1

Maths Notes

by Christine Osborne


These notes are indicative of the sort of material we expect you to know. It does not
matter if you do not know everything!

There will be a short diagnostic test at the beginning of the your degree so that we can
see what skills you have and where you will need help (nb this test does not count
towards your degree and is not an admissions requirement – it is to help us teach you).





























Hint for reading this electronically: if you are reading the pdf copy on the screen then
click on View > Navigation Panels > Bookmarks. This should bring up a document
map which allows you to move quickly around the document.


2

CHAPTER 1 : FUNCTIONS, CONTINUITY AND CALCULUS

Functions are very important in economics because they allow us to express
relationships between economic variables. In this chapter we will look at

- Exponential functions.
- Logarithmic functions.
- What is a limit?
- Some important applications of limits such as continuity and
differentiability.
- The product, quotient and function of a function rule.
- Concept of a partial derivative.
- The link between integration and differentiation.

1. WHAT IS A FUNCTION?

Function is the name given to a special relationship between two or more variables.
Suppose we call the function f and f denotes a relationship between two variables x
and y so that ( ) x f y = e.g. ( ) 3 4 2
2
+ ÷ = = x x x f y . We call y the dependent or
endogenous variable and x the independent or exogenous variable and we say that
„y is a function of x‟ .

A function is a relationship where for each value of the independent or
exogenous variable, there is a unique value of the dependent or endogenous
variable.

Example 1.1 The Money Multiplier

Suppose banks wish to hold cash reserves R equal to some fraction c
b
of deposits D
and that the private sector wishes to hold cash in circulation C equal to some fraction
c
p
of their bank deposits D. Thus R c D
b
= and C c D
p
= . Since the monetary base
or stock of high-powered money H equals currency in circulation plus cash with
banks, we have

( )
H C R c c D
p b
= + = + (1)
The money supply M equals currency in circulation C plus banks‟ sight deposits D.
Hence
( )
M C D c D
p
= + = +1 (2)
Comparing equations (1) and (2) we see that M
c
c c
H
p
p b
=
+
+
1
(3)
Thus the value of the money multiplier is
c
c c
p
p b
+
+
1
. Since c
b
and c
p
are positive
fractions, the money multiplier exceeds unity. Also an increase in c
b
, the banks‟


3

desired cash reserve ratio, or in c
p
, the private sector‟s desired ratio of cash to sight
deposits, will reduce the value of the money multiplier. Here for each value of the
exogenous variable H, there is exactly one value of the endogenous variable M
(for more information see Economics by Begg, Fischer and Dornbrush, 5th edition ,
Chapter 23).

Important note
There may be more than one value of the exogenous (or independent ) variable with the
same value of the endogenous (or dependent) variable.

Example 1.2 Average product function

A firm has the following short-run production function:
( )
7
4
6
3
2
l
l l f Q ÷ = =
where l is the labour input in 100‟s of units. The average product function is given
by ( )
7
4
6
2
l
l
l
Q
l AP ÷ = =
Some values of the exogenous variable l have the same value of the endogenous
variable AP(l). For example, 4.5 and 6 have the same value of AP as do 3 and 7.5.

( ) 4286 . 15 ) 6 ( 5 . 4 = = AP AP to 4 dec. places
( ) 8571 . 12 ) 5 . 7 ( 3 = = AP AP to 4 dec. places

For a graph of Q and ( ) l AP against l, see Fig. 1.1. on the following page.

Polynomial functions of one variable

A polynomial function of degree k is a function of the form:
( )
k
k
x a x a x a x a a x f + + + + + = ......
3
3
2
2 1 0
or
¿
=
k
i
i
i
x a
0


In Example 1.1, M is a polynomial function of degree 1. In Example 1.2, ( ) l AP and
Qor ( ) l f are respectively polynomial functions of degree 2 and degree 3. A
polynomial function of degree 1 is also called a linear function so M is a linear
function of H.
A polynomial function of degree 2 is called a quadratic function, so AP is a quadratic
function of l and a polynomial function of degree 3 is called a cubic function, so Q is
a cubic function so l.

If we graphed all 3 functions M, AP and Q , placing the endogenous variable on the
vertical axis and the exogenous variable on the horizontal axis, we would get


4

respectively a straight line passing through the origin with slope
c
c c
p
p b
+
+
1
, a
parabola passing through the origin with a maximum at the point
( 5.25, 15.75) and a cubic curve passing through the origin with a maximum at the
point ( 7, 98). Fig. 1.1 below is a graph of Q and AP(l) for 5 . 10 0 s s l .

Figure 1.1: Total and Average Product Curves
The total product and average product curves
0
20
40
60
80
100
120
0 2 4 6 8 10 12
Labour units
Q or f(l)
AP(l)


Functions of more than one variable

The concept of a function can be easily extended to deal with the case of more
than one independent or exogenous variable. For example, the function z = z(x , y)
or z = ( ) y x f , contains the endogenous or dependent variable z and two
independent or exogenous variables x and y. We say „z is a function of x and y‟
and for each pair of values (x, y) there is a unique value of z. We say that z or f
are multivariate functions as they are functions of more than one variable.


5

Example 1.3 Utility functions

According to Begg et al., a model of consumer‟s choice is made up of 4 elements
which describe both the consumer and the market environment. These 4 elements are
(i) The consumer‟s income.
(ii) The prices at which goods can be bought.
(iii) The consumer‟s tastes, which rank different bundles of goods by
the satisfaction or utility they provide.
(iv) The behavioural assumption that consumers do the best they can for
themselves. Of the affordable consumption bundles, the consumer picks the
bundle that maximises his/her own satisfaction or utility.

We require with element (iii) of this model that the consumer can decide that one
bundle of goods is better than, worse than, or exactly as good as another and this
ranking of possible bundles is internally consistent. If the consumer decides that one
bundle is better than another bundle then the utility for the preferred bundle will be
higher than the utility for the other bundle. If bundle 1 is at least as good as bundle 2
then the utility for bundle 1 > the utility of bundle 2.

To further illustrate, suppose that the consumer consumes
1
x of good 1 and x
2
of
good 2 and u is the total utility (or satisfaction) derived from such consumption.
The utility function u is a function of two variables x
1
and x
2
i.e. ( ) u u x x =
1 2
, so that
for each pair of values ( ) x x
1 2
, there is an associated value of u which is unique.
Usually u will be a non-linear function of x
1
and x
2
, for example,

( )
2
1
2
1
2 1 2 1
20 , x x x x u = or ( ) u x x x x
1 2 1 2
2 , ln ln = +

Example 1.4 Production functions

According to Begg et al. a production function

(i) specifies the maximum output that can be produced from any given amount of
inputs where an input (or factor of production) is defined as any good or
service used to produce output,
(ii) it summarises the technically efficient ways of combining inputs
to produce output.



6

Examples of factors of production are labour l, physical capital k (buildings and
machinery), raw materials, technology (including information technology), land,
enterprise. A well-known production function is the Cobb-Douglas production
function, defined by,
( ) Q or y f l k Al k = = ,
o |

where Q or y is the production output, l is the labour input, k is the capital input, o ,
| , and A are constants such that A > 0, 0 <o < 1 and 0 <| < 1.

This production function relates the production output to the amount of capital input
and the amount of labour input. As can be seen it is a non-linear function of k and l .

Example ( )
4
1
2
1
25 , k l k l f Q = =




7

2. EXPONENTIAL FUNCTIONS

Exponential functions are functions of the form ( )
x
a x f = where 1 = a and a > 0.
There are two reasons why we have these two restrictions on the value of a. They are:

(i) By permitting a > 0, we avoid the problem of finding the square root
of a negative number when
2
1
= x .
(ii) By not permitting a = 1, we exclude ( ) 1 1 = =
x
x f , which is a constant
function (i.e its value is constant) rather than an exponential function.

Given the function
x
a , a is called the base and x is called the exponent or index.
The base a is the constant part of the function and the index or exponent is the
variable part of the function. Note that the index can be a positive or negative whole
number or a positive or negative fraction.

e.g. (i)
3
2 . Here the base is 2 and the index or exponent is 3.
(ii) ( )
3
1
5 . 2 . Here the base is 2.5 and the index or exponent is
3
1
.

If the base is e where e ~ 2.718281828, then the function
x
e is called the natural
exponential function.

2.1 Rules for handling such functions

Rule 2.1: Multiplying exponential functions

To multiply two exponential functions with the same base, you add the indices or
exponents.
y x y x
a a a
+
= .
Examples 1.5
(i) 128 2 2 . 2
7 4 3
= = (ii) ( ) ( ) 0793 . 1 5 . 2 5 . 2 . 5 . 2
12
1
4
1
3
1
= =
÷
to 4 dec. places.

Rule 2.2: Dividing exponential functions

To divide two exponential functions with the same base, you subtract the indices or
exponents
y x
y
x
a
a
a
÷
=
Examples 1.6
(i) 4 2
2
2
2
3
5
= = (ii)
( )
( )
7066 . 1 5 . 2
5 . 2
5 . 2
12
7
4
1
3
1
= =
÷
to 4 dec. places.

If you apply Rule 2.2, we get 1
0
= = =
÷
a a
a
a
x x
x
x
and
x x
x x
a a
a
a a
1
0
0
= = =
÷ ÷



8

so 1
0
= a and
x
x
a
a
1
=
÷
for any a.
Examples 1.7
1 2
0
=
and
0625 . 0
2
1
2
4
4
= =
÷


Rule 2.3: Powers of exponential functions

To raise an exponential function to a power, multiply the index or exponent by the
power
( )
xy
y
x
a a =

Examples 1.8
(i) ( ) 4096 2 2
12
4
3
= = (ii) ( ) ( ) 25 . 6 5 . 2 5 . 2
2
6
3
1
= =

Rule 2.4
x x
a a =
1


e.g. (i) a a =
2
1
= the square root of a (ii)
3 3
1
a a = = the cube root of
a.

Examples 1.9 (i) 4 4
2
1
= = the square root of 4.
(ii)
3 3
1
27 27 = = the cube root of 27.


Rule 2.5 ( )
y
x
y
x y
x
a a a = =
1
or ( )
x
y
x
y y
x
a a a =
|
.
|

\
|
=
1
using Rule 2.3
Examples 1.10 ( ) 64 16 16
3
2
3
= = or 64 4096 16 16
3
2
3
= = =

Now suppose you have two exponential functions with different bases but
the same exponent or index. The following two rules apply :

Rule 2.6 ( )
x x x
ab b a = .

Rule 2.7
x
x
x
b
a
b
a
|
.
|

\
|
=

N.B. You cannot combine exponential functions if both the base and the
exponent or index are different. Please avoid the following errors!

WRONG : ( )
y x y x
ab b a
+
= .
WRONG : ( )
xy y x
ab b a = .
WRONG :
y x
y
x
b
a
b
a
÷
|
.
|

\
|
=


9

2.2 Graphs of exponential functions ( )
x
a x f = and ( )
x
a x f
÷
= where a > 1

Below is Fig. 1.2 which is a graph of ( )
x
x f 2 = and ( )
x
x f
÷
= 2 for 3 3 s s ÷ x :

Figure 1.2: Exponential Curves
Exponential curves
0
1
2
3
4
5
6
7
8
9
-4 -3 -2 -1 0 1 2 3 4
x
2 to the power x
2 to the power -x




10

3. LOGARITHMS AND LOGARITHMIC FUNCTIONS

3.1 What is a logarithm?

Suppose that we have two numbers such as 9 and 3 which are related by the equation
9 =
2
3 , then the power or index 2 can be defined as the logarithm (or log for short)
of 9 to the base of 3. So we can write

2 9 log 3 9
3
2
= ¬ = and
2
3
3 9 2 9 log = ¬ =

We can write this as follows : 2 9 log 3 9
3
2
= · = .

In other words, a logarithm is simply the power (such as 2) to which the base
(such as 3) must be raised to give a particular number (such as 9).

In general, we can write
x y a y
a
x
= · = log 1 , 0 ( = > a a so y > 0) (1.1)

which states that the log of y to the base a ( written as y
a
log ) is the power to which
the base a must be raised to give the value y.

Also note that (1.1) can be written equivalently as
y x
a
a a y
log
= =

If the base of the logs is e, then y
e
log is written as ln y and is known as
a natural log.

The natural logarithmic function is a function involving “ln” e.g. x ln , ( ) x + 1 ln ,
( ) x ÷ 1 ln .. Here are some facts and numerical values worth memorising.

Consider the function ( ) x f ln then ( ) x f ln is defined for ( ) 0 > x f and for ( ) 0 s x f it
is not defined.

(2) ln 1 = 0
(3) ln(e) = 1

Where there is no ambiguity, you can omit the brackets, so ln 2 and ln (2) are the
same.

3.2 Rules governing logs

Rule 3.1 ( ) ( ) ( ) ( ) ( ) y g x f y g x f ln ln ln + = and ( ) ( ) y g x f ln ln + = ( ) ( ) ( ) y g x f ln

Rule 3.2
( )
( )
( ) ( ) y g x f
y g
x f
ln ln ln ÷ =
|
|
.
|

\
|
and ( ) ( ) y g x f ln ln ÷
( )
( ) y g
x f
ln =



11

Rule 3.3 ( ) ( ) x f z x f
z
ln ln = and ( ) x f z ln = ( )
z
x f ln


3.3 Graphs of natural logarithmic functions

Fig. 1.3 is a graph of ( ) x x f ln = and ( ) ( ) x x f + = 1 ln for 8 8 . 0 s s ÷ x :

Figure 1.3: Logarithmic curves
Logarithmic functions (1+x) and ln x
-3
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
-2 -1 0 1 2 3 4 5 6 7 8 9
x
ln(1+x)
ln x

3.4 Series forms of the exponential, natural exponential and logarithmic
functions

Exponential functions

For all values of x,

( ) ( ) ( )
¿
·
=
= + + + + =
0
3 2
!
ln
.........
! 3
ln
! 2
ln
ln 1
r
r
x
r
a x a x a x
a x a .

Natural Exponential functions
For all values of x,
¿
·
=
= + + + + =
0
3 2
!
.........
! 3 ! 2
1
r
r
x
r
x x x
x e
So for small x (1 + x) is approximately the same as
x
e i.e. ( )
x
e x ~ + 1

Logarithmic functions
( ) ........
4 3 2
1 ln
4 3 2
+ ÷ + ÷ = +
x x x
x x for 1 1 s < ÷ x only
So for small x, ( ) x + 1 ln is approximately the same as x i.e. ( ) x x ~ + 1 ln



12

3.5 Application of the result ( ) x x ~ + 1 ln

The growth rate (g) of a variable (y) at date t can be defined as

1
1 1
1
1
÷ =
÷
=
A
÷
÷ ÷
÷
÷ t
t
t
t t
t
t
t
y
y
y
y y
y
y
g so
= +
t
g 1
1 ÷ t
t
y
y
(1.2)

Taking logs to the base e of both sides of equation (1.2)

( )
1
1
ln ln ln 1 ln
÷
÷
÷ =
|
|
.
|

\
|
= +
t t
t
t
t
y y
y
y
g .
Since ( )
t
g + 1 ln is approximately
t
g (the approximation improves the smaller the
value of
t
g ), the growth rate can be written as the change in the log of y between
period t – 1 and t. The percentage growth rate is simply 100
t
g .

Common mistakes

Below are three very common mistakes made by students: try to avoid them!

WRONG :
( )
( )
( ) ( ) y g x f
y g
x f
ln ln
ln
ln
÷ =
WRONG : ( ) ( ) ( ) ( ) ( ) y g x f y g x f ln ln ln + = +
WRONG :
y x y x
e e e + =
+


3.6 Connection between the exponential and logarithmic functions

The exponential function f (x) and the logarithmic function g(x) are called inverse
functions since ( ) ( ) x g f = ( ) ( ) x x f g = ,

i.e. e
x ln
= exp ( ln x ) = ln e
x
= x

Consider the function ( ) ( ) x g f

Start with x and log it ÷ ln x
Now exponentiate it ÷
x
e
ln
or exp(ln x)
End up where you started ÷ x

Consider the function ( ) ( ) x f g

Start with x and exponentiate it ÷
x
e
ln
or exp(ln x)
Now log it ÷ ln e
x

End up where you started ÷ x


13

4. LIMITS

4.1 What is a limit?

Suppose that we are interested in finding the limit of any function f (x) as x x ÷
where x is a finite real number. Generally x can approach x from the left where x <
x ( i.e.
÷
÷ x x ) or it can approach x from the right where x > x ( i.e.
+
÷ x x ).

Suppose the limit of f (x) as
÷
÷ x x is
÷
L and the limit of f (x) as
+
÷ x x is
+
L .
We call
÷
L the left-side limit of f (x) and
+
L the right - side limit of f (x). These may
not be equal.

If they are not equal then we say the limit of f (x) as x x ÷ does not exist.
See Fig. 1.4 on page 17 for an example of this.

If they are equal so that
÷
L =
+
L = L, then we say that the limit of f (x) as x x ÷ exists
and we write

( )
x x
x f
÷
lim
= L.
N.B. L must be a finite number.


Some textbooks write (a) ( ) x f
x x÷
lim = · or (b) ( ) x f
x x÷
lim = · ÷ which effectively
says that f (x) does not have a limit.

Mathematically we can also write (a) as follows ; As x x ÷ the function
f (x) · ÷ . This means that f (x) will assume ever – increasing values as x x ÷ .


Mathematically we can also write (b) as follows ; As x x ÷ the function
f (x) ÷· ÷ . This means that f (x) will assume ever – decreasing values as x x ÷ .

Example ( ) ( ) x x f + = 1 ln with 1 ÷ = x . As 1 ÷ ÷ x , ( ) x + 1 ln ÷· ÷ .


If a function f (x) has a limit L as x x ÷ , then we say that

( ) x f
x x
÷
÷
lim = ( ) x f
x x
+
÷
lim = L .



14

Example 1.11

Consider ( )
1 4 2
3
2
3
+ +
+
=
x x
x
x f as
÷
÷2 x . Below is a table of values of x and f (x).

x f (x)
1.94 0.6325
1.96 0.6373
1.98 0.6421
1.99 0.6445
1.992 0.6451
1.994 0.6456
1.996 0.6461
1.998 0.6466
1.999 0.6468
1.9999 0.64703
1.99999 0.64706
1.999999 0.64706


You can see that as
÷
÷2 x , ( ) 64706 . 0 ÷ x f to 5 decimal places, so
( ) x f
x
÷
÷2
lim 64706 . 0 = =
÷
L to 5 decimal places.
Consider now the same function as
+
÷2 x . Below is a table of values of x
and f (x) as
+
÷2 x .

x f (x)
2.06 0.6624
2.04 0.6571
2.02 0.6521
2.01 0.6496
2.008 0.6491
2.006 0.6486
2.004 0.6481
2.002 0.6476
2.001 0.6473
2.0001 0.64708
2.00001 0.64706
2.000001 0.64706

Again it can be seen that as
+
÷2 x , ( ) 64706 . 0 ÷ x f to 5 decimal places so
( ) x f
x
+
÷2
lim 64706 . 0 = =
+
L to 5 d.p.


15

Note that
÷
L =
+
L , then we say that the limit of ( ) x f as 0 ÷ x exists and we
write ( ) x f
x
+
÷2
lim = 0.64706 to 5 d.p. In fact we will show later on in this
chapter (see Example 1.17) that ( ) x f
x 2
lim
÷
=
2
lim
÷ x
1 4 2
3
2
3
+ +
+
x x
x
=
17
11
which is
0.64706 to 5 d.p.

When finding ( ) x f
x x÷
lim we only let x tend to x i.e. get closer and closer to x .

Generally speaking we do not let x = x . In fact we can legitimately talk about and find
the limit of f (x) as x x ÷ , even if x is not a value x can take. If in this case we were
to let x = x , f (x) would not be defined. This is illustrated in Example 1.12 below.


Example 1.12 Suppose that ( )
( ) x
x
x f
÷
÷ ÷
=
2
2 6
where 2 = x . Evaluate ( ) x f
x 2
lim
÷
.

Solution Clearly f (x) is not defined for x = 2. Here x = 2 and we cannot evaluate the limit
of f (x) as x tends to x by letting x = x , since this would involve dividing by 0. So how
do we do this?

Solution Method 1 By substitution
Let
2
6 y x = ÷ then
2
6 y x ÷ = and
2
lim
÷ x
( ) x
x
÷
÷ ÷
2
2 6
=
2
lim
÷ y
( ) ( )
2
2
6 2
2
y
y
÷ ÷
÷
=
2
lim
÷ y
4
2
2
÷
÷
y
y
=
2
lim
÷ y
( )( ) 2 2
2
+ ÷
÷
y y
y
=
2
lim
÷ y
( ) 2
1
+ y
=
4
1
.


Method 2 By inspection

( ) x
x
÷
÷ ÷
2
2 6
=
( )( )
( )
=
+ ÷ ÷
+ ÷ ÷ ÷
2 6 ( 2
2 6 2 6
x x
x x
( ) ) 2 6 ( 2
4 6
÷ ÷ ÷
÷ ÷
x x
x
=
( ) ) 2 6 ( 2
2
÷ ÷ ÷
÷
x x
x

=
2 6
1
+ ÷ x
so
2
lim
÷ x
( ) x
x
÷
÷ ÷
2
2 6
=
2
lim
÷ x
2 6
1
+ ÷ x
=
4
1
2 4
1
=
+
.


Notes continued

In certain cases, only one of the limits needs to be considered. For example when considering
the limit of f (x) as · ÷ x , only the left-side limit
÷
L needs to be considered since one can
only approach · from the left. If we are considering the limit of f (x) as ÷· ÷ x , only the
right-side limit
+
L needs to be considered since one can only approach · ÷ from the right.
Below is an example of evaluating the limit of f (x) as · ÷ x .



16

Examples 1.13

(1) 0 lim =
· ÷
x
x
a . This means that the negative x - axis is an asymptote to the
exponential curve ( )
x
a x f = . An asymptote is a line which a curve approaches but
never touches or intersects.

(2) 0 lim =
÷
· ÷
x
x
a which means that the positive x-axis is an asymptote to the exponential
curve ( )
x
a x f
÷
= .

Example 1.14
Consider the function ( )
x
x
x f
|
.
|

\
|
+ =
1
1 as · ÷ x . Overleaf is a table of values of
( ) x f as x increases from 1 to 10000000 or
7
10 :


x
x
x
|
.
|

\
|
+
1
1

f ( x )

1
1
1
1
1
|
.
|

\
|
+

2

2
2
2
1
1
|
.
|

\
|
+

2.25


3
3
3
1
1
|
.
|

\
|
+

2.37037

10
10
10
1
1
|
.
|

\
|
+

2.59374

100 or
2
10
100
100
1
1
|
.
|

\
|
+

2.70481

1000 or
3
10
1000
1000
1
1
|
.
|

\
|
+

2.71692

10000 or
4
10
10000
10000
1
1
|
.
|

\
|
+

2.71815

100000 or
5
10
100000
100000
1
1
|
.
|

\
|
+

2.71827

1000000 or
6
10
1000000
1000000
1
1
|
.
|

\
|
+

2.71828


10000000 or
7
10

10000000
10000000
1
1
|
.
|

\
|
+

2.71828





17

As x increases, the function ( ) x f is getting closer and closer to the exponential
constant e. So the limit of ( ) x f is e as x approaches infinity.
As · ÷ x , e
x
x
÷
|
.
|

\
|
+
1
1 .
Mathematically we can write it as follows :
x
x
x
|
.
|

\
|
+
· ÷
1
1 lim = e.
In fact we can define e as
x
x
x
|
.
|

\
|
+
· ÷
1
1 lim .


Rule of dominant terms in determining limits

Suppose we have a rational function ( )
( )
( ) x g
x h
x f = and we want to find
( ) x f
x · ÷
lim or ( ) x f
x · ÷
lim . We can use the rule of dominant terms.
So ( ) x f
x · ÷
lim =
· ÷ x
lim
( )
( ) x g in terms ant min Do
x h in terms ant min Do
.

Example 1.15 Find (i)
1 4 9
3 4
lim
2
2
+ +
÷ ÷
· ÷
x x
x x
x
(ii)
1 4 9
3 4
lim
2
2
+ +
÷ ÷
· ÷ ÷
x x
x x
x

Solutions

(i) Using the rule of dominant terms

1 4 9
3 4
lim
2
2
+ +
÷ ÷
· ÷
x x
x x
x
=
2
2
9
4
lim
x
x x
x
÷
· ÷
= =
÷
· ÷
x
x x
x
3
2
lim
x
x
x
3
lim
÷
· ÷


taking the positive square roots as x is approaching ·.

So
1 4 9
3 4
lim
2
2
+ +
÷ ÷
· ÷
x x
x x
x
= = ÷
· ÷
3
1
lim
x
3
1
÷ .

(ii) Using the rule of dominant terms

1 4 9
3 4
lim
2
2
+ +
÷ ÷
· ÷ ÷
x x
x x
x
2
2
9
4
lim
x
x x
x
÷
=
· ÷ ÷
=
( )
( ) x
x x
x
3
2
lim
÷
÷ ÷
· ÷ ÷


taking the negative square roots as x is approaching · ÷ .

So
1 4 9
3 4
lim
2
2
+ +
÷ ÷
· ÷ ÷
x x
x x
x
=
( )
( ) x
x x
x
3
2
lim
÷
÷ ÷
· ÷ ÷
=
( )
=
÷
· ÷ ÷
x
x
x
3
3
lim = ÷
· ÷ ÷
1 lim
x
1 ÷



18

4.2 Limit Theorems

Theorem 1.1 involving one function

Suppose that ( ) x f is a polynomial of degree k i.e. ( )
k
k
x a x a x a a x f ......
2
2 1 0
+ + + =
then ( ) ( ) x f x f
x x
=
÷
lim =
k
k
x a x a x a a ......
2
2 1 0
+ + + .

Example 1.16 Find ( ) x f
x 2
lim
÷
where ( )
4 2
2 7 5 4 x x x x f + ÷ + =
Solution ( ) x f
x 2
lim
÷
= ( ) ( )
4 2
2 2 ) 2 ( 7 ) 2 ( 5 4 2 + ÷ + = f = 18

Theorem 1.2

Suppose ( )
1
lim L x f
x x
=
÷
where
1
L is a finite number. Then ( ) ( ) ( )
k k
x x
L x f
1
lim =
÷
.

Theorems involving two functions

Suppose that the two functions of x are ( ) x g and ( ) x h . Further suppose
( )
1
lim L x g
x x
=
÷
and ( )
2
lim L x h
x x
=
÷
where
1
L and
2
L are finite numbers.

Theorem 1.3 (sum-difference limit theorem)

( ) ( ) = ±
÷
x h x g
x x
lim ( ) ±
÷
x g
x x
lim ( )
2 1
lim L L x h
x x
± =
÷

i.e the limit of a sum/difference = the sum/difference of the limits.

Theorem 1.4 (product limit theorem)

( ) ( ) =
÷
x h x g
x x
. lim ( )
(
¸
(

¸

÷
x g
x x
lim . ( )
2 1
. lim L L x h
x x
=
(
¸
(

¸

÷

i.e the limit of a product = the product of the limits.

Theorem 1.5 (quotient limit theorem)

Provided 0
2
= L ,
( )
( )
=
÷
x h
x g
x x
lim
( )
( )
2
1
lim
lim
L
L
x h
x g
x x
x x
=
÷
÷


i.e. The limit of a quotient = the quotient of the limits provided the
denominator of the quotient is non-zero.



19

Example 1.17 Show that
2
lim
÷ x
17
11
1 4 2
3
2
3
=
+ +
+
x x
x
.

Solution Let ( ) 3
3
+ = x x g , then ( ) x g is a ploynomial of degree 3 so using Theorem 1.1,
2
lim
÷ x
( ) x g = ( ) 11 3 2 2
3
= + = g .
Let ( ) 1 4 2
2
+ + = x x x h , then ( ) x h is a ploynomial of degree 2, so using Theorem 1.1,
2
lim
÷ x
( ) x h ( ) ( ) ( ) 0 17 1 2 4 2 2 2
2
= = + + = = h so using Theorem 1.5,
2
lim
÷ x
( )
( )
=
x h
x g
2
lim
÷ x
=
+ +
+
1 4 2
3
2
3
x x
x
( )
( ) 17
11
1 4 2 lim
3 lim
2
2
3
2
=
+ +
+
÷
÷
x x
x
x
x
.




20

5. SOME IMPORTANT APPLICATIONS OF LIMITS

5.1 Continuity
We can represent a function of one variable by a two-dimensional graph. In particular if we
have a function ( ) x f then we can draw a graph of it. Continuous functions ( ) x f are ones
whose graphs "do not have jumps", i.e. graphs that one can draw without removing pencil from
paper. The exponential and logarithmic functions are continuous functions. On the other hand
discontinuous functions have " jumps" in them.

Mathematical definition

A function ( ) x f is said to be continuous at a point x if
(a) f is defined at x

(b) ( ) ( ) x f x f
x x
=
÷
lim .

Condition (b) actually means that ( ) =
÷
÷
x f
x x
lim ( ) ( ) x f x f
x x
=
+
÷
lim .
Example 1.18
Given the function
( )
3 2 2 5
2 0 2
2
s < + =
s s =
x x
x x x f
where · < s x 0 .
Is ( ) x f a continuous function? No because there is a jump in the function at x = 2.

Figure 1.4: A discontinuous function
A discontinous function
0
2
4
6
8
10
12
14
16
18
0 0.5 1 1.5 2 2.5 3 3.5
x
f
(
x
)
2 (xsquared)
5x + 2




21

Mathematically ( ) =
÷
÷
x f
x 2
lim 8 2 lim
2
2
=
÷
÷
x
x
whereas = +
+
÷
2 5 lim
2
x
x
12 and so
( ) =
÷
÷
x f
x 2
lim ( ) x f
x
+
÷2
lim so condition (b) is violated.

Example 1.19
Suppose the function ( ) x f is defined as follows;
( )
¦
¦
¦
¹
¦
¦
¦
´
¦
>
÷
s s
÷
<
+
=
3
16
1
3 0
2 7
1
0
5 2
1
2
x if
x
x if
x
x if
x
x f
If x < 0, ( )
5 2
1
+
=
x
x f and this is not defined when 2x + 5=0 i.e. when 5 . 2 ÷ = x
resulting in ( ) x f being discontinous at 5 . 2 ÷ = x . This violates condition (a).
Similarly ( ) x f is not defined when 4 = x so ( ) x f is discontinuous at 4 = x .

Also ( ) =
÷
÷
x f
x 0
lim
5
1
5 2
1
lim
0
=
+
÷
÷ x x
whereas ( ) =
+
÷
x f
x 0
lim ( )
5
1
0
7
1
2 7
1
lim
0
= = =
÷
+
÷
f
x x
.
and ( ) =
÷
÷
x f
x 3
lim ( ) 3 1
2 7
1
lim
3
f
x x
= =
÷
÷
÷
whereas ( ) =
+
÷
x f
x 3
lim 1
7
1
16
1
lim
2
3
= ÷ =
÷
+
÷ x x
.

Hence condition (b) does not hold either and we find that ( ) x f is discontinuous
at 5 . 2 ÷ = x , 0 = x , 3 = x and 4 = x .

Example 1.20
The most important application of continuity is in ensuring that demand and supply
curves cross to give an equilibrium price. Suppose we have a downwards sloping
demand curve, D, and an upwards sloping supply curve, S :

Figure 1.5: Supply and Demand

PRICE
PRICE PRICE
QUANTITY QUANTITY
p* p*
q* q*
(a) (b) (c)
D D D
S S S
S S S
D
D
D
.
.
.
.



22

With case Fig. 1.5(a) we see that the demand and supply curves intersect and at the
(equilibrium) price p*, the market can clear. Both demand and supply curves are
continuous.
If, however, one of the curves is not continuous or discontinuous (as the demand curve
in Fig. 1.5(b)) then they may not cross. In case (b) there is no equilibrium price. At
p*, for example, there is excess supply (i.e. quantity demanded < quantity supplied)
but lowering the price by any amount (no matter how small) leads to excess demand
(i.e. quantity demanded > quantity supplied).
Diagram (c) illustrates a supply and discontinuous demand function that have an
equilibrium.

Necessary and sufficient conditions
(1) A necessary condition is something which must hold for a result to follow.
(2) A sufficient condition guarantees the result, but the result may, perhaps,
follow even if the condition is not satisfied.

Example 1.21

Assuming the demand curve is dwonward sloping and the supply curve is upward
sloping as in Example 1.20, continuity of the two curves is a sufficient condition for
an equilibrium but it is not a necessary condition because as in case (c) , the demand
curve is discontinuous but we still have an equilibrium where the demand and supply
curves intersect.

5.2 Continuity theorems

Theorem 1.6 (involving one function) All polynomials are continous functions.
From Limit Theorem 1.1, if ( ) x f is a polynomial of degree k then

( )
k
k
x a x a x a a x f ......
2
2 1 0
+ + + = and
( ) ( ) x f x f
x x
=
÷
lim =
k
k
x a x a x a a ......
2
2 1 0
+ + + .
Also ( ) x f is defined at x so using the mathematical definition of continuity, ( ) x f is
continous at x . This is true for any x , so ( ) x f is a continous function.

Theorems involving two functions.

Suppose that ( ) x g and ( ) x h are continous at x , then

Theorem 1.7 The sum/difference ( ) ( ) x h x g ± is continuous at x .


23


Theorem 1.8 The product ( ) x g . ( ) x h is continuous at x .

Theorem 1.9 The quotient
( )
( ) x h
x g
is continuous at x , provided ( ) 0 = x h .

Since ( ) x g and ( ) x h are continous at x , ( ) ( ) x g x g
x x
=
÷
lim and
( ) ( ) x h x h
x x
=
÷
lim . If you now apply the Limit Theorems 1.3 – 1.5 in section 4.2
you get the above results following quite quickly.

Example 1.21 Given the function ( )
2
9 3 2
4
2 3
+
÷ + +
=
x
x x x
x f where · < < · ÷ x ,
show g is a continuous function.

Solution ( )
( )
( ) x h
x g
x f = where ( ) 9 3 2
2 3
÷ + + = x x x x g and ( ) 2
4
+ = x x h
Now ( ) x g is a polynomial of degree 3 and so it is a continuous function. The function
( ) x h is a polynomial of degree 4, so it is a continuous function and
( ) ( ) x h x h
x x
=
÷
lim 2
4
+ = x . Also 0 2
4
= + x for any x , hence using Theorem 1.9,
( )
( )
( ) x h
x g
x f = is continuous at any x where · < < · ÷ x so g is a continuous function.


5.3 Concept of differentiability for functions of one variable (univariate calculus)

Suppose we sketch the curve ( ) x f twice and in the first sketch draw a chord on the
curve from x = x to any point x (see Fig. 1.6(i) below). Suppose in the second sketch,
we draw the tangent to the curve ( ) x f at x = x (see Fig. 1.6(ii) below).

Figure 1.6: Tangent and Slope

f(x)
f(x)
-
x x
-
f(x)
f(x)
-
x
slope = b tangent to graph at x
-
-
(i) (ii)


24


Suppose the chord through ( x , ( ) f x ) and (x, ( ) f x ) has slope b (see Fig. 1.6(i) )
where

( ) ( )
( )
b
f x f x
x x
=
÷
÷
.

If x is fixed, then b is a function of x ( x x = ) so as we change x , b changes.

For the function f graphed in Figs. 1.6, as x gets closer and closer to x , the chord
gets closer and closer to the tangent to the graph of f at x , and the slope b gets
closer and closer to the slope of the tangent at x (which is f '( x )).

We can write it mathematically several equivalent ways as follows:

(1) As x converges to x , b converges to f ' ( ) x .
(2) As x x ÷ , b ( ) x f ' ÷ .
(3) ) (
) (
) ( ) (
lim lim x f
x x
x f x f
b
x x x x
' =
÷
÷
=
÷ ÷


Suppose that
( ) ( )
÷
÷
=
÷
÷
÷
L
x x
x f x f
x x
lim and
( ) ( )
+
÷
=
÷
÷
+
L
x x
x f x f
x x
lim
then
( ) ( )
lim
x x
f x f x
x x
÷
÷
÷
exists only if
+ ÷
= L L . Suppose that
( ) ( )
lim
x x
f x f x
x x
÷
÷
÷

exists and this limit = L then we say that f is differentiable at x and
L = the derivative of f at x x = i.e. ( ) x f ' .
The limit L is also the slope of the tangent at x x = .

If f is differentiable at all x then we say ( ) x f that is differentiable and we denote
the derivative by f '(x).

Alternatively in Fig 1.6(a), let ( ) x x x ÷ = A and ( ) ( ) f x f x f ÷ = A , then

b
f
x
=
A
A
= the slope of the chord in Fig. 1.6(i) and
=
÷
b
x x
lim
x x
x
dx
df
x
f
=
÷
=
A
A
A 0
lim or ( ) x f '

N.B. Ax never equals 0 as you cannot divide by 0, but it gets very close to 0.

Examples of differentiable and non-differentiable functions



25

A differentiable function
( ) ( ) 0 4 4
2
> ÷ = ÷ = x x x x x x f
Its gradient is ( ) x x f 2 4 ÷ = ' and the gradient changes continuously. Fig. 1.7 overleaf
shows ( ) x f and its gradient for 5 . 4 0 s s x . If the gradient of a function is continuous
then the function is differentiable.

Figure 1.7: Function and gradient
Function f(x) and its gradient
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
x
f(x)
Gradient of f(x)

(b) A non-differentiable function


( ) ( )
2 2 8
2 0 4
> ÷ =
s s ÷ =
x x
x x x x g


For 2 0 < s x the gradient of ( ) x g is the same as that of ( ) x f , so when
x = 2 the gradient of ( ) x g is 0, but for 2 > x the gradient is 2 ÷ .

Now
( ) ( )
2
2
lim
2 ÷
÷
÷
÷ x
g x g
x
( )
2
4 4
lim
2
2 ÷
÷ ÷
=
÷
÷ x
x x
x
( )
2
2
lim
2
2 ÷
÷ ÷
=
÷
÷ x
x
x
( ) 0 2 lim
2
= ÷ ÷ =
÷
÷
x
x



( ) ( )
2
2
lim
2 ÷
÷
+
÷ x
g x g
x
( )
2
4 2 8
lim
2 ÷
÷ ÷
=
+
÷ x
x
x
( )
2
2 2
lim
2 ÷
÷
=
+
÷ x
x
x
2 2 lim
2
÷ = ÷ =
+
÷ x


As these two limits are not the same we can say that ( ) x g is not differentiable at
x = 2. The gradient suddenly changes from 0 to 2 ÷ at x = 2 . Hence the gradient of
( ) x g does not change continuously but is discontinuous at x = 2. Fig 1.8 overleaf
shows its gradient for 5 . 4 0 s s x


26

Figure 1.8: A non-differentiable function
Gradient of g(x)
-3
-2
-1
0
1
2
3
4
5
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
x
Gradient of g(x) for x between 0 and 2
Gradient of g(x) for x between 2 and 4.5


Important note

If the gradient of a function is discontinuous at x x = , then the function will not be
differentiable at x x = .

Derivatives of standard functions

(1)
( )
dx
x d
n
= n x
n÷1
for all values of n
From this follows that
( ) ( )
= =
dx
cx d
dx
c d
0
0 so differentiating a constant c gives 0.

(2)
( )
( )
=
dx
e d
x g
( )
( ) x g
e x g' e.g.
( )
2
2
2
2
4
x
x
xe
dx
e d
=

(3)
( ) ( )
dx
x f d ln
=
( )
( ) x f
x f '
e.g.
( ) ( )
( )
2
2
1
2 1 ln
x
x
dx
x d
+
=
+


(4)
( )
a a
dx
a d
x
x
ln = e.g.
( )
3 ln 3
3
x
x
dx
d
=

(5) Using (4) ,
( )
( )
n
n
x x
dn
x d
. ln =



27

Note that the function being differentiated in cases (1) and (5) is
n
x . In case (1) we
are treating n as a constant (i.e. it is just a number, such as “2”) and seeing how
n
x
changes when x changes. In case (5), it is the other way around: we are treating x as a
constant and seeing how
n
x changes when n changes.

A very common mistake that students make is the following:
WRONG :
( )
1 ÷
=
n
n
nx
dn
x d

Clearly this is just muddling up cases (1) and (5) from above.

Second and higher order derivatives

The derivative of a function ( ) x f is itself a function of x. The derivative may or may
not be differentiable itself but if it is then we can differentiate to obtain the second
derivative of the original function.
We denote the second derivative of ( ) x f by f ª(x) or
2
2
dx
f d
.

We denote the third derivative of ( ) x f by ( ) x f ' ' ' or
3
3
dx
f d

Similarly, the n
th
derivative of ( ) x f is denoted by
( )
( ) x f
n
or
n
n
dx
f d
.

Properties of differentiable functions

Let f = f (x), g =g (x), u= u (x) and v = v (x) where a and b are constants;

Differentiating a sum of two functions


( )
dx
dv
b
dx
du
a
dx
bv au d
+ =
+

Differentiating a product of two functions (called the product rule)

d
dx
( u v ) = u
dv
dx
+ v
du
dx

Differentiating a quotient of two functions (called the quotient rule)

d
dx
u
v
v
du
dx
u
dv
dx
v
|
\

|
.
| =
÷
2



Function of a function rule or simple chain rule

Suppose g is a function of f i.e ( ) f g g = and f is a function of x, i.e ( ) x f f = then
g can be considered to be a function of x also. If ( ) ( ) x f g g = then


28

( ) x g' = g'( f ( x )). ' f (x) or
dx
df
df
dg
dx
dg
. =

Example 1.22 Differentiate (i) ( ) ( ) ( )
4 3
2 1 2 1 ln 3 x x x f ÷ + + =
(ii) ( )
) 2 1 (
3
3
2
t
e
t
t g
÷
=
Solution (i) ( ) ( )( ) ( ) = ÷ ÷ +
+
= ' 2 2 1 4 2
) 1 (
) 3 ( 3
3
3
2
x
x
x
x f
( )
( )
3
3
2
2 1 16
1
9
x
x
x
÷ ÷
+

Solution (ii) ( )
2 3
3 2 3
) 2 1 (
) 6 ( 3 ) 2 1 ( 6
t
t t
e
e t e t
t g
÷
÷ ÷ ÷
= '
2 3
3 2 3
) 2 1 (
18 ) 2 1 ( 6
t
t t
e
e t e t
÷
+ ÷
=

Result 1.1 If f (x) is differentiable at x , then it is continuous at x .
Let S = the set of all functions, C = the set of continuous functions and
D = the set of differentiable functions. Then C is a sub-set of S i.e. S C c
and D is a sub-set of C i.e. C Dc . This implies that if any function is discontinuous
at any point, then it will not be differentiable at the point of discontinuity, since the
function is not in set C so cannot be in set D.

Example 1.23 In Example 1.18 the function
( )
3 2 2 5
2 0 2
2
s < + =
s s =
x x
x x x f

where · < s x 0 , is discontinuous at x = 2 so we know from Result 1.1 that
( ) x f is not differentable at x = 2.



29

5.4 Concept of a partial derivative (multivariate calculus)

First-order partial derivatives

If ( )
3 2 1
, , x x x f is a function of 3 variables, we can hold any two of the variables fixed
and consider the behaviour of f as a function of the third variable alone.

For example we can fix
2
x at
2
x

and
3
x at
3
x and allow only
1
x to vary so
( )
3 2 1
, , x x x f is a function of
1
x only. Suppose we let
( ) ( )
1 3 2 1
, , x r x x x f =

then using univariate calculus we can define the derivative of ( )
1
x r at
1 1
x x =
as follows

:

( ) = '
1
x r
( ) ( )
( )
1 1
1 1
1 1
lim
x x
x r x r
x x
÷
÷
÷
=
1 1
lim
x x ÷
( ) ( )
( )
1 1
3 2 1 3 2 1
, , , ,
x x
x x x f x x x f
÷
÷


If this limit exists, it is called the first order partial derivative of ( )
3 2 1
, , x x x f
with respect to
1
x evaluated at ( )
3 2 1
, , x x x . We denote this by:

( )
1
3 2 1
, ,
x
x x x f
c
c
or ( )
3 2 1 1
, , x x x f
Similarly we can define and calculate the first-order partial derivatives of
( )
3 2 1
, , x x x f with respect of
2
x as follows:

We fix
1
x at
1
x

and
3
x at
3
x and allow only
2
x to vary so ( )
3 2 1
, , x x x f is a function
of
2
x only. Suppose we let
( ) ( )
2 3 2 1
, , x s x x x f =

then using univariate calculus we can define the derivative of ( )
2
x s at
2 2
x x =
as follows

:

( ) = '
1
x s
( ) ( )
( )
2 2
2 2
2 2
lim
x x
x s x s
x x
÷
÷
÷
=
1 1
lim
x x ÷
( ) ( )
( )
2 2
3 2 1 3 2 1
, , , ,
x x
x x x f x x x f
÷
÷

If this limit exists, it is called the first order partial derivative of ( )
3 2 1
, , x x x f
with respect to
2
x evaluated at ( )
3 2 1
, , x x x .
We denote this by:
( )
2
3 2 1
, ,
x
x x x f
c
c
or ( )
3 2 1 2
, , x x x f .


30

Similarly we can define and calculate the first-order partial derivatives of
( )
3 2 1
, , x x x f with respect of
3
x as follows:

We fix
1
x at
1
x

and
2
x at
2
x and allow only
3
x to vary so ( )
3 2 1
, , x x x f is a function
of
3
x only. Suppose we let
( ) ( )
3 3 2 1
, , x t x x x f =
then using univariate calculus we can define the derivative of ( )
3
x t at
3 3
x x =
as follows

:
( ) = '
3
x t
( ) ( )
( )
3 3
3 3
3 3
lim
x x
x t x t
x x
÷
÷
÷
=
3 3
lim
x x ÷
( ) ( )
( )
3 3
3 2 1 3 2 1
, , , ,
x x
x x x f x x x f
÷
÷

If this limit exists, it is called the first order partial derivative of ( )
3 2 1
, , x x x f
with respect to
3
x , evaluated at ( )
3 2 1
, , x x x . We denote this by:

( )
3
3 2 1
, ,
x
x x x f
c
c
or ( )
3 2 1 3
, , x x x f

In general, a function ( )
n
x x x x f ,....., , ,
3 2 1
has n first-order partial derivatives:

( )
n
x x x x f ,....., , ,
3 2 1 1
or
1
x
f
c
c
, ( )
n
x x x x f ,....., , ,
3 2 1 2
or
2
x
f
c
c
,
( )
n
x x x x f ,....., , ,
3 2 1 3
or
3
x
f
c
c
, ……………
( )
n n
x x x x f ,....., , ,
3 2 1
or
n
x
f
c
c
.

Second order partial derivatives

The n first order partial derivatives of ( )
n
x x x x f ,....., , ,
3 2 1
being themselves
functions of
n
x x x ,......., ,
2 1
can also be partially differentiated to yield higher
order partial derivatives.

We denote the second order partial derivative of ( )
n
x x x f ,....., ,
2 1
with respect to
i
x and
j
x by:

|
|
.
|

\
|
c
c
c
c
=
c c
c
j i j i
x
f
x x x
f
2
or
ij
f
If i = j , these become:
|
|
.
|

\
|
c
c
c
c
=
c
c
i i i
x
f
x x
f
2
2
or
ii
f




31

Examples Suppose that ( )
3 2 1
, , x x x f is a function of 3 variables.



|
|
.
|

\
|
c
c
c
c
=
c
c
1 1
2
1
2
x
f
x x
f
or ,
11
f

|
|
.
|

\
|
c
c
c
c
=
c
c
2 2
2
2
2
x
f
x x
f
or ,
22
f
|
|
.
|

\
|
c
c
c
c
=
c
c
3 3
2
3
2
x
f
x x
f
or
33
f


It is almost always the case that the order of taking second order partial
derivatives does not matter, i.e.


i j j i
x x
f
x x
f
c c
c
=
c c
c
2 2
or
ij
f
ji
f =

for all i and j.

Where j i = these are also known as cross partial derivatives.

Examples Suppose that ( )
3 2 1
, , x x x f is a function of 3 variables.
=
|
|
.
|

\
|
c
c
c
c
=
c c
c
=
2 1 2 1
2
12
x
f
x x x
f
f
|
|
.
|

\
|
c
c
c
c
=
1 2
x
f
x
21
1 2
2
f
x x
f
=
c c
c
= .
=
|
|
.
|

\
|
c
c
c
c
=
c c
c
=
3 1 3 1
2
13
x
f
x x x
f
f
|
|
.
|

\
|
c
c
c
c
=
3 1
x
f
x
31
1 3
2
f
x x
f
=
c c
c
= .
=
|
|
.
|

\
|
c
c
c
c
=
c c
c
=
3 2 3 2
2
23
x
f
x x x
f
f
|
|
.
|

\
|
c
c
c
c
=
2 3
x
f
x
23
2 3
2
f
x x
f
=
c c
c
= .

Important note
In partial differentiation, only one variable is allowed to change at any one time, the
other variables remaining constant.

Example 1.24
Suppose we have a production function given by ( )
3
2
2
6
1
1 2 1
4 , x x x x f = . Find the first
and second order derivatives when 2
1
= x and 3
2
= x .

Solution

Keeping
2
x constant and allowing
1
x to vary,

3
2
2
6
5
1 1
6
1
4 x x f
÷
|
.
|

\
|
= =
3
2
2
6
5
1
3
2
x x
÷
,
3
2
2
6
11
1 11
6
5
3
2
x x f
÷
|
.
|

\
|
÷ = =
3
2
2
6
11
1
9
5
x x
÷
÷ ,
(
2
x constant in both differentiations)

Keeping
1
x constant and allowing
2
x to vary,

3
1
2
6
1
1 2
3
2
4
÷
|
.
|

\
|
= x x f =
3
1
2
6
1
1
3
8 ÷
x x ,
3
4
2
6
1
1 22
3
1
3
8 ÷
|
.
|

\
|
÷ = x x f =
3
4
2
6
1
1
9
8 ÷
÷ x x
(
1
x constant in both differentiations)

Cross-partial derivatives


32



|
|
.
|

\
|
c
c
c
c
=
2 1
12
x
f
x
f =
|
.
|

\
|
c
c ÷
3
1
2
6
1
1
1
3
8
x x
x
=
21
3
1
2
6
5
1
9
4
f x x =
÷ ÷
.
(
2
x constant in this 2
nd
differentiation)

Or
|
|
.
|

\
|
c
c
c
c
=
1 2
21
x
f
x
f =
|
.
|

\
|
c
c ÷
3
2
2
6
5
1
2
3
2
x x
x
=
12
3
1
2
6
5
1
9
4
f x x =
÷ ÷
.
To 5 dec. places, ( ) = 3 , 2
1
f =
|
.
|

\
|
|
.
|

\
|
÷
3
2
6
5
3 2
3
2
0.77827,
( ) = 3 , 2
11
f = 32428 . 0 3 2
9
5
3
2
6
11
÷ =
|
.
|

\
|
|
.
|

\
|
÷
÷
,
( ) = 3 , 2
2
f
|
.
|

\
|
|
.
|

\
|
÷
3
1
6
1
3 2
3
8
= 2.07539, ( ) = 3 , 2
22
f 23060 . 0 3 2
9
8
3
4
6
1
÷ =
|
.
|

\
|
|
.
|

\
|
÷
÷
,
( ) = 3 , 2
12
f ( ) 3 , 2 17295 . 0 3 2
9
4
21
3
1
6
5
f = =
|
.
|

\
|
|
.
|

\
|
÷ ÷
.


Example 1.25
Find all the first-order and second order partial derivatives of

( ) y z x xy e z y x f
xy 3 2 2 2
4 ln , , + + =

Solution

( ) y z x y x e z y x f
xy 3 2 2 2
4 ln ln , , + + + = y z x y x e
xy 3 2 2
4 ln 2 ln + + + =

Let x vary, y and z stay constant.
y xz
x
ye f
xy
x
3 2
8
1
2 + + = and ( ) y z
x
e y f
xy
xx
3
2
2 2
8
1
2 + ÷ = y z
x
e y
xy 3
2
2 2
8
1
4 + ÷ =
( y and z constant in both differentiations)

Cross-partial partial derivatives
yx
f and
zx
f
( ) =
c
c
=
x yx
f
y
f
|
.
|

\
|
+ +
c
c
y xz
x
ye
y
xy 3 2
8
1
2 (x and z constant in this 2
nd

differentiation)
( )( )
3 2 2
8 2 2 2 xz e y x e
xy xy
+ + =
3 2 2
8 4 2 xz xye e
xy xy
+ + =

( ) =
c
c
=
x zx
f
z
f
|
.
|

\
|
+ +
c
c
y xz
x
ye
z
xy 3 2
8
1
2 ( x and y constant in this 2
nd

differentiation)
( )( ) y xz e y x e
xy xy 2 2 2
24 2 2 2 + + = y xz xye e
xy xy 2 2 2
8 4 2 + + =

Let y vary, x and z stay constant.
3 2 2
4
2
2 z x
y
xe f
xy
y
+ + = and ( )
2
2 2
2
2
y
e x f
xy
yy
÷ =
2
2 2
2
4
y
e x
xy
÷ =


33

( x and z constant in both differentiations)

As f is quite complicated, it is a good idea to check that the cross-partial partial
derivatives are equal, so we will calculate
xy
f and
zy
f next.

Cross-partial partial derivatives
xy
f and
zy
f

( ) =
c
c
=
y xy
f
x
f
|
|
.
|

\
|
+ +
c
c
3 2 2
4
2
2 z x
y
xe
x
xy
(y and z constant in this 2
nd

differentiation)
( )( )
3 2 2
8 2 2 2 xz e y x e
xy xy
+ + =
3 2 2
8 4 2 xz xye e
xy xy
+ + =
xy
f =
( ) =
c
c
=
y zy
f
z
f
|
|
.
|

\
|
+ +
c
c
3 2 2
4
2
2 z x
y
xe
z
xy
(x and y constant in this 2
nd

differentiation)

2 2
12 z x =

Let z vary, x and y stay constant.

y z x f
z
2 2
12 = and zy x f
zz
2
24 = ( x and z constant in both differentiations)

It is a good idea to check that the cross-partial partial derivatives are equal.

Cross-partial partial derivatives
xz
f and
yz
f
( ) =
c
c
=
z xz
f
x
f ( )
zx
f y xz y z x
x
= =
c
c
2 2 2
24 12 (y and z constant in this 2
nd

differentiation)

( ) =
c
c
=
z yz
f
y
f ( )
zy
f z x y z x
y
= =
c
c
2 2 2 2
12 12 (x and z constant in this 2
nd

differentiation)




34

6. THE LINK BETWEEN INTEGRATION AND DIFFERENTIATION

Integration reverses differentiation. If you differentiate a function once with respect to
a particular variable you obtain a derivative of the function. If you now integrate the
derivative with respect to the same variable you get back to the function you started
with.

Functions of one variable

Generally, suppose we start with the function F(x) and differentiate F(x) with respect
to x to give f (x). So ( )
dx
dF
x f = and is called the derivative of F.

Now let us integrate the derivative f (x) with respect to x and we get back to F(x).

We can write this as follows:
( ) x f
dx
dF
= and ( ) dx x f
}
= ( ) x F .

The
}
sign is called the integral sign. It is a mediaeval „S‟ indicating continuous
summing which is basically what integration is.

Suppose now that we start with the function F(x) + c where c is a constant and
differentiate (F(x) + c) with respect to x . When you differentiate a constant you get 0
so
( ) ( )
( ) x f
dx
c x F d
=
+
.

Now let us integrate the derivative f (x) with respect to x and we get back to
(F(x) + c ).

We can write this as follows:

( ) ( )
( ) x f
dx
c x F d
=
+
and ( ) dx x f
}
= ( ) c x F + .
The constant c is called the constant of integration and all the integrals given above
are called indefinite integrals.

Simple rules of integration

(1)
( )
c
n
x
dx x
n
n
+
+
=
}
+
1
1
provided 1 ÷ = n .

(2)
( )
= =
} }
dx
dx
x d
dx
x
ln 1
ln x + c
which extends to
( )
( )
( ) ( )
} }
= =
'
dx
dx
x f d
dx
x f
x f ln
( ) c x f + ln


35

(3)
( )
= =
} }
dx
dx
a
e
d
dx e
ax
ax
c
a
e
ax
+
which extends to ( )
( )
( )
( )
} }
= = ' dx
dx
e d
dx e x f
x f
x f ( )
c e
x f
+

(4) ( ) ( ) ( )
( ) ( ) | |
} }
= = ' ' dx
dx
x f g d
dx x f x f g ( ) ( ) c x f g +

One approach here is to let ( ) x f u = so that ( ) x f
dx
du
' = and the integral
( ) ( ) ( )
}
' ' dx x f x f g becomes ( )
}
' dx
dx
du
u g which simplifies to ( )
}
' du u g
and ( ) ( ) ( ) ( )
}
+ = + = ' c x f g c u g du u g .

This is known as integration by substitution.

Definite integrals

A definite integral is one where the integral has 2 limits, an upper limit and a lower
limit.

Example dx e x
x
x
x
4
4
2
4
3 2 +
}
=
=
or dx e x
x 4
4
2
4
3 2 +
}
for short.

Usually the upper limit is mathematically greater than the lower limit.

Generally if
( ) ( )
( ) x f
dx
c x F d
=
+
then ( ) dx x f
}
= ( ) c x F + .

So ( ) ( ) | | ( ) | | ( ) ( ) a F b F c c F c b F dx x f
b
a
÷ = + ÷ + =
}


If there are limits, the constant of integration cancels out. So with definite integrals
we do not need to include a constant of integration. If doing integration by
substitution, for example letting ( ) x f u = , then the upper and lower limits of the
integral become ( ) b f and ( ) a f respectively.


Examples 1.26 (i)
}
= dx
x
3
3
c x
x
dx x + ÷ =
÷
=
÷
÷
÷
}
2
1
2
1
2
3
6
)
2
1
(
3
3



36

(ii) By inspection =
+
}
dx
x
3
1
3
) 1 (
1
( ) dx x
dx
d
dx x
2
3
1
3
1
3
1
2
1
) 1 (
÷ ÷
+
|
.
|

\
|
÷ = +
} }

( )
3
1
2
1 2
1
(
¸
(

¸

+
÷ =
x

( )
(
¸
(

¸

|
.
|

\
|
÷ ÷
|
.
|

\
|
÷ =
(
¸
(

¸

+
÷ =
8
1
32
1
1 2
1
3
1
2
x
=
32
3


By substitution Here we are integrating a function of a function so we could
integration by substitution . Let (1 + x) = u, then 1 =
dx
du
. When x = 3, u = 4 and when
x = 1, u = 2.
So =
+
}
dx
x
3
1
3
) 1 (
1
=
(
¸
(

¸

÷ =
(
¸
(

¸

÷
=
÷
÷
}
4
2
2
4
2
2
4
2
3
2
1
) 2 ( u
u
du u
|
.
|

\
|
÷ ÷
|
.
|

\
|
÷
8
1
32
1
=
32
3
.

(iii) dx
x
x
}
+ ) 4 3 (
2
2
= ( ) ( ) ( ) c x dx x
dx
d
dx
x
x
+ + = + =
+
} }
4 3 ln
3
1
4 3 ln
3
1
) 4 3 (
6
3
1
2 2
2


(iv) | |
4 2 . 4
1 . 2
2
2
1 . 2
2
2
2
3
2
3
3 e e
e
dx e
x
x
÷ =
(
¸
(

¸

=
}
= 18.1323 to 4 dec. places.

Summarising
Differentiate F(x) with respect to x ( ) x f
dx
dF
= ÷
Integrate f (x) with respect to x ( ) ( ) x F dx x f = ÷
}


Other useful results on definite integrals

Suppose that a, b and c are constants where a < b < c
( ) ( ) ( ) dx x f dx x f dx x f
c
b
b
a
c
a
} } }
+ = and ( ) ( )
} }
÷ =
a
b
b
a
dx x f dx x f

Integrating a product

From earlier in the chapter we have the product rule, namely

d
dx
( u v ) = u
dv
dx
+ v
du
dx

Integrate both sides of the above equation with respect to x.


( )
dx
dx
uv d
b
a
}
= dx
dx
dv
u
b
a
}
+ dx
dx
du
v
b
a
}
.

The L.H.S. of the equation becomes uv


37

So the equation is : uv = dx
dx
dv
u
b
a
}
+ dx
dx
du
v
b
a
}
.

Rearranging the equation gives the following result :

dx
dx
dv
u
b
a
}
= | | ÷
b
a
uv dx
dx
du
v
b
a
}


Integrating a product is called „integrating by parts’ . The aim of integration by parts
is to choose u and
dx
dv
in such a way that the integral on the R.H.S. of the above
formula is simpler than the integral on the L.H.S. of the above formula.

Functions of two variables

(a) Suppose we start with the function ( ) y x F , and partially differentiate
( ) y x F , with respect to y first to give
y
F
c
c
or
y
F . Further suppose that we
partially differentiate a second time with respect to x to give
y x
F
c c
c
2
.

(b) Alternatively suppose we start with the function ( ) y x F , and partially
differentiate ( ) y x F , with respect to x first to give
x
F
c
c
or
x
F . Further suppose
that we partially differentiate a second time with respect to y to give
x y
F
c c
c
2
.

Let ( ) y x f
y x
F
x y
F
,
2 2
=
c c
c
=
c c
c
, then ( ) y x f , is called the cross-partial derivative of F .

Now let us integrate the cross-partial derivative ( ) y x f , twice, once with respect
to x and once with respect to y. We get back to ( ) y x F , .

We can write this as (a) ( ) y x f
y
F
x y x
F
,
2
=
|
|
.
|

\
|
c
c
c
c
=
c c
c
and ( ) dy dx y x f
d
c
b
a
,
} }
= F(x, y).

Or (b) ( ) y x f
x
F
y x y
F
,
2
=
|
.
|

\
|
c
c
c
c
=
c c
c
and ( ) dx dy y x f
b
a
d
c
,
} }
= F(x, y).

(a) First integrate ( ) y x f , or
y x
F
c c
c
2
with respect to x and then with respect to y. In the 1
st

integration with respect to x, note that y is constant.


38


( ) dy dx y x f
d
c
b
a
,
} }
= ( ) dy dx y x f
d y
c y
b x
a x
} }
=
=
=
=
(
(
¸
(

¸

, dy dx
y
F
x
d y
c y
b x
a x
} }
=
=
=
=
(
(
¸
(

¸

|
|
.
|

\
|
c
c
c
c
= dy
y
F
d y
c y
b x
a x
}
=
=
=
=
(
¸
(

¸

c
c
=
+
y is constant

= ( ) | | dy y x F
d y
c y
b x
a x
y
}
=
=
=
=
, = ( ) ( ) | |dy y a F y b F
d y
c y
y y
}
=
=
÷ , , ( ) ( ) | |
d y
c y
y a F y b F
=
=
÷ = , ,
( ) ( ) | | ( ) ( ) | | = ÷ ÷ ÷ = c a F c b F d a F d b F , , , , ( ) ( ) ( ) ( ) d a F c b F c a F d b F , , , , ÷ ÷ +


(b) First integrate ( ) y x f , or
x y
F
c c
c
2
with respect to y and then with respect to x. In the 1
st

integration with respect to y, note that x is constant.

( ) dx dy y x f
b
a
d
c
,
} }
= ( ) dy dy y x f
b x
a x
d y
c y
} }
=
=
=
=
(
(
¸
(

¸

, dx dy
x
F
y
b x
a x
d y
c y
} }
=
=
=
=
(
(
¸
(

¸

|
.
|

\
|
c
c
c
c
= dx
x
F
b x
a x
d y
c y
}
=
=
=
=
(
¸
(

¸

c
c
=
+
x is constant

= ( ) | | dx y x F
b x
a x
d y
c y x
}
=
=
=
=
, = ( ) ( ) | | dx c x F d x F
b x
a x
x x
}
=
=
÷ , , ( ) ( ) | |
b x
a x
c x F d x F
=
=
÷ = , ,

= ( ) ( ) | | ( ) ( ) | | = ÷ ÷ ÷ c a F d a F c b F d b F , , , , ( ) ( ) ( ) ( ) d a F c b F c a F d b F , , , , ÷ ÷ +

= ( ) dy dx y x f
d
c
b
a
,
} }
.

Notes

(1) Multiple integration is basically repeated integration, where you integrate with
respect to one variable at a time, the other variables remaining constant during that
particular integration.

(2) The order of the integration does not matter.

Example ( ) =
} }
dy dx y x f
d
c
b
a
, ( ) dx dy y x f
b
a
d
c
,
} }
.

(2) can be quite helpful as sometimes during the repeated integration, integrating with
respect to one variable may be easier than integrating with respect to another variable.


39

For example finding ( ) dy dx y x f
d
c
b
a
,
} }
, where you integrate with respect to x first may
be an easier integration than integrating with respect to y first i.e finding
( ) dx dy y x f
b
a
d
c
,
} }
or vice-versa.

Example 1.27 Evaluate ( ) dy dx y x xy 3 2
108
1
4
1
3
0
+
} }


Solution ( ) dy dx y x xy 3 2
108
1
4
1
3
0
+
} }
= | dy dx xy y x
y
y
x
x
2
4
1
3
0
2
3 2
108
1
+

¸

} }
=
=
=
=

dy
y x y x
x
x
y
y
3
0
2 2 3
4
1
2
3
3
2
108
1
=
=
=
=
(
¸
(

¸

+ =
}
| | dy
y
y
y
y
0
2
27
18
108
1
2
4
1
÷
(
¸
(

¸

+ =
}
=
=
4
1
3
2
2
4
1
6
27
9
108
1
2
27
18
108
1
=
=
=
=
(
¸
(

¸

+ =
(
¸
(

¸

+ =
}
y
y
y
y
y
y dy
y
y
( )
( )
(
¸
(

¸

+ =
2
64 9
16 9
108
1
(
¸
(

¸

+ ÷
2
9
9
108
1
| | 875 . 3 5 . 13 432
108
1
= ÷ = .

Summarising

Partially differentiate F(x, y) twice with respect to x and y ( ) y x f
y x
F
,
2
=
c c
c
÷

Integrate ( ) y x f , twice with respect to x and y ( ) dy dx y x f
} }
÷ , = ( ) y x F , or
( ) ( ) y x F dx dy y x f , , = ÷
} }
.

Integration reverses differentiation



40

Related reading for Chapter 1 :

Essential Mathematics for Economics and Business, by Teresa Bradley.
Published by John Wiley, (ISBN 978-0-470-01856-9): Relevant sections.

Fundamental Methods of Mathematical Economics by A.C. Chiang.
Published by Mcgraw – Hill. Relevant sections.

Mathematics for Economics and Business by Ian Jacques
(6
th
edition) Published by Prentice Hall, (ISBN 978-0-273-72216-8): Relevant
sections.

Economics by D. Begg, S. Fischer and Dornbusch. 5
th
edition.
Published by McGraw – Hill. Chapter 6.

CHAPTER 1 : FUNCTIONS, CONTINUITY AND CALCULUS Functions are very important in economics because they allow us to express relationships between economic variables. In this chapter we will look at  Exponential functions.  Logarithmic functions.  What is a limit?  Some important applications of limits such as continuity and    1. differentiability. The product, quotient and function of a function rule. Concept of a partial derivative. The link between integration and differentiation.

WHAT IS A FUNCTION?

Function is the name given to a special relationship between two or more variables. Suppose we call the function f and f denotes a relationship between two variables x and y so that y  f  x  e.g. y  f  x   2 x 2  4 x  3 . We call y the dependent or endogenous variable and x the independent or exogenous variable and we say that „y is a function of x‟ . A function is a relationship where for each value of the independent or exogenous variable, there is a unique value of the dependent or endogenous variable.
Example 1.1 The Money Multiplier

Suppose banks wish to hold cash reserves R equal to some fraction cb of deposits D and that the private sector wishes to hold cash in circulation C equal to some fraction c p of their bank deposits D. Thus R  cb D and C  c p D . Since the monetary base or stock of high-powered money H equals currency in circulation plus cash with banks, we have (1) H  C  R  c p  cb D

The money supply M equals currency in circulation C plus banks‟ sight deposits D. Hence (2) M  C  D  c p 1 D

Comparing equations (1) and (2) we see that Thus the value of the money multiplier is

H (3) c p  cb cp 1 . Since cb and c p are positive c p  cb

M

c p 1

fractions, the money multiplier exceeds unity. Also an increase in cb , the banks‟ 2

desired cash reserve ratio, or in c p , the private sector‟s desired ratio of cash to sight deposits, will reduce the value of the money multiplier. Here for each value of the exogenous variable H, there is exactly one value of the endogenous variable M (for more information see Economics by Begg, Fischer and Dornbrush, 5th edition , Chapter 23).
Important note

There may be more than one value of the exogenous (or independent ) variable with the same value of the endogenous (or dependent) variable.
Example 1.2 Average product function

A firm has the following short-run production function: 4l 3 Q  f l   6l 2  7 where l is the labour input in 100‟s of units. The average product function is given Q 4l 2 by APl    6l  l 7 Some values of the exogenous variable l have the same value of the endogenous variable AP(l). For example, 4.5 and 6 have the same value of AP as do 3 and 7.5.

AP 4.5  AP (6)  15.4286 to 4 dec. places AP3  AP(7.5)  12.8571 to 4 dec. places
For a graph of Q and AP l  against l, see Fig. 1.1. on the following page.
Polynomial functions of one variable

A polynomial function of degree k is a function of the form:
f x   a0  a1 x  a2 x 2  a3 x3  ......  ak x k or

a x
i 0 i

k

i

In Example 1.1, M is a polynomial function of degree 1. In Example 1.2, APl  and Qor f l  are respectively polynomial functions of degree 2 and degree 3. A polynomial function of degree 1 is also called a linear function so M is a linear function of H. A polynomial function of degree 2 is called a quadratic function, so AP is a quadratic function of l and a polynomial function of degree 3 is called a cubic function, so Q is a cubic function so l. If we graphed all 3 functions M, AP and Q , placing the endogenous variable on the vertical axis and the exogenous variable on the horizontal axis, we would get 3

respectively a straight line passing through the origin with slope

cp 1 c p  cb

, a

parabola passing through the origin with a maximum at the point ( 5.25, 15.75) and a cubic curve passing through the origin with a maximum at the point ( 7, 98). Fig. 1.1 below is a graph of Q and AP(l) for 0  l  10.5 .
Figure 1.1: Total and Average Product Curves
The total product and average product curves
120 Q or f(l) AP(l)

100

80

60

40

20

0 0 2 4 6 Labour units 8 10 12

Functions of more than one variable

The concept of a function can be easily extended to deal with the case of more than one independent or exogenous variable. For example, the function z = z(x , y) or z = f x, y  contains the endogenous or dependent variable z and two independent or exogenous variables x and y. We say „z is a function of x and y‟ and for each pair of values (x, y) there is a unique value of z. We say that z or f are multivariate functions as they are functions of more than one variable.

4

. 5 . These 4 elements are (i) The consumer‟s income.Example 1. Of the affordable consumption bundles. (iii) The consumer‟s tastes. the consumer picks the bundle that maximises his/her own satisfaction or utility. Usually u will be a non-linear function of x1 and x 2 .4 Production functions According to Begg et al. (ii) The prices at which goods can be bought. a model of consumer‟s choice is made up of 4 elements which describe both the consumer and the market environment.3 Utility functions According to Begg et al. or exactly as good as another and this ranking of possible bundles is internally consistent. We require with element (iii) of this model that the consumer can decide that one bundle of goods is better than. (ii) it summarises the technically efficient ways of combining inputs to produce output. If the consumer decides that one bundle is better than another bundle then the utility for the preferred bundle will be higher than the utility for the other bundle. for example. (iv) The behavioural assumption that consumers do the best they can for themselves. u  u x1 . If bundle 1 is at least as good as bundle 2 then the utility for bundle 1  the utility of bundle 2. x 2  there is an associated value of u which is unique. u x1.x2  20 x12 x22 1 1 or u x1 . worse than. suppose that the consumer consumes x1 of good 1 and x 2 of good 2 and u is the total utility (or satisfaction) derived from such consumption. The utility function u is a function of two variables x1 and x 2 i. x 2   2 ln x1  ln x 2 Example 1. x2  so that for each pair of values  x1 . which rank different bundles of goods by the satisfaction or utility they provide. a production function (i) specifies the maximum output that can be produced from any given amount of inputs where an input (or factor of production) is defined as any good or service used to produce output. To further illustrate.e.

and A are constants such that A > 0. As can be seen it is a non-linear function of k and l . k is the capital input. Q or y  f l . raw materials. l is the labour input.Examples of factors of production are labour l. technology (including information technology). Example Q  f l . k   25l 2 k 1 1 4 6 .  .  . defined by. This production function relates the production output to the amount of capital input and the amount of labour input. A well-known production function is the Cobb-Douglas production function. k   A l  k  where Q or y is the production output. enterprise. land. physical capital k (buildings and machinery). 0 <  < 1 and 0 <  < 1.

we avoid the problem of finding the square root of a negative number when x  1 . places.6 (i) 25  22  4 (ii) 23 2.1 Rules for handling such functions Rule 2.2. 2.5 and the index or exponent is 1 .5 1 1 4  2.5 1 12  1. which is a constant function (i. you subtract the indices or exponents ax  ax  y y a Examples 1. Here the base is 2 and the index or exponent is 3. we get ax  a x  x  a 0  1 and ax a x  a0 x  a0 1  ax ax 7 .718281828.7066 to 4 dec. The base a is the constant part of the function and the index or exponent is the variable part of the function.2: Dividing exponential functions To divide two exponential functions with the same base. then the function e x is called the natural exponential function. 2.g.2.1: Multiplying exponential functions To multiply two exponential functions with the same base. ax.5 3 1 2. There are two reasons why we have these two restrictions on the value of a. 3 If the base is e where e  2. Here the base is 2. Note that the index can be a positive or negative whole number or a positive or negative fraction. (i) (ii) 2 3 . Given the function a x .2.5 3 .5 (i) 23.5 13 . Rule 2.e its value is constant) rather than an exponential function.0793 to 4 dec. you add the indices or exponents. They are: (i) (ii) By permitting a > 0.5 4 1  2.5 7 12  1. If you apply Rule 2. ay  ax  y Examples 1. e. a is called the base and x is called the exponent or index. places. we exclude f  x   1x  1 .24  27  128 (ii) 2. 2 By not permitting a = 1. EXPONENTIAL FUNCTIONS Exponential functions are functions of the form f  x   a x where a  1 and a > 0.

8 (i) 23   212  4096 4 (ii) 2.7 ax  a    bx  b  x x N.g.4 a 1 x xa  a = the square root of a (ii) a  3 a = the cube root of e.0625 24 2  1 and Rule 2. (i) a a. Please avoid the following errors! WRONG : WRONG : WRONG : a x . b y  ab x y x y a x .5 a x y  ax   3 2 1 y  a x or a y x y Examples 1.3: Powers of exponential functions To raise an exponential function to a power. 1 2 Examples 1.9 (i) 4 1 2 1 3  4 = the square root of 4.so a 0  1 and a  x  Examples 1. You cannot combine exponential functions if both the base and the exponent or index are different. ax 2 4  1  0.B.6 a x .3 or 16 2  163  4096  64 Now suppose you have two exponential functions with different bases but the same exponent or index. (ii) 27 Rule 2.5   2. b y  ab  xy ax  a    by  b  8 .10 16   16   64 3  a   3 1 y     x  a y x using Rule 2. The following two rules apply : Rule 2. multiply the index or exponent by the power a  x y  a xy Examples 1.7 0 1 for any a. b x  ab Rule 2.25 1 3 6 2 1 3 Rule 2.  3 27 = the cube root of 27.5  6.

2 Graphs of exponential functions f  x   a x and f  x   a  x where a > 1 Below is Fig.2: Exponential Curves Exponential curves 9 8 2 to the power x 2 to the power -x 7 6 5 4 3 2 1 0 -4 -3 -2 -1 0 x 1 2 3 4 9 .2.2 which is a graph of f  x   2 x and f x   2 x for  3  x  3 : Figure 1. 1.

a logarithm is simply the power (such as 2) to which the base (such as 3) must be raised to give a particular number (such as 9). 3. Also note that (1. So we can write 9  32  log 3 9  2 and log 3 9  2  9  32 We can write this as follows : 9  32  log 3 9  2 . Consider the function ln f  x  then ln f  x  is defined for f  x   0 and for f  x   0 it is not defined. then the power or index 2 can be defined as the logarithm (or log for short) of 9 to the base of 3. The natural logarithmic function is a function involving “ln” e. In general.1 LOGARITHMS AND LOGARITHMIC FUNCTIONS What is a logarithm? Suppose that we have two numbers such as 9 and 3 which are related by the equation 9 = 3 2 . we can write y  a x  log a y  x (a  0.g. Here are some facts and numerical values worth memorising.. you can omit the brackets. so ln 2 and ln (2) are the same.3. a  1 so y > 0) (1.2 ln   g  y    ln f  x   ln g  y     and ln f x   ln g  y   ln f x  gy 10 . 3. ln 1  x  .1) can be written equivalently as y  a x  a log a y If the base of the logs is e.2 Rules governing logs Rule 3. In other words.1) which states that the log of y to the base a ( written as log a y ) is the power to which the base a must be raised to give the value y. ln 1  x  . then log e y is written as ln y and is known as a natural log. (2) ln 1 = 0 (3) ln(e) = 1 Where there is no ambiguity. ln x .1 ln  f  x g  y   ln f  x   ln g  y  and ln f x   ln g  y  = ln  f  x g  y   f x   Rule 3.

5 -1 -1.3: Logarithmic curves Logarithmic functions (1+x) and ln x 2...8  x  8 : Figure 1.. Natural Exponential functions For all values of x.. for  1  x  1 only 2 3 4 So for small x.5 -3 x 0 1 2 3 4 5 6 7 8 9 ln(1+x) ln x 3......3 ln f  x   z ln f  x  z and z ln f  x  = ln f  x  z 3... 1  x   e x Logarithmic functions x2 x3 x4    ... natural exponential and logarithmic functions Exponential functions For all values of x.. a x x ln a 2   x ln a 3  ..5 2 1..4 Series forms of the exponential..   1  x ln a  2! 3!  r 0  x ln a r r! .   2! 3! r 0 r ! So for small x (1 + x) is approximately the same as e x i. ln 1  x  is approximately the same as x i.Rule 3.e.3 is a graph of f x   ln x and f x   ln 1  x  for  0.5 -2 -2. ln 1  x   x ln 1  x   x  11 . 1..3 Graphs of natural logarithmic functions Fig.5 1 0..5 0 -2 -1 -0.. ex  1 x   x2 x3 xr   .e....

3.6 ln f  x   ln f  x   ln g  y  ln g  y  ln  f  x   g  y   ln f  x   ln g  y  e x y  e x  e y Connection between the exponential and logarithmic functions The exponential function f (x) and the logarithmic function g(x) are called inverse functions since f g x  = g  f x   x . e ln x = exp ( ln x ) = ln e x = x Consider the function f  g  x  Start with x and log it  ln x Now exponentiate it  eln x or exp(ln x) End up where you started  x Consider the function g  f  x  Start with x and exponentiate it  eln x or exp(ln x) Now log it  ln e x End up where you started  x 12 . i. y   t 1  Since ln 1  g t  is approximately g t (the approximation improves the smaller the value of g t ). Common mistakes Below are three very common mistakes made by students: try to avoid them! WRONG : WRONG : WRONG : 3.2) Taking logs to the base e of both sides of equation (1.2)  y  ln 1  g t   ln  t   ln yt  ln yt 1 .5 Application of the result ln 1  x   x The growth rate (g) of a variable (y) at date t can be defined as y t y  y t 1 y  t  t 1 y t 1 yt 1 y t 1 yt 1  gt  yt 1 gt  so (1. the growth rate can be written as the change in the log of y between period t – 1 and t. The percentage growth rate is simply 100 g t .e.

Suppose the limit of f (x) as x  x  is L and the limit of f (x) as x  x  is L . Generally x can approach x from the left where x < x ( i. then we say that x x  lim f x  = lim f x  = L . These may not be equal. 4.e.B. As x  1 . We call L the left-side limit of f (x) and L the right . If they are not equal then we say the limit of f (x) as x  x does not exist. then we say that the limit of f (x) as x  x exists and we write lim f x  = L. x x 13 . Example f x   ln 1  x  with x  1.4 on page 17 for an example of this. x  x  ) or it can approach x from the right where x > x ( i. Some textbooks write (a) x x lim f x  =  or (b) lim f x  =   which effectively x x says that f (x) does not have a limit. x  x  ). Mathematically we can also write (a) as follows .4.1 LIMITS What is a limit? Suppose that we are interested in finding the limit of any function f (x) as x  x where x is a finite real number. x x N. ln 1  x    . As x  x the function f (x)   .side limit of f (x). This means that f (x) will assume ever – increasing values as x  x .e. L must be a finite number. This means that f (x) will assume ever – decreasing values as x  x . If they are equal so that L = L = L. See Fig. Mathematically we can also write (b) as follows . If a function f (x) has a limit L as x  x . 1. As x  x the function f (x)   .

008 2.6521 0. so Consider now the same function as and f (x) as x  2  .6466 0.6461 0.64706 0.6373 0.6571 0. f x   0.00001 2.6624 0.Example 1.999999 x  2 .64706 to 5 d.64703 0.64706 to lim f x   L  0.98 1.94 1.6421 0.96 1.64708 0.004 2.02 2.996 1.6445 0. x 2 14 .6468 0. x 2.64706 to 5 decimal places so lim f x   L  0.6473 0.998 1.6451 0.994 1.64706 Again it can be seen that as x  2  . f (x) 0.9999 1.99 1.11 x3  3 Consider f x   2 as x  2  .6481 0.06 2. Below is a table of values of x f (x) 0.01 2. 2x  4x  1 x 1.04 2.6325 0. see that as  5 decimal places. Below is a table of values of x and f (x).000001 x  2  .992 1.006 2.6496 0.p.6486 0.64706 to 5 decimal places.6476 0.6456 0.0001 2.002 2.999 1.6491 0.001 2.99999 1.64706 0.64706 You can x 2 f x   0.

42 4 Notes continued In certain cases. In fact we will show later on in this x 2 chapter (see Example 1.p.p.64706 to 5 d. even if x is not a value x can take. For example when considering the limit of f (x) as x   . then we say that the limit of f  x  as x  0 exists and we write lim f x  = 0.Note that L = L . In fact we can legitimately talk about and find the limit of f (x) as x  x .64706 to 5 d. get closer and closer to x . only the right-side limit L needs to be considered since one can only approach   from the right. Below is an example of evaluating the limit of f (x) as x   . So how do we do this? Solution Method 1 By substitution Let 6  x  y then x  6  y and lim 2 2 x 2 6 x 2 = lim y 2 2  x    y2  2 2  6  y2  = lim y 2 y2 = y2  4 y 2 lim y2 = lim  y  2 y  2 y  2 1 1 = . Example 1. When finding lim f x  we only let x tend to x i. This is illustrated in Example 1. If we are considering the limit of f (x) as x   . Evaluate lim f x  .17) that lim f x  = lim x 2 x 2 x3  3 11 = which is 2 2 x  4 x  1 17 0. If in this case we were to let x = x .12 Suppose that f  x   6 x 2 where x  2 .  y  2 4 Method 2 By inspection 6 x 2 = 2  x   6 x 2 6 x 2 6 x4 2 x  = 2  x ( 6  x  2 2  x ( 6  x  2) 2  x ( 6  x  2)   = 1 so lim x 2 6 x 2 6 x 2 = lim x 2 2  x  1 = 6 x 2 1 1  . f (x) would not be defined. x 2 2  x  Solution Clearly f (x) is not defined for x = 2. 15 . since this would involve dividing by 0. only the left-side limit L needs to be considered since one can only approach  from the left. Here x = 2 and we cannot evaluate the limit of f (x) as x tends to x by letting x = x . x x Generally speaking we do not let x = x .e.12 below. only one of the limits needs to be considered.

An asymptote is a line which a curve approaches but never touches or intersects. Example 1.71827 1000000 1000000 or 10 6 1   1   1000000   2.14 x  x  lim a x  0 . This means that the negative x .25 3 2.71828 10000000 10000000 or 10 7 1   1   10000000   2. Overleaf is a table of values of x  f x  as x increases from 1 to 10000000 or 107 : 1  1   x  x x x 1 2 3 10 100 or 10 2 f(x) 2 2 1  1   1  1  1   2  1  1   3  1 2.Examples 1.70481 1000 1000 or 103 10000 or 10 4 1   1   1000   2.71815 100000 100000 or 10 5 1   1   100000   2.59374 100 1   1   100   2. (2) lim a  x  0 which means that the positive x-axis is an asymptote to the exponential curve f x   a  x .71692 10000 1   1   10000   2.37037 10 1  1   10   2.axis is an asymptote to the 1  Consider the function f  x   1   as x   .13 (1) exponential curve f  x   a x .71828 16 .

We can use the rule of dominant terms.15 Find (i) x  lim x  4x2  3 9x2  4x  1 (ii) lim x  4x2  3 9x2  4x  1 x  Solutions (i) Using the rule of dominant terms x  lim x  4x2  3 9x  4x  1 2 = lim x  4x2 9x 2 x  = lim x  x  2x x  lim x   3x 3x taking the positive square roots as x is approaching  . So the limit of f  x  is e as x approaches infinity. the function f  x  is getting closer and closer to the exponential constant e. x   x x Rule of dominant terms in determining limits Suppose we have a rational function f x   x  lim f x  or x  x  h x  and we want to find g x  lim f x  . x  So lim f x  = lim Do min ant terms in h x  . 1  As x   . x  x Mathematically we can write it as follows : In fact we can define e as  1 lim 1   .As x increases. So lim x  4x2  3 9x2  4x  1 x  = lim x  x   2 x  3x = lim  lim  1   1  3x  x    3x  x  17 . Do min ant terms in gx  Example 1. So lim (ii) x  4x2  3 9x2  4x  1 x  = x  lim  1 1  . 1    e . x   x x  1 lim 1   = e. 3 3 Using the rule of dominant terms x  lim x  4x2  3 9 x2  4x  1  lim x  4x2 9x2 x  = lim x  x   2 x   3x  taking the negative square roots as x is approaching   .

18 . x x Theorem 1.5 (quotient limit theorem) Provided L2  0 . x x x x Theorem 1. Then lim  f x   L1  .4 (product limit theorem) lim g x ..e the limit of a sum/difference = the sum/difference of the limits. x x Example 1. x x x x Theorems involving two functions Suppose that the two functions of x are g x  and h x  ..e.2 Limit Theorems Theorem 1.1 involving one function Suppose that f x  is a polynomial of degree k i. hx    lim g x  ... f x   a0  a1 x  a2 x 2  .ak x k then lim f x   f x  = a0  a1 x  a2 x 2  . ak x k . Theorem 1.  lim hx   L1. lim x x g x   h x  x x lim g  x  x x lim h x   L1 L2 i.4.e.16 Find x 2 x 2 lim f x  where f x   4  5 x  7 x 2  2 x 4 4 Solution lim f x  = f 2  4  5(2)  7(2) 2  22 = 18 Theorem 1.... Further suppose lim g x   L1 and lim hx   L2 where L1 and L2 are finite numbers.3 (sum-difference limit theorem) x x lim g x   hx   lim g x   lim hx   L1  L2 x x x x i. The limit of a quotient = the quotient of the limits provided the denominator of the quotient is non-zero.2 k k Suppose lim f x   L1 where L1 is a finite number..e the limit of a product = the product of the limits. L2 x x  x x      i...

x 2 lim g x   lim h x  x  2 lim x3  3 11 x3  3 x 2  . Let h x   2 x 2  4 x  1. so using Theorem 1.1.5.17 Show that lim x 2 x3  3 11  . then h x  is a ploynomial of degree 2.  2 2 lim 2 x  4 x  1 17 2x  4x  1 x 2     19 . x 2 lim g x  = g 2  23  3  11 .1. x 2 2 lim h x   h2  22  42  1  17  0 so using Theorem 1. then g  x  is a ploynomial of degree 3 so using Theorem 1. 2 2 x  4 x  1 17 Solution Let g  x   x 3  3 .Example 1.

i. In particular if we have a function f x  then we can draw a graph of it.5 x 2 2.e. Mathematical definition A function f x  is said to be continuous at a point x if (a) f is defined at x (b) x x lim f x   f x  .1 SOME IMPORTANT APPLICATIONS OF LIMITS Continuity We can represent a function of one variable by a two-dimensional graph.5 20 .5 1 1. Given the function Figure 1.  5x  2 2  x  3 Is f x  a continuous function? No because there is a jump in the function at x = 2.18 f x   2 x 2 0 x2 where 0  x   . On the other hand discontinuous functions have " jumps" in them.5. Condition (b) actually means that lim  f x   lim f x   f x  . 5. Continuous functions f x  are ones whose graphs "do not have jumps". The exponential and logarithmic functions are continuous functions.5 3 3.4: A discontinuous function A discontinous function 18 2 (xsquared) 5x + 2 16 14 12 10 f(x) 8 6 4 2 0 0 0. graphs that one can draw without removing pencil from paper. x x x x Example 1.

and an upwards sloping supply curve. x 3 x 3 x 3 7  2x x  3 x  16 7 Also lim f x   lim Hence condition (b) does not hold either and we find that f x  is discontinuous at x  2.5 . This violates condition (a). x  0 . S : Figure 1. (c) S D QUANTITY (a) (b) 21 . Suppose we have a downwards sloping demand curve.19 Suppose the function f x  is defined as follows.Mathematically lim f x   lim 2 x 2  8 whereas lim 5 x  2  12 and so x 2 lim f x   lim f x  so condition (b) is violated.5 2x  5 resulting in f x  being discontinous at x  2. 1 1 1 1 1  whereas lim f x   lim   f 0  . f x   and this is not defined when 2x + 5=0 i.5 .. Example 1. x 2 x 2 x 2 x 2 Example 1.  1 if x  0  2x  5   1 f x    if 0  x  3 7  2x   1 if x  3  2  x  16 1 If x < 0. D S PRICE D S .20 The most important application of continuity is in ensuring that demand and supply curves cross to give an equilibrium price. x 0 x 0 x 0 2x  5 x 0 7  2x 5 7 5 1 1 1 and lim f x   lim  1  f 3 whereas lim f x   lim 2    1.e. D. . x  3 and x  4 . Similarly f x  is not defined when x  4 so f x  is discontinuous at x  4 .5: Supply and Demand PRICE D p* S q* D QUANTITY S PRICE D p* S q* . when x  2.

. Both demand and supply curves are continuous. perhaps. so f x  is a continous function. 22 .2 Continuity theorems Theorem 1.With case Fig.ak x k and Also f x  is defined at x so using the mathematical definition of continuity.e.1.21 Assuming the demand curve is dwonward sloping and the supply curve is upward sloping as in Example 1.7 The sum/difference g x   hx  is continuous at x . for example. but the result may... 5.e. From Limit Theorem 1..5(b)) then they may not cross. Diagram (c) illustrates a supply and discontinuous demand function that have an equilibrium. f x  is continous at x . In case (b) there is no equilibrium price. continuity of the two curves is a sufficient condition for an equilibrium but it is not a necessary condition because as in case (c) . quantity demanded > quantity supplied).20. Example 1.. 1. however. (2) A sufficient condition guarantees the result. the demand curve is discontinuous but we still have an equilibrium where the demand and supply curves intersect. quantity demanded < quantity supplied) but lowering the price by any amount (no matter how small) leads to excess demand (i. the market can clear.5(a) we see that the demand and supply curves intersect and at the (equilibrium) price p*. if f x  is a polynomial of degree k then f x   a0  a1 x  a2 x 2  .. Suppose that g x  and h x  are continous at x .. Necessary and sufficient conditions (1) A necessary condition is something which must hold for a result to follow. one of the curves is not continuous or discontinuous (as the demand curve in Fig. follow even if the condition is not satisfied. This is true for any x .. then Theorem 1. x x lim f x   f x  = a0  a1 x  a2 x 2  . If. ak x k .. Theorems involving two functions. there is excess supply (i.. 1. At p*.6 (involving one function) All polynomials are continous functions.

x3  2 x 2  3x  9 where    x   . so it is a continuous function and Solution f x   x x lim hx   hx   x 4  2 . Suppose in the second sketch.Theorem 1. Example 1. h x  is continuous at x .8 The product g x  . h x  Since g x  and h x  are continous at x . Figure 1.6: Tangent and Slope f(x) slope = b f(x) tangent to graph at x f(x) x - f(x) x x (i) (ii) 23 . If you now apply the Limit Theorems 1. f x   g x  is continuous at any x where    x   so g is a continuous function.3 Suppose we sketch the curve f x  twice and in the first sketch draw a chord on the curve from x = x to any point x (see Fig. lim g x   g x  and x x lim hx   hx  . Also x 4  2  0 for any x .5 in section 4.6(ii) below).6(i) below). provided hx   0 . 1.9 The quotient g x  is continuous at x . The function h x  is a polynomial of degree 4. Theorem 1. we draw the tangent to the curve f x  at x = x (see Fig. hence using Theorem 1. 1. x4  2 g x  where g x   x3  2 x 2  3x  9 and h x   x 4  2 h x  Now g x  is a polynomial of degree 3 and so it is a continuous function.9.2 x x you get the above results following quite quickly. h x  Concept of differentiability for functions of one variable (univariate calculus) 5.3 – 1.21 Given the function f x   show g is a continuous function.

1.B. but it gets very close to 0.Suppose the chord through ( x .6(i) and x  x 0 x x lim b  lim f df or f x   x dx x  x N. The limit L is also the slope of the tangent at x  x .e. f x  . Alternatively in Fig 1.  x never equals 0 as you cannot divide by 0. If f is differentiable at all x then we say f  x  that is differentiable and we denote the derivative by f (x).6(i) ) where b  f  x  f  x  .6. then f = the slope of the chord in Fig. Suppose that lim x x x x xx xx Suppose that lim exists and this limit = L then we say that f is differentiable at x and L = the derivative of f at x  x i. As x  x . We can write it mathematically several equivalent ways as follows: (1) (2) (3) As x converges to x . b  f  x  .6(a). and the slope b gets closer and closer to the slope of the tangent at x (which is f ( x )). Examples of differentiable and non-differentiable functions 24 . f  x  ) and (x. then b is a function of x ( x  x ) so as we change x . x  x If x is fixed. b changes. b converges to f   x  . 1. as x gets closer and closer to x . f  x  ) has slope b (see Fig. For the function f graphed in Figs. f ( x)  f ( x ) lim b  lim  f ( x ) x x x x (x  x) f x   f x  f x   f x   L and lim  L x x x x x x x x f  x  f  x  f  x  f  x  then lim exists only if L  L . the chord gets closer and closer to the tangent to the graph of f at x . let b x  x    x and f  x   f  x    f . 1.

Figure 1. The gradient suddenly changes from 0 to  2 at x = 2 . If the gradient of a function is continuous then the function is differentiable.5 4 4. Fig 1.5 1 1. so when x = 2 the gradient of g x  is 0.5 3 3. but for x  2 the gradient is  2 .5 25 .5 5 f(x) Gradient of f(x) (b) A non-differentiable function g x   x4  x   8  2x 0 x2 x2 For 0  x  2 the gradient of g x  is the same as that of f x  .5 2 2.A differentiable function f x   x4  x   4 x  x 2 x0 Its gradient is f x   4  2 x and the gradient changes continuously. Fig.5 .7 overleaf shows f x  and its gradient for 0  x  4.8 overleaf shows its gradient for 0  x  4. 1.7: Function and gradient Function f(x) and its gradient 5 4 3 2 1 0 0 -1 -2 -3 -4 -5 -6 x 0. 2 4 x  x 2 4  x  2 g x   g 2  lim  lim  lim  x  2  0 x 2 x2 x2 x2 x 2 x2 Now lim x 2   x 2 lim 8  2 x   4  lim 22  x   lim  2  2 g x   g 2  lim x 2 x 2 x  2 x 2  x2 x2 As these two limits are not the same we can say that g x  is not differentiable at x = 2. Hence the gradient of g x  does not change continuously but is discontinuous at x = 2.

d ln 1  x 2 2x  dx 1  x2      (4) d a x   a x ln a dx e.  g  x  e dx dx f  x  d ln f  x  = f x  dx      4xe 2 2x2 (3) e.g. x n dn 26 .5 5 -2 -3 x Important note If the gradient of a function is discontinuous at x  x .5 4 4. dx dx (2) d e gx d e2 x g x e.8: A non-differentiable function Gradient of g(x) 5 Gradient of g(x) for x between 0 and 2 Gradient of g(x) for x between 2 and 4. d 3x  3x ln 3 dx   (5) Using (4) .5 2 2. then the function will not be differentiable at x  x .g. Derivatives of standard functions (1) d xn dx   = n x n1 for all values of n From this follows that d c  d cx 0    0 so differentiating a constant c gives 0.Figure 1.5 4 3 2 1 0 0 -1 0.5 1 1.5 3 3.g. d x n   ln x .

g =g (x). A very common mistake that students make is the following: d xn WRONG :  nx n 1 dn Clearly this is just muddling up cases (1) and (5) from above.Note that the function being differentiated in cases (1) and (5) is x n . In case (5). it is just a number.e g  g  f  and f is a function of x. dx n Properties of differentiable functions Let f = f (x). The derivative may or may not be differentiable itself but if it is then we can differentiate to obtain the second derivative of the original function.e. such as “2”) and seeing how x n changes when x changes. i.   Second and higher order derivatives The derivative of a function f  x  is itself a function of x. the nth derivative of f  x  is denoted by f n  x  or . u= u (x) and v = v (x) where a and b are constants. it is the other way around: we are treating x as a constant and seeing how x n changes when n changes.e f  f x  then g can be considered to be a function of x also. Differentiating a sum of two functions d au  bv  du dv a b dx dx dx Differentiating a product of two functions (called the product rule) d dv du (uv)= u +v dx dx dx Differentiating a quotient of two functions (called the quotient rule) d  u   dx  v  v du dv u dx dx 2 v  Function of a function rule or simple chain rule Suppose g is a function of f i. In case (1) we are treating n as a constant (i. dx 2 d3 f We denote the third derivative of f  x  by f  x  or dx3 dn f Similarly. d2 f We denote the second derivative of f  x  by f (x) or . If g  g  f x  then 27 .

This implies that if any function is discontinuous at any point.18 the function 28 . f  (x) or dg dg df  .1 If f (x) is differentiable at x . f x   2 x 2 0 x2  5x  2 2  x  3 where 0  x   . C = the set of continuous functions and D = the set of differentiable functions.23 In Example 1. C  S and D is a sub-set of C i. is discontinuous at x = 2 so we know from Result 1.g  x  = g'( f ( x )).e. Example 1.22 Differentiate (i) f x   3 ln 1  x3  21 2 x    (ii) g t   Solution (i) f  x   Solution (ii) g t   3t (1  2e3t ) 2 3(3x 2 ) 9x2 3  241  2 x   2   161  2 x 3 3 3 (1  x ) 1 x   6t (1  2e )  3t ( 6e ) 6t (1  2e3t )  18t 2e3t  (1  2e3t ) 2 (1  2e3t ) 2 3t 2 3t Result 1. Then C is a sub-set of S i. Let S = the set of all functions. D  C . dx df dx 4 Example 1.1 that f x  is not differentable at x = 2. then it will not be differentiable at the point of discontinuity.e. then it is continuous at x . since the function is not in set C so cannot be in set D.

it is called the first order partial derivative of f  x1 . x3   f x1. x2 . We denote this by: f x1. x3   sx2  then using univariate calculus we can define the derivative of sx2  at x2  x2 as follows : sx1   lim f x1. x3   f  x1. x2 . x2 . We denote this by: f  x1 . x3  is a function of x1 only. x3  or f 2 x1. x2 . x2 . x2 . x3  x1 Similarly we can define and calculate the first-order partial derivatives of f  x1 . x2 . x3   r x1  then using univariate calculus we can define the derivative of r x1  at x1  x1 as follows : rx1   lim f x1. x 2 . x 2 . x2 . x3  r x1   r x1  = lim x1  x1  x  x  x1  x1 x1  x1  1 1 If this limit exists. x 2 . x 2 . x 2 29 . x3  sx2   sx2  = lim x2  x2  x  x  x1  x1 x2  x2  2 2 If this limit exists. x3  is a function of x 2 only. x2 . x3  . x3  is a function of 3 variables. Suppose we let f x1.5. x3  with respect to x 2 evaluated at  x1 . x3  with respect to x1 evaluated at  x1 . it is called the first order partial derivative of f  x1 . x2 . x 2 . x 2 . x3  with respect of x 2 as follows: We fix x1 at x1 and x3 at x3 and allow only x 2 to vary so f x1 . x2 .4 Concept of a partial derivative (multivariate calculus) First-order partial derivatives If f  x1 . x3  . Suppose we let f x1. x2 . we can hold any two of the variables fixed and consider the behaviour of f as a function of the third variable alone. For example we can fix x 2 at x 2 and x3 at x3 and allow only x1 to vary so f x1 . x3  . x3  or f1 x1.

x3  or x3 f3 x1. these become: 2 xi  xi  xi   or f ii f ij 30 . x3  with respect of x3 as follows: We fix x1 at x1 and x2 at x2 and allow only x 3 to vary so f x1 ..... x3   t x3  then using univariate calculus we can define the derivative of t  x3  at x3  x3 as follows : f x1... xn  being themselves functions of x1 .. x3  is a function of x 3 only....... x2 . We denote this by: f  x1 . x2 . x2 . x3  In general.. x3 . x2 ..... x2 ... x 2 ... evaluated at  x1 ..... x2 .... xn  has n first-order partial derivatives: f1 x1.. xn  with respect to xi and x j by: 2 f   f     xi x j xi  x j    2  f   f    or  If i = j ... x2 ... x3 .. x2 . Suppose we let f x1. x3  t x3   t x3  = lim t x3   lim x3  x3 x3  x3  x  x  x3  x3  3 3 If this limit exists.. x 2 .. x3 . f 2 x1. x2 . xn can also be partially differentiated to yield higher order partial derivatives. x3  .. x2 . it is called the first order partial derivative of f  x1 .. x2 ... a function f x1.. x2 . xn  or f3 x1.. x3 . x3  with respect to x3 .Similarly we can define and calculate the first-order partial derivatives of f  x1 . x2 . xn  or . We denote the second order partial derivative of f x1 . xn Second order partial derivatives The n first order partial derivatives of f x1.. x3   f  x1.. x2 . x2 .... x3 . x3 . x3 …………… f n x1.. xn  or f .. x1 x2 f . xn  or f f .

f12  f13  2 f   f    f  2 f        f 21 . 3 6 ( x2 constant in both differentiations) 1 2 2  5  116 2 3 5 11 2 x2 =  x1 6 x2 3 . x1x3 x1  x3  x1  x3  x3x1     2 f   f    f  2 f      f 23    f 23 . the other variables remaining constant. Examples Suppose that f  x1 . x2   4 x1 6 x2 3 . x 2 . only one variable is allowed to change at any one time. i.Examples Suppose that f  x1 .    x1 3 6 9 Keeping x1 constant and allowing x2 to vary.e. 2 f   f    or  2 x2 x2  x2    f 22 . x3  is a function of 3 variables. 2 f   f    or  2 x3 x3  x3    f33 It is almost always the case that the order of taking second order partial derivatives does not matter. 2  56 23  1  5 2 f1  4  x1 6 x2 3 = f11  x1 x2 . Solution Keeping x2 constant and allowing x1 to vary. Find the first and second order derivatives when x1  2 and x2  3 . 2 f 2 f  xi x j x j xi or f ij  f ji for all i and j. x 2 . f 22     x1 6 x2 3 =  x1 6 x2 3 3 3 3 9 3 ( x1 constant in both differentiations) Cross-partial derivatives 31 . x1x2 x1  x2  x2  x1  x2x1     2 f   f    f  2 f        f31 . x3  is a function of 3 variables. x2x3 x2  x3  x3  x2  x3x2     Important note In partial differentiation.24 Suppose we have a production function given by f x1. 2 f   f    or  2 x1  x1  x1   f11. 8  1  1 4 8 1 1 8 1 4  2 1 1 f 2  4  x1 6 x2 3 = x1 6 x2 3 . Example 1. Where i  j these are also known as cross partial derivatives.

23060 . 9   Example 1. x and z stay constant. 9 To 5 dec.3  2   56   23   2   3   0.  9   4 8  1 6    13  8 1 f 2 2. 9 ( x2 constant in this 2nd differentiation) Or f 21    f    2  56 23    =  x1 x2  x2  x1  x2  3    = 4  5 6  13 x1 x2  f12 . y.25 Find all the first-order and second order partial derivatives of f x. 2 2 2 2 f y  2 xe 2 xy   4 x 2 z 3 and f yy  2 x  e 2 xy  2  4 x 2e 2 xy  2 y y y 32 . 3   11   2  5 f112. y and z stay constant.    3 9     4   5 6    13  f12 2.17295  f 212.3   2   3  = 2. places.3  =   2 6   3 3   0.32428 .f12    f    8 1 6  13    =  x1 x2  x1  x2  x1  3    = 4  5 6  13 x1 x2  f 21 .3    2 6   3 3   0. z   e 2 xy  ln x  ln y 2  4 x 2 z 3 y  e 2 xy  ln x  2 ln y  4 x 2 z 3 y Let x vary.07539. f1 2. f 22 2. y. z   e2 xy  ln xy 2  4 x 2 z 3 y Solution f x. 1 1 1 2 f x  2 ye2 xy   8 xz3 y and f xx  2 y  e2 xy  2  8 z 3 y  4 y 2e2 xy  2  8 z 3 y x x x ( y and z constant in both differentiations) Cross-partial partial derivatives f yx and f zx    1 2 xy 3   fx   (x and z constant in this 2nd  2 ye   8 xz y  y  x y  differentiation)  2e2 xy  2 x 2 y e2 xy  8 xz 3  2e2 xy  4 xye 2 xy  8 xz 3 f yx   1  2 xy 3  ( x and y constant in this 2nd  fx    2 ye   8 xz y  z  x z  differentiation)  2e2 xy  2 x 2 y e2 xy  24 xz 2 y  2e 2 xy  4 xye 2 xy  8 xz 2 y f zx  Let y vary.77827.3 .3   2   3   0.

it is a good idea to check that the cross-partial partial derivatives are equal. x and y stay constant.( x and z constant in both differentiations) As f is quite complicated. f z  12 x 2 z 2 y and f zz  24 x 2 zy ( x and z constant in both differentiations) It is a good idea to check that the cross-partial partial derivatives are equal. so we will calculate f xy and f zy next. Cross-partial partial derivatives f xz and f yz   fz   x differentiation) f xz    fz   y differentiation) f yz   12 x 2 z 2 y  24 xz 2 y  f zx x  12 x 2 z 2 y  12 x 2 z 2  f zy y   (y and z constant in this 2nd   (x and z constant in this 2nd 33 . Cross-partial partial derivatives f xy and f zy    2   2 xe 2 xy   4 x 2 z 3  (y and z constant in this 2nd fy    x  y x  differentiation)  2e2 xy  2 x 2 y e2 xy  8 xz 3  2e2 xy  4 xye 2 xy  8 xz 3  f xy f xy      2   2 xe 2 xy   4 x 2 z 3  fy    z  y z  differentiation)  12 x 2 z 2 f zy    (x and y constant in this 2nd Let z vary.

We can write this as follows: d F  x   c   f  x  and  f x  dx = F x   c . dx Now let us integrate the derivative f (x) with respect to x and we get back to (F(x) + c ). Suppose now that we start with the function F(x) + c where c is a constant and differentiate (F(x) + c) with respect to x .  sign is called the integral sign.6. If you differentiate a function once with respect to a particular variable you obtain a derivative of the function. When you differentiate a constant you get 0 d F  x   c  so  f x  . Functions of one variable Generally. dx Now let us integrate the derivative f (x) with respect to x and we get back to F(x). It is a mediaeval „S‟ indicating continuous summing which is basically what integration is. Simple rules of integration (1) xn 1  x dx  n  1  c n provided n  1 . suppose we start with the function F(x) and differentiate F(x) with respect dF to x to give f (x). We can write this as follows: dF  f  x  and dx The  f x  dx = F x  . If you now integrate the derivative with respect to the same variable you get back to the function you started with. dx The constant c is called the constant of integration and all the integrals given above are called indefinite integrals. THE LINK BETWEEN INTEGRATION AND DIFFERENTIATION Integration reverses differentiation. (2)  x dx   1 which extends to d ln x  dx  ln x + c dx f  x  d ln f  x   f x  dx   dx dx  ln f x   c 34 . So f x   and is called the derivative of F.

Generally if b d F  x   c   f x  dx then  f x  dx = F x   c . then the upper and lower limits of the integral become f b  and f a  respectively. x4 Example x2 4 4x  2 x  3e dx or  2x 2 4 4  3e 4 x dx for short. Usually the upper limit is mathematically greater than the lower limit. Examples 1. Definite integrals du  gu du A definite integral is one where the integral has 2 limits.26 (i)  3 x3 dx   3x 3 2 1 3x 2 dx   6 x 2  c ( 1 ) 2 1 35 . the constant of integration cancels out. So  f x  dx  F b   c  F c   c  F b   F a  a If there are limits.(3) e ax dx   ax de  a  dx  e dx ax which extends to  f x  e f x d e f  x   dx   dx  e f  x   c dx a c (4)  g f x f x dx   d g  f x  dx  g  f x   c dx du  f x  and the integral dx which simplifies to One approach here is to let u  f x  so that  g  f x  f x  dx becomes  gu  dx dx and  g u  du  g u   c  g  f x   c . If doing integration by substitution. This is known as integration by substitution. for example letting u  f x  . an upper limit and a lower limit. So with definite integrals we do not need to include a constant of integration.

1 2 1  4 dx  ln 3x 2  4  c 3    (iv)  3e 2 2x  3e 2 x  3 4. places.S.2 4 dx     e  e = 18. then  1 .(ii) By inspection 1  1 d 2 3  (1  x)3 dx   (1  x) dx     2  dx 1  x  dx  1 1 1    1   1  1 3           = 2  21  x  1  32   8  32 3 3 3 3   1   2  21  x  1 3 By substitution Here we are integrating a function of a function so we could du integration by substitution . When x = 3.H. b and c are constants where a < b < c  a c f x  dx   f x  dx   f x  dx a b b c and  a b f  x  dx    f  x  dx b a Integrating a product From earlier in the chapter we have the product rule. dx The L.       2  2 1 3 4 (iii)  (3x 2  4) dx = 3  (3x2  4) dx  3  dx ln 3x 2x 1 6x 1 d 2. u = 4 and when dx x = 1. So 4 4  u 2  1  1   1   1 3 3  (1  x)3 dx   u du   (2)    2u 2  2    32     8  = 32 .1323 to 4 dec. u = 2. 2  2 2   Summarising Differentiate F(x) with respect to x  Integrate dF  f x  dx f (x) with respect to x   f  x  dx  F  x  Other useful results on definite integrals Suppose that a. of the equation becomes uv 36 .1 2.  a b d uv  dx = dx  a b dv u dx + dx  a b v du dx . Let (1 + x) = u. namely d dv du (uv)= u +v dx dx dx Integrate both sides of the above equation with respect to x.

yx xy Now let us integrate the cross-partial derivative f x. Functions of two variables (a) Suppose we start with the function F x. ac bd 2F with respect to x and then with respect to y. y  twice. y  or 37 . y  with respect to y first to give y partially differentiate a second time with respect to x to give 2F . xy (b) Alternatively suppose we start with the function F x. y  is called the cross-partial derivative of F . Further suppose that we F x. note that y is constant. y). In the 1st xy integration with respect to x. The aim of integration by parts dv is to choose u and in such a way that the integral on the R. y  with respect to x first to give or Fx . ca db Or (b) 2F   F      f  x. y). of the above formula.S.S. y  dx dy = F(x. y  . We get back to F x. of the above dx formula is simpler than the integral on the L. y  and partially differentiate F or Fy . once with respect to x and once with respect to y. (a) First integrate f x. yx Let 2F 2F   f x.So the equation is : uv =  a b u dv dx + dx  a b v du dx . 2F   F    f  x.H. y  and partially F differentiate F x. y  and yx y  x    f x. y  . y  and   We can write this as (a) xy x  y      f x.H. Further suppose x 2F that we partially differentiate a second time with respect to y to give . then f x. y  dy dx = F(x. dx Rearranging the equation gives the following result :  a b dv u dx = dx uv b a   v dx dx a b du Integrating a product is called „integrating by parts’ .

d   F a. c  dx  F x. d   F a. c   F a. ca db Notes (1) Multiple integration is basically repeated integration. y  dx dy    f x. Example  ca db f x. note that x is constant. integrating with respect to one variable may be easier than integrating with respect to another variable. c   F b. c   F a. d   F a. y  dx dy =    f  x. y  dx dy   y c  x a    y is constant y  d x b  y  d x b    F        x  y  dx dy     y c  x  a   y d  F    y  dy  xa y c  x b y d =  F b. where you integrate with respect to one variable at a time. d   Fx x. d  y c  F x. y  or  ac bd y d x b  y  d x b    F    F  f x. y  y d y c x b dx = xa x b  Fx x. c   F a. y  dy dx =    f  x. c   F b. y  dy dx . d   F x. 38 . y  y x b xa y d dy = y c  Fy b. (2) The order of the integration does not matter. y  dy  dy     dx   dy  dx      x  y  c  y c   y  c y  x   xa  xa  xa    x is constant x b  y  d x b = xa  Fx x. d   F b. c   F a. ca db  f x. c x  a = F b. c   F b. ac bd (2) can be quite helpful as sometimes during the repeated integration. y  dx dy . c   F b. y   F a. (b) First integrate f x. y  dy  F b. the other variables remaining constant during that particular integration. d   F a. y y  c y d 2F with respect to y and then with respect to x. d  =   f x. d   F b. y   Fy a. In the 1st yx integration with respect to y.

875 . y  dx dy = F x. where you integrate with respect to x first may ca db be an easier integration than integrating with respect to y first i. y  dy dx or vice-versa. 108      27 y 2  1  2 27 y 3  18 y  dy   9 y     2  108  6  y 1 y 1  y 4 Summarising Partially differentiate F(x.27 Evaluate  108 xy2 x  3 y  dx dy 10 y 4 y 1 43 1 1 1 Solution  xy2 x  3 y  dx dy = 108 108 10 1  108 1  108 y 4 x 3 43   x 3 2 2   2 x y  3xy dx  x 0   dy y 4   2 x3 y 3x 2 y 2  1 27 y 2    3  2  dy  108  18 y  2   0 dy  x 0  y 1  y 1  y 4  1  964  1  9 1 916   2   108 9  2   108 432  13. y) twice with respect to x and y  Integrate f x.e finding   f x. ac bd Example 1. Integration reverses differentiation 39 .For example finding   f x. y  . y  dy dx  F x.5  3. y  xy  f x. y  or    f x. y  twice with respect to x and y   2F  f  x. y  dx dy .

Fundamental Methods of Mathematical Economics by A. (ISBN 978-0-273-72216-8): Relevant sections. 5th edition. Published by McGraw – Hill. S. Begg. (ISBN 978-0-470-01856-9): Relevant sections. Chapter 6.C. 40 . Relevant sections. Economics by D. Mathematics for Economics and Business by Ian Jacques (6th edition) Published by Prentice Hall. Published by Mcgraw – Hill. by Teresa Bradley. Chiang. Published by John Wiley.Related reading for Chapter 1 : Essential Mathematics for Economics and Business. Fischer and Dornbusch.

Sign up to vote on this title
UsefulNot useful