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Find the intersection of the lines 2x + y = 7 size 12{2x+y=7} {} and 3x y = 3 size 12{3x - y=3} {} by the elimination method.

We add the left and right sides of the two equations.

2x + y = 7 3x y = 3 ̲ 5x = 10 size 12{ matrix { 2x+y=7 {} ##{underline {3x - y=3}} {} ## 5x="10"} } {}
x = 2 size 12{x=2} {}

Now we substitute x = 2 size 12{x=2} {} in any of the two equations and solve for y size 12{y} {} .

2 ( 2 ) + y = 7 size 12{2 \( 2 \) +y=7} {}
y = 3 size 12{y=3} {}

Therefore, the solution is (2, 3).

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Solve the system of equations x + 2y = 3 size 12{x+2y=3} {} and 2x + 3y = 4 size 12{2x+3y=4} {} by the elimination method.

If we add the two equations, none of the variables are eliminated. But the variable x size 12{x} {} can be eliminated by multiplying the first equation by –2, and leaving the second equation unchanged.

2x 4y = 6 2x + 3y = 4 ̲ y = 2 size 12{ matrix { - 2x - 4y= - 6 {} ##{underline {2x+3y=4}} {} ## - y= - 2} } {}
y = 2 size 12{y=2} {}

Substituting y = 2 size 12{y=2} {} in x + 2y = 3 size 12{x+2y=3} {} , we get

x + 2 ( 2 ) = 3 size 12{x+2 \( 2 \) =3} {}
x = 1 size 12{x= - 1} {}

Therefore, the solution is (–1, 2).

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Solve the system of equations 3x 4y = 5 size 12{3x - 4y=5} {} and 4x 5y = 6 size 12{4x - 5y=6} {} .

This time, we multiply the first equation by – 4 and the second by 3 before adding. (The choice of numbers is not unique.)

12 x + 16 y = 20 12 x 15 y = 18 y = 2 size 12{ matrix { - "12"x+"16"y= - "20" {} ##"12"x - "15"y="18" {} ## y= - 2} } {}

By substituting y = 2 size 12{y= - 2} {} in any one of the equations, we get x = 1 size 12{x= - 1} {} . Hence the solution (–1, –2).

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Supply, demand and the equilibrium market price

In a free market economy the supply curve for a commodity is the number of items of a product that can be made available at different prices, and the demand curve is the number of items the consumer will buy at different prices. As the price of a product increases, its demand decreases and supply increases. On the other hand, as the price decreases the demand increases and supply decreases. The equilibrium price is reached when the demand equals the supply.

The supply curve for a product is y = 1 . 5x + 10 size 12{y=1 "." 5x+"10"} {} and the demand curve for the same product is y = 2 . 5x + 34 size 12{y= - 2 "." 5x+"34"} {} , where x size 12{x} {} is the price and y the number of items produced. Find the following.

  1. How many items will be supplied at a price of $10?
  2. How many items will be demanded at a price of $10?
  3. Determine the equilibrium price.
  4. How many items will be produced at the equilibrium price?
  1. We substitute x = 10 size 12{x="10"} {} in the supply equation, y = 1 . 5x + 10 size 12{y=1 "." 5x+"10"} {} , and the answer is y = 25 size 12{y="25"} {} .
  2. We substitute x = 10 size 12{x="10"} {} in the demand equation, y = 2 . 5x + 34 size 12{y= - 2 "." 5x+"34"} {} , and the answer is y = 9 size 12{y=9} {} .
  3. By letting the supply equal the demand, we get

    1 . 5x + 10 = 2 . 5x + 34 size 12{1 "." 5x+"10"= - 2 "." 5x+"34"} {}
    4x = 24 size 12{4x="24"} {}
    x = 6 size 12{x=6} {}
  4. We substitute x = 6 size 12{x=6} {} in either the supply or the demand equation and we get y = 19 size 12{y="19"} {} .

    The graph below shows the intersection of the supply and the demand functions and their point of intersection, (6, 19).

    The intersection of the lines y=-2.5x+34 and y=1.5x+10 at (6,19) on a Cartesian graph.

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Break-even point

In a business, the profit is generated by selling products. If a company sells x size 12{x} {} number of items at a price P size 12{P} {} , then the revenue R size 12{R} {} is P size 12{P} {} times x size 12{x} {} , i.e., R = P x size 12{R=P cdot x} {} . The production costs are the sum of the variable costs and the fixed costs, and are often written as C = mx + b size 12{C= ital "mx"+b} {} , where x size 12{x} {} is the number of items manufactured.

A company makes a profit if the revenue is greater than the cost, and it shows a loss if the cost is greater than the revenue. The point on the graph where the revenue equals the cost is called the Break-even point .

If the revenue function of a product is R = 5x size 12{R=5x} {} and the cost function is y = 3x + 12 size 12{y=3x+"12"} {} , find the following.

  1. If 4 items are produced, what will the revenue be?
  2. What is the cost of producing 4 items?
  3. How many items should be produced to break-even?
  4. What will be the revenue and the cost at the break-even point?
  1. We substitute x = 4 size 12{x=4} {} in the revenue equation R = 5x size 12{R=5x} {} , and the answer is R = 20 size 12{R="20"} {} .
  2. We substitute x = 4 size 12{x=4} {} in the cost equation C = 3x + 12 size 12{C=3x+"12"} {} , and the answer is C = 24 size 12{C="24"} {} .
  3. By letting the revenue equal the cost, we get

    5 x = 3 x + 12
    x = 6
  4. We substitute x = 6 in either the revenue or the cost equation, and we get R = C = 30 .

    The graph below shows the intersection of the revenue and the cost functions and their point of intersection, (6, 30).

     The intersection of the lines y=3x+12 and R=5x on a Cartesian graph.
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Source:  OpenStax, Applied finite mathematics. OpenStax CNX. Jul 16, 2011 Download for free at http://cnx.org/content/col10613/1.5
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