CHAPTER 7

DIFFERENTIATION AND
APPLICATIONS OF
DIFFERENTIATION
7.1 Derivative of Functions
7.2 Theorems of Differentiation
7.3 Differentiation of Exponential and Logarithmic Functions
7.4 Implicit and Parametric Differentiations
7.5 Tangent and Normal Equations
7.6 Extremum Problems
7.7 Applications of Differentiation in Economics and Business
7.1 Derivative of Functions
The process of finding the derivative of a given function is called differentiation. The derivative
of a function is used to analyzed the rate of change of a quantity such as the slope of a tangent
line to a curve.
Definition of the derivative of a function:

y = f ( x)

Q ( x +  x, f ( x +  x ) )
y

P ( x, f ( x ) )

x
x

Consider the curve y = f ( x ) as shown. Let P ( x, f ( x ) ) be any point on y = f ( x ) .

Let  x be a small increment in the x coordinate from P to another point Q on the curve. So,
Q is the point ( x +  x, f ( x +  x ) ) .

Let  y be a corresponding small increment in the y = f ( x ) coordinate from P to Q , that is

 y = f ( x +  x) − f ( x) .

 y f ( x +  x) − f ( x)
Gradient of PQ = = .
x x

 y   f ( x +  x) − f ( x) 
Gradient of curve at P = lim   = lim  .
 x →0  x x
   x →0  

dy  y   f ( x +  x) − f ( x) 
Therefore, = lim   = lim  
dx  x→0   x   x→0  x 
The result above is the definition of derivative of a function f . This process is called
differentiation from first principle.
 EXAMPLE 1

Find the derivative of the function by using differentiation from the first principles.
1
a) f ( x) = x Ans: f  ( x ) =
2 x
b) f ( x ) = 4 x + 3x − 1
2
Ans: f  ( x ) = 8 x + 3
 i. Definition of a function at any point x = a .
Let a be a number in the domain of a function f , thus

f ( x) − f (a) f (a +  x) − f (a)
f  ( a ) = lim or f  ( a ) = lim
x →a x−a  x →0 x
We call this the limit of derivative of f at a . Geometrically, f  ( a ) is the slope of the tangent
line to the graph of f at the point ( a, f ( a ) ) .

EXAMPLE 2

Find f  ( a ) for the given value of a if f ( x ) = 1 − x 2 , a = 3 . Ans: - 6

EXAMPLE 3

1 1
Find f  ( a ) for the given function f ( x ) = x − . Ans: 1 +
x a2
7.2 Theorems of Differentiation
I. Rules of Differentiation
Rule 1 (Differentiation of a f ( x ) = c , c is a constant f ( x) = 0
constant)
Rule 2 f ( x ) = xn f  ( x ) = nx n −1
Rule 3 f ( x ) = kx n f  ( x ) = knx n −1
Rule 4 (Sum rule of two h ( x) = f ( x) + g ( x) h ( x ) = f  ( x ) + g  ( x )
functions)
Rule 5 (Product rule of two h ( x) = f ( x)  g ( x) h ( x ) = f ( x ) g  ( x ) + g ( x ) f  ( x )
functions)
Rule 6 (Quotient rule) f ( x) g ( x) f ( x) − f ( x) g( x)
h ( x) = h ( x ) =
g ( x)  g ( x ) 
2

Rule 7 (Chain rule) y = f (u ) dy dy du

= 
u = g ( x) dx du dx
n −1
Rule 8 (Power rule)  f ( x )  n  f ( x )  f ( x)
n

EXAMPLE 4

if y = ( 3x 2 − 2 )( 4 x3 + 1) .
dy dy
Find Ans: = 60 x 4 − 24 x 2 + 6 x
dx dx
 EXAMPLE 5

x −3 1
Find the gradient of the tangent to the curve y = at the point ( 3, −2 ) . Ans:
2x + 7 13

EXAMPLE 6

Find
dy
if y =
1
. Ans: −
1 ( 3x − 5)
2

dx x3 − 5 x 2
( x − 5x )
3 3
 II. Higher Order Derivatives

The second derivatives of a function f ( x ) is the derivation of f  ( x ) .

d2y
We use f  ( x ) or to represent the second derivative.
dx 2

d 2 y d  dy 
Remark: = .
dx 2 dx  dx 

Thus, if y = f ( x ) , then

dy is the first derivative of y

= f ( x)
dx
d2y
= f  ( x )
dx 2 is the second derivative of y

dny
= f n ( x) is the n derivatives of y
dx n

EXAMPLE 7

d2y
for y = ( 3 x 2 − 5 ) . Ans: y = (18 x ) ( 3x 2 − 5 ) , y = 90 ( 3x 2 − 5 )( 3x 2 − 1)
dy 3 2
Find and 2
dx dx
7.3 Differentiation of Exponential and Logarithmic Functions
I. Derivative of Exponential Functions

The natural exponential function e x is differentiable for all x , with derivative.

d x
dx
( e ) = ex

f ( x)
The Chain Rule can be used to differentiate exponential functions of the form y = e , where
f ( x ) is function of x .

The derivative of e f ( x ) :

dx
e(
d f ( x)
)
= f ( x) e ( )
f x

EXAMPLE 8

Differentiate each of the following with respect to x .

−2 2
−2
a) y = e3 x
2
Ans: 6 xe3 x
x
e
b) y = 2e x
Ans:
x
 II. Derivative of Logarithmic Functions
The natural logarithmic function ln x is differentiable for all x  0 with derivative.
d 1
( ln x ) =
dx x
The Chain Rule can be used to differentiate natural logarithmic function of the form
y = ln  f ( x )  where f ( x ) is function of x .

The derivative of ln  f ( x )  :

d f ( x) 1
ln  f ( x )  = =  f ( x)
dx f ( x) f ( x)

EXAMPLE 9

Differentiate each of the following with respect to x .

2x + 3
a) y = ln ( x 2 + 3x − 1) Ans:
x + 3x − 1
2

1
 1+ x 2 1
b) y = ln   Ans:
 1− x  1 − x2
 III. Special Case for an Exponential Functions

If a x , where a is a constant and a  0 .

d x
dx
( a ) = a x ln a

 du 
d u
dx
( a ) = a u ln a   
 dx 

EXAMPLE 10

dy
Find for the following functions.
dx

a) y = 4 x Ans: 4 x  ln 4
b) y = 3x + 2 x +2 x
( 2 x + 2 ) ln 3
2 2
Ans: 3x
c) y = 3x ln x  ln 3 ( x 4 + 5 x 4 ln x )
5 5
Ans: 3x ln x
7.4 Implicit and Parametric Differentiations
I. Implicit Differentiations
Often you are given y as a function of x . Instead, relations between the two variables x and y
are given implicitly.
For example:

Explicit function of x : y = x4 − 2x2 + 3

Implicit function of x : xy + y 2 = 2 x

When the relationship between x and y are difficult (not possible) to express explicitly, then we
have to use implicit differentiation method.

EXAMPLE 11

dy
Find for the following functions.
dx
x
a) x 2 + y 2 = 3 Ans: −
y
4x − 3y
b) y 2 + 3 xy = 2 x 2 − 1 Ans:
2 y + 3x
 II. Parametric Differentiations

i. Cartesian equation
The Cartesian equation of a line is a law, which link the x coordinate and y coordinate of the
general point ( x, y ) on the line.

This can sometimes be useful to involve a third variable, say t and to express x and y each as a
function of this third variable.

These two equations, x = f ( t ) and y = g ( t ) are called parametric equations of the line and t
is the parameter.

If we use x = f ( t ) and y = g ( t ) to eliminate t , we return to the Cartesian equation of the line.

EXAMPLE 12

Find the Cartesian equation of the parametric equations x = 2t − 1, y = 1 − t 2 .

Ans: 4 y = 3 − x 2 − 2 x
 ii. Parametric differentiations

If parametric equations given as x = f ( t ) and y = g ( t ) , by using Chain Rule, the derivative of

parametric equation is:
dy
dy dy dt dy dt
=  or =
dx dt dx dx dx
dt
And the second derivative:

d  dy 
d y d  dy  d  dy  dt
2
d y dt  dx 
2
= =  or =
dx 2 dx  dx  dt  dx  dx dx 2 dx
dt

EXAMPLE 13

dy d2y 3
Find and for y = 3t 4 , x = 2t 2 − 4 . Ans: y = 6t , y =
dx dx 2 2
 EXAMPLE 14

t +1 t −1
2
dy 1
Find as a function of x if x = ,y= Ans: −  
dx t −1 t +1 x

EXAMPLE 14

d2y 2t 3 dy t2
Suppose that x and y are differentiable functions of t and that = , = ,
dx 2 ( t 2 + 1)3 dx t 2 + 1

dx 1
find . Ans: 1 +
dt t2
7.5 Tangent and Normal Equations
I. Tangent and Normal Lines

Let a curve given by y = f ( x ) , the gradient of a curve at point ( x, y ) on the curve is defined as
the gradient of the tangent to the curve at that point.
y = f ( x)

Normal at P

Q ( x +  x, f ( x +  x ) )

f ( x +  x) − f ( x)

Tangent to curve at P
x

Consider a point P on the curve y = f ( x ) .

 f ( x +  x) − f ( x) 
Gradient of tangent at P = lim[ gradient of chord PQ] = lim   . But,
Q→P  x →0
 x 
dy  f ( x +  x) − f ( x) 
= f  ( x ) = lim  .
dx  x →0
 x 
dy
❖ Hence, the gradient of the tangent at any point P on the curve, = f ( x) .
dx

f  ( a ) gives the gradient of the curve at the point where x = a .

The normal at any point on the curve is the line passing through the point which is
perpendicular to the tangent at that point.
1 1
❖ Hence, the gradient of the normal at any point P on the curve, − = .
f ( x) dy
dx

If the gradient of tangent to a curve f ( x ) at a point ( x0 , y0 ) is m , thus the equation of

❖ the tangent at point ( x0 , y0 ) is y − y0 = m ( x − x0 ) .

1
❖ the normal line to the curve at point ( x0 , y0 ) is y − y0 = − ( x − x0 ) .
m
 EXAMPLE 15

Find the equations of the tangent and normal line to x 2 + 3xy + y 2 = 5 at (1,1) .

Ans: y = − x + 2, y = x

EXAMPLE 16

Find the equation of the tangent to the curve y = x 3 − 3 x + 2 where x = 2 . Ans: y = 9 x − 14

 EXAMPLE 17

Find the equation of tangent to the curve xy = 6 which are parallel to the line 4 y + 6 x = 5 .

Ans: 2 y + 3x  12 = 0
 II. Stationary Point, Increasing and Decreasing Function

Consider the graph of function y = f ( x ) : y

D
B

A C
x

A point on the curve y = f ( x ) with f  ( x ) = 0 is called stationary point. The points B and C
are the examples of stationary points.
Geometrically, gradient of tangent to the curve at these points is zero (since the tangent is
horizontal line).
The value of the function at point B is greater than the values of the function at neighboring
points. Point B is called a relative maximum point. Likewise, the value of the function at point
C is less than the values of the function at neighboring points. Point C is called a relative
minimum point.
i. Observe the relative maximum point B
As x increases in the neighboring of B , the gradient of the curve decreases from positive
dy
values, through zero at B , to negative values. Hence, decreases as x increases, that is
dx
d  dy  d 2 y dy d2y
= is negative. Therefore, for relative maximum points, = 0 and 0
dx  dx  dx 2 dx dx 2

ii. Observe the relative minimum point C

As x increases in the neighboring of C , the gradient of the curve increases from negative
dy
values, through zero at C , to positive values. Hence, increases as x increases, that is
dx
d  dy  d 2 y dy d2y
= is positive. Therefore, for relative minimum points, = 0 and 0
dx  dx  dx 2 dx dx 2

Note!

If f  ( c ) = 0 or f  ( c ) does not exist, the test fails, it is inconclusive. Thus, we must use the first
derivative test.
 iii. Test for increasing and decreasing function using f  ( x )
❖ If f  ( x )  0 on an interval I, then f is increasing in that interval I
❖ If f  ( x )  0 on an interval I, then f is decreasing in that interval I

EXAMPLE 18

1 9
Find the stationary points of the function 4 x 3 + 15 x 2 − 18 x + 7 . Ans:  ,  , ( −3,88 )
2 4

EXAMPLE 19

1 3
Find the interval on which f is increasing or decreasing of the function x − 4x + 2 .
3

Ans: ( −, −2 ) , ( −2, 2 ) , ( 2,  )

7.6 Extremum Problems
I. First Derivative for Relative Extremum
Collectively, relative maximum and minimum are called relative extremum.

f ( x) f ( x)

f ( x)  0 f ( x)  0

f ( x)  0 f ( x)  0
x x
c c

Graph (i) Graph (ii)

f ( x) f ( x)

f ( x)  0
f ( x)  0

f ( x)  0 f ( x)  0

x x
c c

Graph (iii)

From the graphs above, we notice that at a stationary point x = c ,

❖ Graph (i) shows that f ( x ) has a relative maximum if f  ( x ) changes from positive to
negative at x = c .
❖ Graph (ii) shows that f ( x ) has a relative minimum if f  ( x ) changes from negative to
positive at x = c .
❖ Graph (ii) shows that f ( x ) has no relative extremum if f  ( x ) has the same sign on both
sides of x = c .

Therefore, ( c, f ( c ) ) is called inflection point.

 i. Finding relative extremum using the first derivative test

Suppose that c is a critical number of a function f that is continuous on ( a, b ) .

❖ If f  ( x )  0 for ( a, c ) and f  ( x )  0 for ( c, b ) , then f has relative maximum at c .

❖ If f  ( x )  0 for ( a, c ) and f  ( x )  0 for ( c, b ) , then f has relative minimum at c .
❖ If f  ( x ) does not change sign at c , then f has no relative extremum at c .

ii. Relative extremum at which the derivative is undefined.

f ( x) f ( x)
f ( x)
f ( x)  0
f ( x)  0 f ( x)  0
f ( x)  0
f ( x)  0 f ( x)  0

x x x
c c c
Graph (i) Graph (ii) Graph (iii)

❖ Graph (i): f  ( c ) is undefined (does not exist), relative maximum.

❖ Graph (ii): f  ( c ) is undefined (does not exist), relative minimum.
❖ Graph (iii): f  ( c ) is undefined (does not exist), neither relative maximum nor relative
minimum.

iii. Concavity of curve and points of inflection

Figure (i) below shows the graph of two increasing function on ( a, b ) .

f ( x)

concave upward B

A
concave downward
x
a b
Both graphs join point A to point B but they look different because they bend in different
directions.
 EXAMPLE 20

x2 − x + 1
Find the relative maximum point and relative minimum point on the curve y = .
x −1

Ans: max ( 0,1) , min ( 2,3)

 EXAMPLE 21

Given a function f ( x ) = x3 − 3x + 2 .

a) Obtain the stationary points of the function. Ans: ( −1, 4 ) , (1, 0 )

b) Find the interval which the function increasing or decreasing.
Ans: ( −, −1)  (1,  ) , ( −1,1)
c) Hence, determine all relative maximum and relative minimum points of f ( x ) .
 II. Second Derivative Test
Second derivatives are used to measure the rate at which the first derivative is increasing or
decreasing.
From the observation on Figure (i), concave upward is the gradient of the tangent increases and
the curve always lies above its tangents.
From the observation on Figure (i), concave downward is the gradient of the tangent decreases
and the curve always lies below its tangents.
i. Test for concavity
Suppose f is a function which is defined in the interval I and f is twice differentiable on the
interval I, then

❖ f is said to be concave upward if f  ( x ) increases as x increases or f  ( x )  0 for all x

in I.
❖ f is said to be concave downward if f  ( x ) decreases as x increases or f  ( x )  0 for
all x in I.

ii. Point of inflection

If a function changes its concavity at a point ( a, f ( a ) ) , then the point is called a point of
inflection. At a point of inflection, f  ( x ) = 0 , but f  ( x ) is not necessarily zero.

Figures below observe the graph of functions cross their tangent line at the points of reflection.

Steps for finding inflection points:

STEP 1: compute f  ( x ) = 0 .

STEP 2: determine the points in domain of f for which f  ( x ) = 0 .

STEP 3: determine the sign of f  ( x ) to the left and right of each point x = c found in STEP 2.

If there is a change in the sign f  ( x ) as we move across the point x = c , then x = c is an

inflection point of f .
 iii. Curve sketching
STEP 1: find and plot all intercepts. y intercept is usually easy to find but x intercept may
require a calculator (you can skip x intercept if it is difficult to find).
STEP 2: find all the asymptotes for rational function.
STEP 3: apply first derivative test to find all the stationary points. Determine the intervals where
function is increasing and decreasing.
STEP 4: determine all the relative extremum points.
STEP 5: find the inflection point and determine the concavity of a function.
STEP 6: sketch the graph.

EXAMPLE 22

Find the points of inflection of the function f ( x ) = − x3 + 3x 2 − 1 . Ans: (1,1)

 EXAMPLE 23

Using the second derivative test, find the relative extremum and points of inflection of
f ( x ) = x 3 − 3x 2 − 24 x + 32 . Ans: max ( −2, 60 ) , min ( 4, −48 ) , (1, 6 )
 EXAMPLE 24

Sketch the graph of the function f ( x ) = x3 − 6 x 2 + 9 x + 2 .

 EXAMPLE 25

The equation of a curve is f ( x ) = ax3 + bx 2 . The curve passes through the point ( −1,1) and has
1
the inflection point when x = .
3
1 1
a) Determine the value of a and b . Ans: a = − , b =
2 2
b) Find the interval for which f ( x ) is increasing or decreasing.

2   2
Ans: decreasing: ( −, 0 )   ,   , increasing  0, 
3   3
c) Obtain the relative maximum and minimum and the reflection point.
2 2  1 1 
Ans: min ( 0, 0 ) , max  ,  ,  , 
 3 27   3 27 
d) Sketch the graph.
7.7 Applications of Differentiation in Economics and Business
I. Cost
If x is the number of units of a product produced in some time interval, then

❖ Total cost = C ( x )
C ( x)
❖ Average cost = C ( x ) =
x
dC ( x )
❖ Marginal cost = C  ( x ) =
dx
dC ( x )
❖ Marginal average cost = C  ( x ) =
dx
II. Revenue

If p ( x ) is a price-demand equation,

❖ Total revenue = R ( x ) = x  p ( x )
R ( x)
❖ Average revenue = R ( x ) =
x
dR ( x )
❖ Marginal revenue = R ( x ) =
dx
dR ( x )
❖ Marginal average revenue = R ( x ) =
dx
III. Profit

❖ Total profit = P ( x ) = R ( x ) − C ( x )
P ( x)
❖ Average profit = P ( x ) =
x
dP ( x )
❖ Marginal profit = P ( x ) =
dx
dP ( x )
❖ Marginal average profit = P ( x ) =
dx
IV. Marginal Cost / Revenue / Profit
Marginal cost (or revenue or profit) is the instantaneous rate of change of cost (or revenue or
profit) relative to production at a given production level.

If C ( x ) is the total cost of producing x items, then the marginal cost function, C  ( x )
approximates the cost of producing one more item at a production level of x items.
 EXAMPLE 26

The demand for the product of a firm varies with the price that the firm charges for the product.
The firm estimates that annual total revenue R (stated in thousands) is a function of the price p
(stated in RM). Specifically, R = f ( p ) = −50 p 2 + 500 p .

a) determine the price which should be charged in order to maximize total revenue.
Ans: RM5
b) what is the maximum value of annual total revenue? Ans: RM1250
 EXAMPLE 27

The market research department of a company recommends that the company manufacture and
market a new radio. After suitable test marketing, the research department presents the following
price demand equation: x = 10, 000 − 1, 000 p . Where x is the number of radios retailer are likely
to buy at RM p per radio. The financial department provides the following cost function:
C ( x ) = 7, 000 + 2 x .

a) Find the price demand equation and the domain of the function.
Ans: p = 10 − 0.001x, 0  x  10, 000
b) The marginal cost function and interpret. Ans: RM2
c) Quantity of product when the profit is maximum. Ans: 4,000
d) Total profit and total revenue when the profit is maximum. Ans: RM9,000, RM24,000
 EXAMPLE 28

Given the average cost, C ( x ) = 2 x 2 − 3x − 12 . Determine when the average cost will be
3
minimum. Ans:
4
 EXAMPLE 29

A given average cost is C ( x ) = 25 − 8 x + x 2 . Prove that when average cost is minimum,

marginal cost will be the same as average cost.
 EXAMPLE 30

The total cost, in ringgit, to produce x units of product. The production of product A per week is
given by the following cost function: C ( x ) = 4 x 3 − 18 x 2 + 24 x + 5 . Find

a) The average cost function

b) The marginal cost function
c) The average cost when 10 units of product A are produced Ans: RM244.50
d) The minimum cost and the number of units of product A that need to be produced per
week Ans: RM13, 2 units
 EXAMPLE 31

The demand function, in ringgit, for x units of an electronic component is given by

p ( x ) = 500 − 0.1x . Find

a) the revenue function

b) the average revenue function
c) the marginal revenue function
d) the average marginal revenue function
e) the marginal revenue when x = 20 Ans: RM496
f) the maximum revenue and the number of units of the electronic component that need to
be sold Ans: RM625,000, 2,500 units
 EXAMPLE 32

The revenue generated, in ringgit, by selling x units of calculators is given by

R ( x ) = 1, 000 x − 0.2 x 2 . The cost, in ringgit, to produce x units of calculators is given by
C ( x ) = 60 x + 200 .

a) the profit function

b) the average profit function
c) the marginal profit function
d) the average marginal profit function
e) the average profit when 50 units of calculators are sold Ans: RM26
f) the maximum profit possible and the number of unit of calculators that need to be sold.
Ans: RM1,800, 100 units
 EXAMPLE 33

The average cost function and demand function, in ringgit, of a company that manufactures
2, 000
computer chips are C ( x ) = + 4 and p ( x ) = 40 − 0.002 x , where x is the number of
x
computer chips manufactured. Find
a) the cost functions
b) the maximum revenue and the number of computer chips sold to achieve this
Ans: RM200,000, 10,000 units
c) the maximum profits Ans: RM160,000
d) the maximum profit if each chip sold is taxed RM 5 Ans: RM118,125