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Title: Differentiation in economics
Description: A summary of differentiation rules and their economic applications.
Description: A summary of differentiation rules and their economic applications.
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EECM 3714
Lecture 4: Unit 4
Differentiation
Renshaw, Ch
...
4-10,13
04 March 2022
OUTLINE
Renshaw, Ch
...
4-10 & 13
1
...
Differentiation rules
3
...
Examples
5
...
β’ Look at fig
...
1a and 6
...
When we move from P to Q, we measure the slope of π¦ = ππ₯ + π as the
change in y, Dy, divided by the change in x, Dx
...
The diff
...
measure the slope, or rate of change of y as x
changes, between P and Q
β’ In fig
...
1a the diff
...
is positive because Dy is positive; in
fig
...
1b it is negative because Dy is negative
...
6
...
3
Ξπ¦
Ξπ₯
is the same in both, but the curves are very different
...
quot
...
β’ Another problem: the diff
...
also varies with distance from P to Q
...
4 to address this problem, we can use the slope of the tangent to the
curve at P as the measure of slope of curve at that point
...
5)
β’
Ξπ¦
Ξπ₯
then approaches a limiting value, which
measures slope of tangent at P
...
βπ¦
βπ₯β0 βπ₯
β’ Derivative is lim
ππ¦
= ππ₯
β’ So if π¦ = π(π₯) then the slope of the function is
βπ¦
βπ₯β0 βπ₯
π β² π₯ = lim
ππ¦
= ππ₯
RULES OF DIFFERENTIATION
β’ βDifferentiationβ means finding derivative of a function
...
β’ For any function π¦ = f(π₯), we write its derivative as:
either
dπ¦
dπ₯
or f β² π₯
β’ The notation fβ²(π₯) is obviously more compact
...
Power rule
y=x
n
2
...
Additive constant
y = f( x ) + B
4
...
Power rule: if π¦ = π₯ 3 , we have π = 3, so
dπ¦
dπ₯
= 3π₯ 3β1 = 3π₯ 2
2a
...
Multiplicative constant:if y = Ax, then
ππ¦
ππ₯
=π΄
3
...
Sum or difference: π¦ = π₯ 3 + π₯ 2 ,
dπ¦
dπ₯
dπ¦
dπ₯
= 3π₯ 2
= 3π₯ 2 + 2π₯
RULES OF DIFFERENTIATION II
5
...
Product
7
...
Inverse function
y = f(u ) where u = g( x )
y = uv
where u and v are
functions of x
u
y=
v
where u and v are
functions of x
y = f( x )
dy dy du
=
dx du dx
dy
dv
du
=u
+v
dx
dx
dx
dy
=
dx
dy
=
dx
v
du
dx
dv
β u dx
v2
1
dx
dy
EXAMPLES FOR RULES 5 β 8:
5
...
Product: given π¦ = (π₯ 2 + 1)(π₯ 3 + π₯ 2 )
Create 2 new variables:π’ = π₯ 2 + 1 and π£ = π₯ 3 + π₯ 2
...
Quotient: given π¦ =
π₯ 2 +1
π₯ 3 +π₯ 2
Create 2 new variables: π’ = π₯ 2 + 1 and π£ = π₯ 3 + π₯ 2
dv
dπ’
2
So:
= 3π₯ + 2π₯ and
= 2x
dπ₯
Title: Differentiation in economics
Description: A summary of differentiation rules and their economic applications.
Description: A summary of differentiation rules and their economic applications.