ECON 331

Multivariable Calculus
Partial Derivatives
Single variable calculus is really just a special case of multivariable calculus. For the
function y = f (x), we assumed that y was the endogenous variable, x was the exogenous
variable and everything else was a parameter. For example, given the equations
y = a + bx
or
y = axn
we automatically treated a, b, and n as constants and took the derivative of y with respect
to x (dy/dx). However, what if we decided to treat x as a constant and take the derivative
with respect to one of the other variables? Nothing precludes us from doing this. Consider
the equation
y = ax
where

dy
=a
dx
Now suppose we find the derivative of y with respect to a, but TREAT x as the constant.
Then
dy
=x
da
Here we just reversed the roles played by a and x in our equation.

Two Variable Case:

let z = f (x, y), which means z is a function of x and y. In this case z is the endogenous (dependent) variable and both x and y are the exogenous (independent) variables. To
measure the the eect of a change in a single independent variable (x or y) on the dependent
variable (z) we use what is known as the PARTIAL DERIVATIVE. The partial derivative
of z with respect to x measures the instantaneous change in the function as x changes while
HOLDING y constant. Similarly, we would hold x constant if we wanted to evaluate the
eect of a change in y on z. Formally:
z
x

is the partial derivative of z with respect to x, treating y as a constant.

Sometimes written as fx .

z
y

is the partial derivative of z with respect to y, treating x as a constant.

Sometimes written as fy .

The symbol (bent over lower case D) is called the partial symbol. It is interpreted
dy
in exactly the same way as dx
from single variable calculus. The symbol simply serves to
remind us that there are other variables in the equation, but for the purposes of the current
exercise, these other variables are held constant.
EXAMPLES:
z
z
z
z

= x + y z/x = 1
z/y = 1
= xy
z/x = y z/y = x
= x2 y 2
z/x = 2(y 2 )x z/y = 2(x2 )y
2 3
= x y + 2x + 4y z/x = 2xy 3 + 2 z/y = 3x2 y 2 + 4

REMEMBER: When you are taking a partial derivative you treat the other variables
in the equation as constants!

Rules of Partial Dierentiation

Product Rule: given z = g(x, y) h(x, y)
z
x
z
y

Quotient Rule: given z =

g
= g(x, y) h
+ h(x, y) x
x
g
= g(x, y) h
+ h(x, y) y
y

g(x,y)
h(x,y)

and h(x, y) 6= 0
z
x

z
y

g
h(x,y) x
g(x,y) h
x
[h(x,y)]2
g
h(x,y) y
g(x,y) h
y

[h(x,y)]2

Chain Rule: given z = [g(x, y)]n

z
x
z
y

g
= n [g(x, y)]n1 x
g
= n [g(x, y)]n1 y

Further Examples:
For the function U = U(x, y) find the the partial derivates with respect to x and y
for each of the following examples
Example 1
U = 5x3 12xy 6y 5
Answer:
U
x
U
y

Ux = 15x2 12y

= Uy = 12x 30y 4
2

Example 2
U = 7x2 y 3
Answer:
U
x
U
y

= Ux = 14xy 3
= Uy = 21x2 y 2

Example 3
U = 3x2 (8x 7y)
Answer:
U
x
U
y

= Ux = 3x2 (8) + (8x 7y)(6x) = 72x2 42xy

= Uy = 3x2 (7) + (8x 7y)(0) = 21x2

Example 4
U = (5x2 + 7y)(2x 4y 3 )
Answer:
U
x
U
y

= Ux = (5x2 + 7y)(2) + (2x 4y 3 )(10x)

= Uy = (5x2 + 7y)(12y 2 ) + (2x 4y 3 )(7)

Example 5
U=
Answer:
U
x
U
y

9y 3
xy

(x y)(0) 9y 3 (1)
9y 3
=
(x y)2
(x y)2
(x y)(27y 2 ) 9y 3 (1)
27xy 2 18y 3
= Uy =
=
(x y)2
(x y)2

= Ux =

Example 6
U = (x 3y)3
Answer:
U
x
U
y

= Ux = 3(x 3y)2 (1) = 3(x 3y)2

= Uy = 3(x 3y)2 (3) = 9(x 3y)2

A Special Function: Cobb-Douglas

The Cobb-douglas function is a mathematical function that is very popular in economic
models. The general form is
z = xa y b
and its partial derivatives are
z/x = axa1 y b and

z/y = bxa y b1

Furthermore, the slope of the level curve of a Cobb-douglas is given by

z/x
ay
= MRS =
z/y
bx

Dierentials
Given the function
y = f (x)
the derivative is
dy
= f 0 (x)
dx
However, we can treat dy/dx as a fraction and factor out the dx
dy = f 0 (x)dx
where dy and dx are called dierentials. If dy/dx can be interpreted as the slope of a
function, then dy is the rise and dx is the run. Another way of looking at it is as
follows:
dy = the change in y
dx = the change in x
f 0 (x) = how the change in x causes a change in y
Example 7 if
y = x2
then
dy = 2xdx
Lets suppose x = 2 and dx = 0.01. What is the change in y(dy)?
dy = 2(2)(0.01) = 0.04
Therefore, at x = 2, if x is increased by 0.01 then y will increase by 0.04.

The two variable case

If
z = f (x, y)
then the change in z is
z
z
dx + dy or dz = fx dx + fy dy
x
y
which is read as the change in z (dz) is due partially to a change in x (dx) plus partially
due to a change in y (dy). For example, if
dz =

z = xy
then the total dierential is
dz = ydx + xdy
and, if
z = x2 y 3
then
dz = 2xy 3 dx + 3x2 y 2 dy
REMEMBER: When you are taking the total dierential, you are just taking all the
partial derivatives and adding them up.
Example 8 Find the total dierential for the following utility functions
1. U(x1 , x2 ) = ax1 + bx2

(a, b > 0)

2. U(x1 , x2 ) = x21 + x32 + x1 x2

3. U(x1 , x2 ) = xa1 xb2
Answers:
U
x1
U
x2

= U1 = a
= U2 = b
1.
dU = U1 dx1 + U2 dx2 = adx1 + bdx2
U
x1
U
x2

= U1 = 2x1 + x2
2.
= U2 = 3x22 + x1
dU = U1 dx1 + U2 dx2 = (2x1 + x2 )dx1 + (3x22 + x1 )dx2

3.

U
x1
U
x2

dU

b
axa
1 x2
x1
b
bxa
a b1
1 x2
=
U2 = bx
x
=
2
1
ax2b

b
axa
bx1 x2
1 x2
=
+
dx
dx2
1
x1
x2

b
= U1 = axa1
1 x2 =

adx1
x1

bdx2
x2

xa1 xb2

The Implicit Function Theorem

Suppose you have a function of the form
F (y, x1 , x2 ) = 0
where the partial derivatives are F/x1 = Fx1 , F/x2 = Fx2 and F/y = Fy . This
class of functions are known as implicit functions where F (y, x1 , x2 ) = 0 implicity define
y = y(x1 , x2 ). What this means is that it is possible (theoretically) to rewrite to get y
isolated and expressed as a function of x1 and x2 . While it may not be possible to explicitly
solve for y as a function of x, we can still find the eect on y from a change in x1 or x2 by
applying the implicit function theorem:
Theorem 9 If a function
F (y, x1 , x2 ) = 0
has well defined continuous partial derivatives
F
= Fy
y
F
= Fx1
x1
F
= Fx2
x2
and if, at the values where F is being evaluated, the condition that
F
= Fy 6= 0
y
holds, then y is implicitly defined as a function of x. The partial derivatives of y with respect
to x1 and x2 , are given by the ratio of the partial derivatives of F, or
y
Fx
= i
xi
Fy

i = 1, 2

To apply the implicit function theorem to find the partial derivative of y with respect to
x1 (for example), first take the total dierential of F
dF = Fy dy + Fx1 dx1 + Fx2 dx2 = 0
then set all the dierentials except the ones in question equal to zero (i.e. set dx2 = 0) which
leaves
Fy dy + Fx1 dx1 = 0
or
Fy dy = Fx1 dx1

dividing both sides by Fy and dx1 yields

dy
Fx
= 1
dx1
Fy
which is equal to

y
x1

from the implicit function theorem.

6

Example 10 For each f (x, y) = 0, find dy/dx for each of the following:
1.
y 6x + 7 = 0
Answer:

(6)
dy
fx
= =
=6
dx
fy
1

2.
3y + 12x + 17 = 0
Answer:

fx
(12)
dy
= =
=4
dx
fy
3

3.
x2 + 6x 13 y = 0
Answer:

dy
fx
(2x + 6)
= =
= 2x + 6
dx
fy
1

4.
f (x, y) = 3x2 + 2xy + 4y 3
Answer:

dy
fx
6x + 2y
= =
dx
fy
12y 2 + 2x

5.
f (x, y) = 12x5 2y
Answer:

dy
fx
60x4
= =
= 30x4
dx
fy
2

6.
f (x, y) = 7x2 + 2xy 2 + 9y 4
Answer:

dy
14x + 2y 2
fx
= =
dx
fy
36y 3 + 4xy

Example 11 For f (x, y, z) use the implicit function theorem to find dy/dx and dy/dz :
1.
f (x, y, z) = x2 y 3 + z 2 + xyz
Answer:

dy
dx

2xy +yz
= ff xy = 3x
2 y 2 +xz

dy
dz

= ff yz = 3x2z+xy
2 y 2 +xz
7

2.
f (x, y, z) = x3 z 2 + y 3 + 4xyz
Answer:

2 2

dy
dx

+4yz
= ff xy = 3x3y2z+4xz

dy
dz

z+4xy
= ff yz = 2x
3y 2 +4xz

3.
f (x, y, z) = 3x2 y 3 + xz 2 y 2 + y 3 zx4 + y 2 z
Answer:

2 2

dy
dx

+z y +4y zx
= ff xy = 9x2 y6xy
2 +2xz 2 y+3y 2 zx4 +2yz

dy
dz

+y x +y
= ff yz = 9x2 y22xzy
+2xz 2 y+3y 2 zx4 +2yz

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