

Linear equations also appear in other forms. For example,

y = 5x + 3 Or, y = mx +c [Slope-intercept form]

On the other hand,

2x + 3xy = 7 is not linear because 3xy is a constant times the product of
two variables. Also,

x2 + y + 3x = 16 is not linear because of the presence of the second-

power term, x2. Linear equations are first-degree equations.
The straight line is one of the simplest mathematical functions: it is
easy to manipulate and to graph. It is, therefore, essential to fully
understand the straight line, what each part of the equation means and
the effect of changes in each part on the graph of the line.
Linear equations arise frequently in applied situations.

Example 1. Taxi fare from an airport to a nearby city is $1.25 per

mile driven, plus $0.75 for a bridge toll. Let y represent the fare and
x the number of miles driven on one trip.
a) Write the equation for y in terms of x.
b) Find the fare if the distance from the airport to the city is 22 miles.
Solution:
a) The total fare will be
Fare = (1.25)(number of miles driven) + 0.75
Or, using the specified symbols,
y = 1.25x + 0.75, which is a linear equation.
b) When the distance travel is 22 miles, the fare is
y=1.25(22) +0.75
=$28.25

Exercise: Taxi fare from an airport to a

nearby town is $0.80 per mile driven,
plus $2 for tolls. Let y represent the
fare and x the miles driven on one trip.
a) Write the equation for y in terms of x.
b) Find the fare if the distance from the airport to
the city is 17 miles
y = 1.25x + 0.75 and y = 0.80x + 2, are linear equations in the two
variables x and y.
These equations have graphs that are straight lines. To graph a straight
line we need only to have the coordinates of two of its points.

To graph a straight line, first determine the coordinates of two points,

then draw the line between these points.
See Page#50 (online) Book#31
For example,, in
y = 1.25x + 0.75 if we choose x=1, then

x y =1.25x +0.75 (x,y)

1 y=1.25(1)+.75=2 (1, 2)
5 y=1.25(5) +.75=7 (5, 7)

Linear Functions
The relationship between y and x expressed by

y = 1.25x + 0.75 is called a functional relationship

because for each value of x, there is one, and only one, corresponding
value for y.
y is a function of x means a relationship expressing a unique value of y
for each value of x.
In the above expression x is called the independent variable and is
plotted on the horizontal axis. The value of y depends upon what value
we assign to x, and so y is called the dependent variable, which is
plotted on the vertical axis.
We write the independent variable as the function of dependent variable
denoted by y = f(x), read y equals f of x.
How to define a straight line
A straight line may be defined by two properties:
• Slope, usually represented by the symbol m
• Vertical intercept, or, Y- intercept, or simply the intercept, the
point at which the line crosses the Y-axis, usually represented by the
symbol c.
SLOPE [Online page #51] 4th edition:Pg#58
By “slope” we refer to the inclination/slant of a line –
whether it rises or falls as you move from left to right
along the x-axis – and the rate at which the line rises or
falls(in other words , how steep the line is).
Definition: Slope
The slope is the change in the value of y if x increases by
1 unit.
Example: y = mx + c, numerically, y = 1.7x + 4
The slope of a line may be positive, negative, zero, or
undefined.
- A line with positive slope rises from left to right, or
runs uphill. See figure 2.3 [Online page 51]. The
value of y increases as x increases (or conversely, y
decreases as x decreases).
- A line having a negative slope falls from left to right,
or runs downhill. [page 51]. It means that x and y
behave in an inverse manner, as one increases the
other decreases and vice versa.
- A line having a zero slope is horizontal. As x
increases or decreases, y remains constant (the special
case y = k). [Page 51].
- Vertical lines (of the form x=k) have a slope which is
undefined. Since x is constant, we cannot observe the
behavior of y as x changes.
The slope of a line is quantified by a real number. The
sign of the slope (number) indicates whether the line is
rising or falling. The magnitude (absolute value) of the
slope indicates the relative steepness of the line.
Calculation of slope:
Slope of a line can be calculated
a) Directly from the graph or
b) By using a formula
Directly from the graph
The slope of a straight line is the ratio of the vertical change
(rise or fall) to the horizontal change (run) between two points
on the line, where the rise or fall is the vertical separation and
the run is the horizontal separation of the two points.

Slope = Vertical change/Horizontal change

Slope =m = If we want to read slope from

the graph. [See page#51 - 52] 4th ed: pg#59.

By using a formula

Slope=m= if we want to get slope from

two given points.
From our previous example, two points: (1,2) and (5,7) .Here we
assume, (x1,y1) =(1,2) and (x2,y2) =(5,7). Substitute the values into the
formula

Slope=m=

y=1.25x+0.75.

Interpretation of slope, m =1.25. If x increases by 1 unit y increases by

1.25 unit. For our example for the taxi fare, if the distance increases by 1
mile, the fare increases by $1.25.
If slope is negative

Example: y = -2x + 10. Slope, m = -2. [Assume x = price, y = Quantity

demanded].
Interpretation: . If price(x) increases by $1, quantity demanded (y)
decreases by 2 unit (kg).

Interpretation of y-intercept, c=0.75

a) The line crosses the y-axis at the point 0.75

b) If x=0, i.e., if the taxi is hired but not travelled any distance, yet
you have to pay $0.75. In this case y=0.75, i.e., fare =$0.75.
Some economical terms:

Disposable Income – the amount of income left after taxes have been
paid.
Savings – The part of the disposable income that is placed in a bank or
otherwise invested is savings.
Personal consumption expenditure – the remainder is spent on food,
clothing, housing, luxuries, and so on.

A line segment fitted to points whose coordinates are in the order

(Disposable income, Consumption expenditure)

for the United States in recent years passes through

(312, 295) and (575, 537) where the numbers are in billion
dollars.

Slope = m =

Slope = Change in consumption expenditures/ Change in disposable

income = 537 – 295/575- 312 = 242/263 = 0.92.
Thus an increase of $263 billion in disposable income resulted in an
increase of $242 billion in consumption expenditures.

So the slope .92 represents the rate of change in consumption

expenditures per one dollar of additional income.
Another way of saying this is
$0.92 out of every additional $1.00 in income will go to consumer
expenditures.
In economics, this change is called the marginal propensity to consume,
or MPC for short as shown in the figure 1 – 4.
Here the word marginal means extra, and MPC is the extra consumption
that accompanies a $1 increase in income.
Income not used for consumption expenditures is saved. We can see that
$.08 of each extra dollar of disposable income is saved, and 0.08 is called
the marginal propensity to save, MPS.

MPS = 1 – MPC = 1 - .92 = .08

Equation of a line: Slope – intercept form. Go to page# 85 –online.

Straight- line Equation given a point and Slope.

We know that the straight – line equation can be written directly if the
slope m and a particular point, the y-intercept c, are given. The equation
then is given by the slope-intercept form

y = mx + c.

If the given point is not the y- intercept we can easily determine this
intercept from the above slope-intercept form.

Example: Find the equation of the line with slope 0.75 that passes
through the point (8, 10).

Solution: We know,
Slope = m =
y-y1=m(x-x1)
Substitute the value, m=0.75 and (x1, y1)=(8,10)

y-10 =.75(x-8)
y -10 =.75x – 6
y = .75x +10 -6
y = .75x +4
Or,
y=mx +c
10=.75(8)+c
10= 6+c
C=4
So the equation is y =mx +c
y=.75x+4

Home Work: Exercise 1, 2, 3. Page No. 89 (on Line).

STRAIGHT – LINE EQUATION FROM TWO POINTS

Two points completely determine a straight line and, of course, they

determine the slope of the line. We do not need a special two-point form
since we can use the two points to first compute the slope, m, and then
use this value of m together with either point in the point-slope form.

y – y1 = m(x – x1) to generate the equation of the line.

Example: Page 88 (online). Test Exercises 2. On line page # 106. Ex.

1, 2 , 3, 4.

HORIZONTAL AND VERTICAL LINES

When the equation of a line is to be determined from two given

points, it is a good idea to first compare corresponding
coordinates. The reason is that if the y values are the same, the
line is horizontal, but if the x values are same, the line is
vertical. For example, given the points

(3, 6) and (8, 6)

We see that the line through them is horizontal because both y –

coordinates are 6. Graph . It is clear that y is 6 at every point
on this line irrespective of the value assigned to the x
coordinate, and because
y=6
describes this line, and this line only, we say y = 6 is the
equation for the line.
If the x-coordinates of the two different points are equal, as in

(5, 2) and (5, 12)

The line through them is vertical and its equation is

x = 5.

PARALLEL AND PERPENDICULAR LINES

Parallel Lines: Lines that have the same slope are parallel. Thus,
 y=1/2x + 5 and y=1/2x + 2 are parallel lines.

Perpendicular Lines: If the slope of one line is the negative

reciprocal of the slope of the other line, the two lines are
perpendicular to each other. Thus,

y= and y= are perpendicular.

Here, m1= Thus the product of two slopes is -1.
That is m1m2=-1

EXAMPLE 1: Taxi fare from an airport to a nearby city

is $1.25 per mile driven, plus 0.75 for a bridge toll. Let y
represent the fare and x the number of miles driven on
one trip.
a) Write the equation for y in terms of x.
b) Find the fare if the distance from the airport to the
city is 22 miles.

Exercise: Taxi fare from an airport to a nearby town is

$0.80 per mile driven, plus $2 for tolls. Let y represent
the fare and x the miles driven on one trip.
a) Write the equation for y in terms of x.
b) Find the fare if the distance from the airport to the
city is 17 miles.
EXAMPLE 2. (Page # 30).

It costs $2,500 to set up the presses and machinery

needed to print and bind a paperback book. After
setup, its costs $2 per book printed and bound. Let x
represent the number of books made and y the total
cost of making this number of books.
a) Write the equation for y in terms of x.
b) State the slope of the line and interpret this
number.
c) State the y – intercept of the line, and interpret
this number.