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Topic 7 Rules of Differentiation
Topic 7 Rules of Differentiation
Differentiation
1.Rules of Differentiation
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Differentiation is all about measuring change!
Measuring change in a linear function:
y = a + bx
a = intercept
b = constant slope i.e. the impact of a unit
change in x on the level of y
y2 y1
b = y =
x x2 x1
2
If the function is non-linear:
40
e.g. if y = x2
30
y=x2
20
10
0
0 1 2 3
X 4 5 6
y y 2 y1
x
= x2 x1
gives slope of the line
connecting 2 points (x1, y1) and (x2,y2) on a
curve
(16-4)
(2,4) to (4,16): slope = /(4-2) = 6
(2,4) to (6,36): slope = (36-4)/(6-2) = 8 3
The slope of a curve is equal to the slope of
the line (or tangent) that touches the curve
at that point
Total Cost Curve
40
35
30
25
y=x2
20
15
10
0
1 2 3 4 5 6 7
Y = X2
Y+Y = (X+X) 2
Y+Y =X2+2X.X+X2
Y = X2+2X.X+X2 – Y
since Y = X2 Y = 2X.X+X2
Y
X
= 2X+X
dy y
f ' ( x) lim
dx x0 x
• The process of differentiation involves
letting the change in x become arbitrarily
small, i.e. letting x 0
• e.g if = 2X+X and X 0
= 2X in the limit as X 0
6
the slope of the non-linear
function
Y = X2 is 2X
• the slope tells us the change in y that
results from a very small change in X
• We see the slope varies with X
e.g. the curve at X = 2 has a slope = 4
and the curve at X = 4 has a slope = 8
• In this example, the slope is steeper
at higher values of X 7
Rules for Differentiation
(section 4.3)
dy
e.g. y = 10 then dx 0
8
2. The Linear Function Rule
If y = a + bx
dy
b
dx
dy
6
e.g. y = 10 + 6x then dx
9
3. The Power Function Rule
If y = axn, where a and n are constants
dy
n.a .x n 1
dx
dy 0
i) y = 4x => dx 4 x 4
dy
ii) y = 4x 2
=> dx 8 x
dy 3
-2
iii) y = 4x => dx 8 x
10
4. The Sum-Difference Rule
If y = f(x) g(x)
dy d [ f ( x )] d [ g ( x )]
dx dx dx
12
Examples
dy dv du
If y = u.v u v
dx dx dx
2
i) y = (x + 2 )(a x + b x )
x 2 2 ax b ax
dy 2
bx
dx
du dv
v u
dy dx dx
2
dx v
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du dv
v u
u dy dx dx
If y then
v dx v2
Example 1
y
x 2
x 4
dy
x 4 1 x 2 1
2
dx x 4 2
x 4 2
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7. The Chain Rule
(Implicit Function Rule)
dy dy dv
.
dx dv dx
16
dy dy dv
.
Examples dx dv dx
2 ½
i) y = (ax + bx)
let v = (ax2 + bx) , so y = v½
1
dy 1
ax bx 2 .2ax b
2
dx 2
3 4
ii) y = (4x + 3x – 7 )
3 4
let v = (4x + 3x – 7 ), so y = v
dy
dx
3 3
2
4 4 x 3 x 7 . 12 x 3
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8. The Inverse Function Rule
dy 1
If x = f(y) then dx dx
dy
• Examples
i) x = 3y2 then
dx dy 1
dy
6y so dx 6 y
3
ii) y = 4x then
dy dx 1
12x 2 so dy 12 x 2
dx 18
Differentiation in Economics
Application I
• Total Costs = TC = FC + VC
• Total Revenue = TR = P * Q
= Profit = TR – TC
• Break even: = 0, or TR = TC
• Profit Maximisation: MR = MC
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