DERIVATIVES

Definition- The derivative measures the steepness of the graph of a given function at some
particular point on the graph. It means it is a ratio of change in the value of the function to
change in the independent variable.
A. Standard Results-
𝑑𝑦
1. Y= X n 𝑑𝑥
= nXn-1
𝑑𝑦
2. Y=KX n 𝑑𝑥
= nKXn-1
𝑑𝑦
3. Y=[f(X)] n 𝑑𝑥
=n[f(X)]n-1f `(X)
𝑑𝑦
4. Y=a f(X) 𝑑𝑥
= af(X)log a f `(X)
𝑑𝑦 𝑑𝑈 𝑑𝑉
5. Y=U±𝑉 𝑑𝑥
= 𝑑𝑥
± 𝑑𝑥

𝑑𝑦 𝑑𝑉 𝑑𝑈
6. Y = U. V 𝑑𝑥
= 𝑈. 𝑑𝑥
+ 𝑉. 𝑑𝑥
𝑑𝑈 𝑑𝑉
𝑈 𝑑𝑦 𝑉 −𝑈 𝑑𝑥
7. Y= 𝑉 𝑑𝑥
= 𝑑𝑥
2
𝑉

1 𝑑𝑦 1 𝑑𝑉
8. Y= 𝑉 𝑑𝑥
=− 2 𝑑𝑥
𝑉

𝑑𝑦
9. Y=e f(X) 𝑑𝑥
= ef(X) f `(X)

𝑑𝑦 𝑑𝑦 𝑑𝑈
B. If Y is a function of U and U is a function of X ie Y=f(U) and U=g(X) then 𝑑𝑥
= 𝑑𝑈
. 𝑑𝑥

C. If Y = U p VqWr where U, V, W are functions of X and p,q,r are constants

Then take log of both sides and then differentiate.

D. If the relation between X and Y is in the form f(X, Y) =0 then Y is said to be an implicit
function of X. An implicit function is differentiated term by term.
 𝑑𝑦
QA. Find 𝑑𝑥

1+√𝑋
1. Y= 1−√𝑋

2. Y= a X+Xa+aa+eX
4
𝑋 1
3. Y= 4
+ 4
𝑋
𝑋
𝑒 +1
4. Y= 𝑋
𝑒 −1

𝑑𝑦
Q B &C Find 𝑑𝑥

2𝑋 1−𝑋
1. Find the derivative of 1+𝑋
wrt 1+𝑋
2
𝑥 2
2. Find the derivative of 2 wrt 𝑥
1−𝑥
1
3. Y= 2 2
(Rationalise)
𝑋 +1+ 𝑋 +2
4. Y= Xaloga+ aXXa

𝑑𝑦
QE. Find 𝑑𝑥
for the following implicit functions
−(𝑦+3)
1. xy+3x+2y+y2=0 Answer 𝑥+2+2𝑦
𝑦 𝑥
x y −(𝑒 +𝑦𝑒 )
2. e y+xe =1 Answer 𝑥 𝑦
𝑒 +𝑥𝑒

𝑑𝑦 −1
4. x 1 + 𝑦+y 1 + 𝑥=0 (x≠𝑦) TST 𝑑𝑥
= 2
(1+𝑥)

𝑦 𝑥 𝑑𝑦 𝑥−17𝑦
7. 𝑥
+ 𝑦
=6 TST 𝑑𝑥
= 17𝑥−𝑦

8. 3x+3y=3x+y
 Derivatives of 2nd order
2 𝑑𝑦
𝑑 𝑦 𝑑( 𝑑𝑥 )
2 = 𝑑𝑥
𝑑𝑥

1. If y = ae2x + be3x
2
𝑑𝑦 𝑑𝑦
To prove that 2 −5 𝑑𝑥
+ 6𝑦 = 0
𝑑𝑥

2. If ey+e-x = 2 , show that

𝑑𝑦 2
2
𝑑𝑦 𝑑𝑦
2 + ( 𝑑𝑥 ) + ( 𝑑𝑥 ) = 0
𝑑𝑥

2
𝑑𝑦 𝑑𝑦
3. If y = x2e-3x To prove that 2 +6 𝑑𝑥
+ 9𝑦 = 2e-3x
𝑑𝑥 2
𝑑𝑦
x-y 3
4. If y = e To prove that (1+y) 𝑑𝑥
2
-y=0
2
n n 2n 𝑑𝑦
5. If x y = (x+y) then show that 2 =0
𝑑𝑥
2 −6𝑥
𝑑𝑥 𝑒
6. If Y=e 3x then show that 2 =- 3
𝑑𝑦
2 2
𝑑𝑥 𝑑𝑦
7. If Y=e 3x then show that 2 2 = -3e-3x
𝑑𝑦 𝑑𝑥
 Applications of Derivatives-
𝑑𝑦 𝑑𝑓(𝑥)
I. Slope 𝑜𝑓 𝑦 = 𝑓(𝑥) 𝑖𝑠 𝑑𝑥
= 𝑑𝑥
Problems
1. Find the slope of the tangent to the curve xy=2 at (2,1)
2. Find the slope of the tangent to the curve 2y=ex-e-x at (0,1)
3. Show that the x-axis is a tangent to the curve 3y=x3-3x2 at the origin.
4. Show that the tangent to the curve 8y=(x-2)2at the point (-6,8) is parallel to
3
the tangent to the curve y=x+ 𝑥 at the point (1,4)
5. Show that the tangent to the curve y=2√𝑥 at (1,2) and tangent to the curve
y=-2√𝑥 at (1, -2) intersect at right angles on the line x+1=0

II. Increasing/Decreasing functions

𝑑𝑦
1. If 𝑑𝑥
>0, y=f(x) is an increasing function

𝑑𝑦
2. If 𝑑𝑥
< 0 , 𝑦 = 𝑓(𝑥)𝑖𝑠 𝑎 𝑑𝑒𝑐𝑟𝑒𝑎𝑠𝑖𝑛𝑔 𝑓𝑢𝑛𝑐𝑡𝑖𝑜𝑛

𝑑𝑦
3. If 𝑑𝑥
=0, y =f(x) is steady
 Problems

1. Prove that the function f(x) = x3 – 3x² + 3x – 100 is increasing in R

f'(x) = 3x² – 6x + 3 = 3(x² – 2x + 1)
= 3(x – 1)² > 0. Hence, f is increasing in R.

𝑥
2. Find the values of x for which y= 2 decreases.
1+𝑥

3. Find the range of values of x when y= x3-3x2-9x+15 is

i. an increasing function, ii. a decreasing function iii. a steady function

 III. Maxima/Minima
A. Maxima conditions for y=f(x) at x=a iff
𝑑𝑦
i. 𝑑𝑥
=0 at x=a
2
𝑑𝑦
and ii. 2 < 0 𝑎𝑡 𝑥 = 𝑎
𝑑𝑥

B. Minima conditions for y=f(x) at x=b iff

𝑑𝑦
i. 𝑑𝑥
=0 at x=b
2
𝑑𝑦
and ii. 2 > 0 𝑎𝑡 𝑥 = 𝑏
𝑑𝑥

Note: A local minimum is a point where our function is lower than all
neighboring points. It is not possible to decrease the value of the cost
function by making infinitesimal steps.

A global minimum is a point that obtains the absolute lowest value of our
function, but global minima are difficult to compute in practice.

Problems
1 1
1. Find minima for Y=X+ 𝑋 , X>0 and Maxima for Y=X+ 𝑋 , X<0
−1
−(𝑒)
2. Find the minima 0f Y= X X (answer x=e-1 and Y min=𝑒 )

2 3
(𝑥 −2) +8
3. Find the minima of Y= 3 (answer x=0 and Y min= 6561)
4. If y= x5-5x4+5x3-1, then minima is at x=?
 5. Divide 16 into 2 parts such that their product is maximum. (answer= 8, P=64)
6. The owner of a 80 room hotel can rent all the units at Rs20/night. In order to increase his
income, he decides to increase the rate. However, he finds that for each rupee he raises the
room rate, 2 units will be vacant. How many units should he rent per night and at what rate
so as to maximise his daily income? (Answer x=10)
𝑙𝑜𝑔𝑋
7. Find maxima of Y= 𝑋
, 0<X<∞ (answer x= e and Y max=e-1)

8. Divide 20 into 2 parts such that the product of one of the parts and cube of
other is maximum. Find the 2 parts.
9. Find the maximum or the minimum values or extreme values of 2x3-9x2+12x+6

10. What will be the values of x for the maximum and minimum values
of x3-9x2+24x-12?

11. Find the maximum and the minimum values of

a. 2x2-x3

b. x2-3x+1

c. -20+36x-21x2+2x3

d. -1+12x-9x2+2x3

1
12. Show that the maximum values of x+ 𝑥  is less than its minimum value.

13. Find for which values of x the following function is a maximum or a

minimum:

-2+12x-15x2+4x3

IV Economic Applications
1. Demand function-
If p is the price of a commodity and x is its demand then p=f(x) is called the demand
function. A demand function is generally considered to be in linear or quadratic form and is
given by
P= f(x)=ax+c (Linear function)…….
P =f(x)= ax 2+bx+c(quadratic function)
2. Supply function-
If p is the price of a commodity and x is its supply then p=f(x) is called the Supply function.
A supply function is generally considered to be in linear or quadratic form and is given by
P= f(x)=ax+c (Linear function)
P =f(x)= ax 2+bx+c (quadratic function)

In the goods market, supply is the amount of a product per unit of time that producers are
willing to sell at various given prices
In the labour market, the supply of labour is the amount of time per week, month, or year
that individuals are willing to spend working, as a function of the wage rate.
In financial markets, the money supply is the amount of highly liquid assets available in
the money market.
3. Point of equilibrium-
As the price of a commodity increases, the demand decreases but the supply
increases. At the point of equilibrium, the demand and supply are equal.

The required rate of return is the minimum return an investor will accept for owning a
company's stock, as compensation for a given level of risk associated with holding the
stock. When the required rate of return is equal to the cost of capital, it sets the stage for a
favourable scenario. For example, a company that's willing to pay 5% on its raised capital
and an investor who requires a 5% return on their asset likely would be satisfied trading
partners.
 Problems
1. One of the following curves represents the supply function and the other the demand
function.
2
𝑝
x=25-2p- 3
and p=x-13, where p is the price and x is the quantity. State giving reasons,
which equation is the supply function. Also find the equilibrium price and the quantity
demanded at that price.

2. If the demand and supply curve for computers is:

D = 100 - 6P, S = 28 + 3P

Where P is the price of computers, what is the quantity of computers bought

and sold at equilibrium?

3. The demand and supply function of sugar in a particular zone are known to be linear.
When the price is Rs4/kg then demand is 150 tons and supply is 130 tons. When the price is
Rs5/kg the demand is 120 tons and supply is 140 tons. Find the equilibrium price.

4. Find the equation of linear demand curve for gully cricket tickets, when persons
purchase 1,000 at Rs 5.00 per ticket and 200 at Rs15.00 per ticket. (Answer: the slope
𝑥
of the demand curve is given by -1/80 and the demand curve is p=- 80 +17.5)

5. P = 80 - x (Demand)
P = 20 + 2x (Supply)

Given the above demand and supply equations,

i. find the equilibrium price and quantity.

ii. If the suppliers must pay a tax of Rs6 per unit. Find the new equilibrium
price-inclusive price and quantity.

4. Total Cost function

i. In a production, there are 2 types of costs, fixed (ie rent of factory, capital, investment,
payment of labourers…) and variable cost (cost of raw material….)
C(x) = ax+c
C(x) = ax2+bx+c
ii. Average Cost
𝐶(𝑥)
AC(x)= 𝑥

iii. Marginal Cost

 𝑑𝐶(𝑥)
MC(x)= 𝑑𝑥

Average cost (AC), also called average total cost, is the total cost divided by quantity
produced;
Marginal cost (MC) is the incremental cost of the last unit produced. 

Problems
1. A firm produces an output of x tons of a certain product at a total variable cost given by C(x)
=x3-4x2+7x. Find the output at which the average cost is the least and the corresponding value of the
Average cost.
2. Find the value of x when, AC(x) = 25,000 – 180x + 0.50 x 2, has a minima
3. The total cost C (x) associated with producing and marketing x units of an item is
given by C=3000+30x-0.02x2+0.005x3

Find

a) Total cost when output is 4 units.

b) Average cost of output of 10 units.

c) Marginal cost when output is 3 units.

4. Find (i) the average total cost (ii) the marginal cost function for each of the following
total cost functions. Evaluate them at x = 3 and x = 5.

a. C=3x2+7x+12

b. C=35+5x-2x2+2x3
c. C= 2x2+5x+7

d. C=33+2x-x2+4x3

5. Find Marginal Cost (MC) function from the following average cost AC function 

160
AC= 𝑥
+5+3x+2x2

6. From each of the following Total Cost (TC) function: 

C= 60x-5x2+x3

find:

a) The average cost (AC) function.

b) The critical value at which AC is minimised and

c) The minimum average cost.

7. A production facility is capable of producing 60,000 widgets in a day and the total
daily cost of producing xx widgets in a day is given by,
C(x)=250,000+0.08x+200,000,000/x. How many widgets per day should they produce
in order to minimize production costs?
8. The production costs per day for some widget is given by,
C(x)=2500−10x−0.01x2+0.0002x3

What is the marginal cost when x=200, x=300 and x=400?

5. Revenue function
i. Total Revenue Function-
TR=p.x where p=f(x) is demand function
ii. Average Revenue-
 𝑇𝑅
AR= 𝑥

iii. Marginal Revenue-

𝑑(𝑇𝑅)
MR= 𝑑𝑥

Marginal revenue (MR) = the extra revenue gained from selling an extra unit of a good 

Problems
1. Find (i) average revenue function and, (ii) marginal revenue function for the
following total revenue function TR= 12x-x2
Evaluate at x = 3 and x = 5.

2. The total revenue in Rupees received from the sale of x units of a product is given by
R(x) = 13x 2 + 26x + 15. Find the marginal revenue when x = 7.

3. Find (i) average revenue function and, (ii) marginal revenue function for the
2
𝑥
following total revenue function TR=27x- 3
+x3
Evaluate at x = 3 and x = 5.

4. The demand function of sugar in a particular zone is known to be linear. When the
price is Rs4/kg then demand is 150 tons. When the price is Rs5/kg the demand is 120
tons. Find the revenue function and marginal revenue when demand is 130 tons.

6. Profit function
Profit Function=π(x)= Revenue function- Cost Function
π (x)= R-C
Average Profit = Average Revenue – Average Cost
1.The average cost = the average revenue: the firm earns normal profits.
2.The average cost < the average revenue: the firm earns super-normal profits
3.The average cost > the average revenue: the firm incurs losses
Differentiating wrt x, we get
π `(x)= MR-MC
As the quantity consumption keeps increasing and if MR is greater than MC per unit
then profit will increase (MR>MC then Profit increases)
If the quantity consumption keeps decreasing and if MR is less than MC per unit then
profit will decrease (MR<MC then Profit decreases)
If π `(x)=0 (at x=a)
π ``(x)<0 at x=a then π (x) has a maxima at x=a
When MR=MC, we find the quantity when profit is maximum
Problems
1. A manufacturer can sell x computers at a price of Rs 330-x each. The cost of production
of X computers is Rs x2+10x+12. Find the number of computers to be sold so that he can
make maximum profit. (answer x=80)
2
𝑥
2. The cost function of a factory manufacturing x chairs per day is C(x)= 500+14x+ 2
. The
3𝑥
demand function is p=150- 2
. How many chairs should be manufactured daily to maximise
the profit? (answer =34)
3. Find the value of x when profit function, π(x) = -100+ 160x-10x2, has a maximum (answer
x=8)
4. Find (i) average profit function (ii) marginal profit function for the profit
function P=x2_13x+78 for x = 3 and x = 5.

5. Find (i) average profit function (ii) marginal profit function for the profit
function P=x2-7x+64 for x = 4 and x = 5.

6. An apartment complex has 250 apartments to rent. If they rent x apartments then

their monthly profit, is given by, P(x)=−8x2+3200x−80,000. How many apartments
should they rent in order to maximize their profit?

7. The weekly cost to produce x widgets is given by

C(x)=75,000+100x−0.03x2+0.000004x, 30≤x≤10000

and the demand function for the widgets is given by,

p(x)=200−0.005x0≤x≤10000
Determine the marginal cost, marginal revenue and marginal profit when 2500 widgets
are sold and when 7500 widgets are sold. Assume that the company sells exactly what
they produce.

7. Elasticity of demand
𝑑𝑥
𝑝 𝑑𝑥 % 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑑𝑒𝑚𝑎𝑛𝑑
η =− 𝑥 𝑑𝑝
=− 𝑥
𝑑𝑝 =- % 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑝𝑟𝑖𝑐𝑒
𝑝

Value of η Conclusion Interpretation

Perfectly
Inelastic
η=0

Inelastic.

0<η<1

Unitary
η=1 Elastic

Elastic

η>1
Demand that is inelastic, meaning that demand doesn't rise at a greater rate
than the price falls. The price elasticity for those products is less than 1.
Demand isn’t sensitive to price change.When demand increase is a greater
percentage more than the percentage the price falls, demand is elastic and
greater than 1
 Relation between Marginal Revenue and Elasticity of demand
R=p.x where p=f(x) is demand function

Differentiating wrt demand x

𝑑𝑅 𝑑𝑝
𝑑𝑥
= p +x. 𝑑𝑥
-------I

𝑑𝑅 𝑝 𝑑𝑥 𝑑𝑥 η
𝑀𝑅 = 𝑑𝑥
, AR =p and η =− 𝑥 𝑑𝑝
→ 𝑥𝑑𝑝
= - 𝑝 ……….II

From I and II
𝑝 1
MR=p+(- η )=p (1- η )

1
MR= AR (1- η )

Problems
1. If MR= 25 and η = 2 find AR
(Answer AR= 50)
20
2. If the demand law is x= 𝑝+1 . Find the elasticity of demand at the point, p=3. What type of
curve is the demand curve? ( answer
3. Yesterday, the price of U clips was Rs3 a box, and Julie was willing to buy 10 boxes.
Today, the price has gone up to Rs3.75 a box, and Julie is now willing to buy 8 boxes. Is
Julie's demand for U clips elastic or inelastic? What is Julie's elasticity of demand?

Q. If Neil's elasticity of demand for burger is constantly 0.9, and he buys 4 burgers
when the price is Rs150 per burger, how many will he buy when the price is Rs100 per
burger?

Q. Since Neil probably can't buy fractions of hot dogs, it looks like he will buy 5 hot
dogs when the price drops to Rs100 per hot dog.
Problem: Which of the following goods are likely to have elastic demand, and which
are likely to have inelastic demand?

Home heating oil

Pepsi
Chocolate
Water
Heart medication
Oriental rugs

Elastic demand: Pepsi, chocolate, and Oriental rugs

Inelastic demand: Home heating oil, water, and heart medication

Q. Mayura advertises to sell cupcakes for Rs40 a dozen. She sells 50 dozen, and decides
that she can charge more. She raises the price to Rs60 a dozen and sells 40 dozen. What
is the elasticity of demand? Assuming that the elasticity of demand is constant, how
many would she sell if the price were Rs100 a dozen?

Q.  If the price of a good increases by 8% and the quantity demanded decreases by 12%,
what is the price elasticity of demand?  Is it elastic, inelastic or unitary elastic?
Q. When price of a good is 13 per unit, the consumer buys 11 units of that good. When price
rises to 15 per unit, the consumer continues to buy 11 units. Calculate Price Elasticity of
Demand.

Q. When price of a good is 12 per unit, the consumer buys 24 units of that good. When price
rises to 114 per unit, the consumer buys 20 units. Calculate Price Elasticity of Demand

        Q. The demand curve for a product is given by q=2000−4p2, where p = price. What is the
elasticity of the product when the price is 10?

Q Suppose the demand curve for iPads is given by q = 500 − 10p.

i. Compute the price elasticity of this demand function. ( 𝑝−50
𝑝
)

ii. What is the price elasticity of demand when the price is 30? ( Since 1.5 is greater than 1, this good
is price elastic, and management should consider lowering the price to raise revenue)

Q Ben just opened a business selling calculators. The demand function for calculators can be given by q
= 400 − 2p2 . Find the price for which he should sell the calculators in order to maximize revenue.
 8. Consumption Function-
Let the level of National Income be Y then the aggregative consumption expenditure is given
by C=C(Y) The marginal propensity to consume (MPC) measures the proportion of extra
income that is spent on consumption.
i. Marginal Propensity to consume- The MPC will invariably be between 0 and 1.

C(Y)= a+bY

b=the marginal propensity to consume (measures the change in consumption/change in

disposable income.)

a=consumption when income Y is 0 (autonomous consumption)

𝑑𝐶
i. MPC= 𝑑𝑌
= C`(Y)

ii. Marginal Propensity to Save-

Saving=S=Y-C(Y)
MPS=1-MPC
iii. Average propensity to consume (APC)

The average propensity to consume = consumption / income

Factors that determine the marginal propensity to consume(Change in Disposable

income )

● Income levels. At low-income levels, an increase in income is likely to

see a high marginal propensity to consume; this is because people on low
incomes have many goods/services they need to buy. However, at higher
income levels, people tend to have a greater preference to save because
they have most goods they need already.
● Temporary/permanent. If people receive a bonus, then they may be
more inclined to save this temporary rise in income. However, if they
 gain a permanent increase in income, they may have greater confidence
to spend it.
● Interest rates. A higher interest rate may encourage saving rather than
consumption; however, the effect is fairly limited because higher interest
rates also increase income from saving, reducing the need to save.
● Consumer confidence. If confidence is high, this will encourage people
to spend. If people are pessimistic (e.g. expect unemployment/recession)
then they will tend to delay spending decisions and there will be a low
MPC.

Problem
1. The consumption function is given by C=C(Y)
7200
= 1200- 9+𝑌
, Y ≥0

Find MPS when Income is 91

1. If MR= 25 and η = 2 find AR
20
2. If the demand law is x= 𝑝+1 . Find the elasticity of demand at the point,p=3.
What type of curve is the demand curve?( answer
3. Yesterday, the price of U clips was Rs3 a box, and Julie was willing to buy
10 boxes. Today, the price has gone up to Rs3.75 a box, and Julie is now
willing to buy 8 boxes. Is Julie's demand for U clips elastic or inelastic?
What is Julie's elasticity of demand?

4. If Neil's elasticity of demand for burger is constantly 0.9, and he buys 4

burgers when the price is Rs150 per burger, how many will he buy when
the price is Rs100 per burger?
5. Mayura advertises to sell cup cakes for Rs40 a dozen. She sells 50 dozen,
and decides that she can charge more. She raises the price to Rs60 a dozen
and sells 40 dozen. What is the elasticity of demand? Assuming that the
elasticity of demand is constant, how many would she sell if the price were
Rs100 a dozen?

6.  If the price of a good increases by 8% and the quantity demanded

decreases by 12%, what is the price elasticity of demand?  Is it elastic,
inelastic or unitary elastic?
7. When price of a good is  13 per unit, the consumer buys 11 units of that
good. When price rises to 15 per unit, the consumer continues to buy 11
units. Calculate Price Elasticity of Demand.
 
8. When price of a good is  12 per unit, the consumer buys 24 units of that
good. When price rises to 114 per unit, the consumer buys 20 units.
Calculate Price Elasticity of Demand