UNIT 3.

DIFFERENTIAL CALCULUS

Contents
3.0 Aims and Objectives
3.1 Introduction
3.2 Definition of the Derivative
3.3 Geometric Interpretation of the Derivative
3.4 Differentiability and Continuity
3.5 Rules of Differentiation
3.6 The Chain Rule
3.7 Inverse Function Rule
3.8 The Rule

3.9 Higher Order Derivatives

3.10 Derivatives of Exponential and Logarithmic Functions
3.11 Examples on Economic Applications
3.12 Summary
3.13 Answers to Check Your Progress Exercises
3.14 Model Examination Questions
3.15 References

3.0 AIMS AND OBJECTIVES

In this unit we have introduced with how to find the rate of change of an endogenous variable
with respect to the exogenous variable. The mathematical concept of derivative is directly
related to the notion of rate of change. The discussion will concentrate on functions with a
single independent variable. An extension of this will be discussed in unit five.

After completing this chapter students will be able to

- understand the definition and geometric interpretation of derivative
- use the different rules of differentiation to find the derivative of different types of
functions
- use other rules like the chain rule and inverse rule
- find the derivative of exponential and logarithmic functions

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 - apply the concept of derivative in economic applications

3.1 INTRODUCTION

In this unit we will learn the derivative of different types of functions. you will learn the sum,
difference, product & quotient rules. Other rules like the chain rule and inverse rules will be
introduced. Rules of differentiation for exponential and logarithmic functions are also
discussed.

3. 2 DEFINITION OF THE DERIVATIVE

The objective of this section is to define derivative in terms of the limit concept. The concept
of derivative is the basis of calculus. It tells us many things about the function and has a
variety of applications. For instance, in the analysis of rates of change, curve sketching,
optimization problems etc., we require the concept of derivative.

Let us begin the discussion by taking the general form of the function y = f (x
(x). For a function
of the form y = f (x
(x), we can find the average rate of change of y when change in x, ∆x
∆x, is very
small. Let x changes from x0 to x0 + ∆x
∆x, the value of the function y = f (x
(x)
changes from f (x0) to f (x
(x0 + ∆x
∆x). The change in y per unit change in x can be represented by
the difference quotient

, measures the average rate of change of y.

Example 1: Given y = x2, find the average rate of change of y.

Solution f(x0) = x02

f(x0 + ∆x
∆x) = (x ∆x)2
(x0 + ∆x

The next step is to form the difference quotient

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Let x0 = 5 and ∆x
∆x = 2; then the average rate of change of y will be 2(5) + 2 = 12. This means
that, on the average, as x changes from 5 to 7, the change in Y is 12 units per unit change in x.

In economics, we are frequently interested in the rate of change of y when ∆x

∆x is very small.

In the above example, if ∆x

∆x is very small, it tends to zero, then the difference quotient can

be reduced to 2x
2x0. That is, as ∆x
∆x approaches zero, 2x
2x0 + ∆x
∆x will approach to 2x
2x0.

Symbolically, as , or it can be expressed by the equation

(x) = x2, provided that the limit of

This is the derivative of the function y = f (x exists as ∆x
∆x
approaches zero.

(x), the derivative of the function f at x, written f1(x) or

Therefore, given a function Y = f (x
dy/
dy/dx , is defined as

provided the limit exists or let's use h instead of ∆x

, provided the limit exists

Notations: f1(x) is read as "f

"f prime of x"
dy/
dy/dx is read as "the derivative of y with respect to x"

Therefore, for a function y = f (x

(x), the derivative may be denoted by

dy/dx = f1(x) =
dy/ .

Note that a derivative is a function (a derived function). The original function is called
primitive function.
function.

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The difference quotient measures the average rate of change where as the derivative measures
both the slope and the instantaneous rate of change of the original function f(x) at a given
point.

Steps on how to compute the derivative of f(x) , f1(x).

1. From the difference quotient (Note that ∆x

∆x = h)
2. Simplify the difference quotient algebraically to eliminate the factor h from the
denominator.
3. Let ∆x
∆x or h approaches zero in the simplified difference quotient.
if this limit exists

Example 2. Given f (x 2x + 3, find f1(x)

(x) = 2x

Solution:
f 1( x ) =

Now take the limit of 2.

(x) = 2x2 + 3x + 5, find f1(x)

Example 3: Given f (x

Solution:

Form the difference quotient

This is the simplified expression

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Next evaluate the limit of the simplified expression as h approaches zero.

i.e. f1(x) = (4x

(4x + 2h
2h + 3) = 4x
4x + 3

Check Your Progress Exercise – 1

Use the above steps to find the derivative of the following functions.
a) f(x) = 3x
3x + 5 b) f(x) = x2 + 1
c) f(x) = 1/x
1/x 4x2 – 5x
d) f(x) = 4x 5x + 1

3.3 GEOMETRIC INTERPRETATION OF THE DERIVATIVE

In this section we will see the derivative as a measure of the slope of the line tangent to the
curve at a given point.

X
2
Figure 3.1 the Graph of f(x) = x

The derivative f1(x) expresses the slope of the tangent to the curve y = f(x) as a function of the
x coordinate of the point of tangency.

To say that f is differentiable at a point means geometrically that the curve y = f(x) has at that
point a unique tangent line which is not parallel to the y – axis.

Therefore, in terms of the derivative, the slope of the function y = f (x

(x) curve at point A
corresponds to the particular derivative value f1(x).

3.4 DIFFERENTIABILITY AND CONTINUITY

In this section we will use the concept of limit to see the relationship between continuity and
differentiability.

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A function is said to be differentiable at x = c if it has a derivative when x = c. If it does not
have a derivative at c, we say it is not differentiable at c.

To be differentiable at a point, a function must

i) be continuous at that point and
ii) have a unique tangent at that point

But continuity is not a sufficient condition for differentiability. In fig. 3.4 (a) and (b)
The functions are continuous at x = 0 but they are not differentiable. The graph of a
differentiable function cannot have a sharp point, a cusp or a break.

f(x) f(x)

x
x

f (x ) = / x / f(x) = x2/3
a) corner: no tangent at x = 0 b) cusp: vertical tangent at x = 0

f (x ) =

c) The function is undefined at x = 0

Example 1 Show that the function f(x) = /x

/x/ is continuous at x = 0 but not differentiable at x
= 0.
Solution: Check continuity first.

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i) f(0) is defined

ii) f(x) exists

iii) f(0) = f (x )

Therefore, f(x) = /x
/x/ is continuous.

To check its differentiability, take the limit of the difference quotient. If the limit exists, it is
differentiable at x = 0. If the limit of the difference quotient does not exist, f(x) is not
differentiable at x = 0

Now check both the right and left side limits.

Since the right and left side limits are not the same we say f is not differentiable at x = 0. This
shows that continuity does not guarantee differentiability.

Example 2: Show that the function f (x

(x) = /x
/x – 2/ + 1 is continuous at x = 2 but not
differentiable at x = 2.
Solution
The function is continuous at x = 2 because
i) f(x) is defined

ii) f(x) exists

iii) f(2) = f(2) =1

Next show that the limit of the difference quotient does not exist and f is not differentiable at x
=2

is the derivative of the function f (x

(x) = /x
/x-2/ + 1

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The next step is to check the left and right side limits.

Since the right and left side limits are not equal the limit of the difference quotient does not
exist. Hence it is not differentiable at x = 2

Check Your Progress Exercise – 2

Show that the following functions are continuous but not differentiable at the given value of x.
a) f(x) = /x
/x-1/ : x = 1
b) f(x) = x1/3 : x = 0

3.5 RULES OF DIFFERENTIATION

The objective of this section is to learn the different rules of differentiation that will simplify
the task of finding the derivative of a function.

The process of finding the derivative of a function is called differentiation. Up to now we

found the derivative of a function by using the steps discussed in page But it is a tedious
process and time-consuming. Hence the following rules will help to simplify the process.

1. Constant Function Rule

The derivative of a constant function y = f(x) = k is zero.

Example 1: Find the derivative of f (x

(x) = 3
Solution: f1(x) = 0
Solution:

2. The power Rule

For any number n, the derivative of a power function f(x) = xn is nxn-1

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 i.e.

Example 2. Find the derivative of the following functions

a) f (x ) = x 2

Solution: f1(x) =

b) f (x ) = x 3

Solution: f1(x) =
Solution:

c)

Solution:
Solution:

d) f(x) = x25

Solution:
Solution:

3. The Sum – Difference Rule

The derivative of a sum (difference) of two functions is the sum (difference) of the individual
derivatives.

If both f1(x) and g1(x) exist then

Example 3: Find the derivative dy/

dy/dx for each of the following functions.

a) f(x) = x2 + 2x
2x

Solution:
Solution:

But

Therefore

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 b) (x) = x3 + x2 + 1
f (x

Solution:
Solution:

But

c) f(x) = x5 + x3 + x + 10
Solution:

d) f(x) = x2 – 5x

Solution:
Solution:

Check Your Progress Exercise - 3

Find the derivatives of the following functions by using the above rules of differentiation.

a) f(x) = 1/5 b)

c) d) f(x) = x

4. The Product Rule

The derivative of the product of two (differentiable) functions is equal to the first function
times the derivative of the second function plus the second function times the derivative of the
first function.

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Example 4 Find the derivative of each of the following functions

a) y =(x (x2 + 5)
=(x + 1) (x

Solution: Let f (x (x) = x2 + 5

(x) = x + 1 and g (x
Then f1(x) = 1 and g1(x) = 2x
2x

, Substituting the above values we get

b) 2x2 (3x
y = 2x (3x4 – 2)

Solution:
Solution: Let f (x 2x2 and g(x) = 3x
(x) = 2x 3x4 – 2

(x2 – 5) (1-2x
c) y = (x (1-2x)

Solution: Let f(x) = x2 – 5 and g (x

(x) = 1 – 2x
2x

Note that the product rule can be extended to more than two functions. For instance for the
case of three functions,
y = f(x) . g(x) . h(x)

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Example 5: Find the derivative of the function
(3x2 + 2) (3x
y = (3x (3x) (6x + 7)

Solution: Let f (x 3x2 + 2, g(x) = 3x

(x) = 3x 3x and h(x) = 6x
6x + 7

5. The Quotient Rule

The derivative of the quotient of two functions, is

Example 5 y =

Solution: Let f (x) = x + 1 and g(x) = x – 2. Then

Example 6 y=

Solution:

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Example 7

Solution:

Check Your Progress Exercise – 4

1. Differentiate the following functions by using the product rule
a) f(x) = (x
(x – 3) (2x
(2x – 1) (5x2) (x
b) f(x) = (5x (x3 +2)
c) f( (x2 +1) (2x
f(x) = (x (2x – 3) d) f(x) = (2x (x2 – 1) (3x
(2x + 1) (x (3x2)
2. Differentiate the following by using the quotient rule

3.6 THE CHAIN RULE

In this section we develop a rule for differentiating function of one variable, which in turn is a
function of a second variable.

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Suppose y is a differentiable function of u and u is a differentiable function of x. Then y can
be regarded as a function of x and the derivative of y with respect to x is the derivative of y
with respect to u times the derivative of u with respect to x. That is,

Example 1 Find the if y = u2 + 1 and u = 3x

3x –2

Solution: First find

(by power rule)

Then find

Therefore,

Since you are thinking of y as function of x, it is more natural to express as a function of x.

Substituting the value of u, we get.

Example 2: Find if y = u – 5 , where u = x3

Solution:

Example 3: Find (2x – 5)10

if y = (2x

Solution:

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The chain rule is very useful to differentiate such kind of functions. Note that the dy/
dy/dx can
be found by multiplying 2x
2x – 5 ten times. But that will be a tedious process.

The first step is to take the function inside the bracket as one function, say u and apply the
chain rule.

Let 2x – 5 = u, then y = u10

Substituting the value of u, 2x – 5, we get

3.7 INVERSE FUNCTION RULE

In this section we will learn the rules of finding the derivative of inverse function by applying
inverse function rule. This rule is applicable if the function has an inverse. The function f
will have an inverse function, written a x = f-1(y), if there is a one-to –one mapping (for
monotonic functions).

Given a function f(x), if x1 > x2 and f(x1) > f(x2) then the function f is called an increasing or
monotonically increasing function. If x1 > x2 and f(x1) < f(x2), then the function is said to be a
decreasing (or monotonically decreasing) function. In both cases an inverse function exists.

The rule of differentiation is

This means that the derivative of the inverse function is the reciprocal of the derivative of the
original function.

Example 1 Given y = 3x
3x + 5 , find dx/
dx/dy
Solution:

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Since the function is a monotonic function (its slope is positive) an inverse function exists.
Hence the derivative of the inverse function is

Example 2 Given y = x3 + x; find dx/

dx/dy
Solution:
Solution:

First check whether an inverse function exists This value is greater than zero for

any value of x. That is, it is a monotonically increasing function and an inverse function
exists.

Note that the inverse function rule is strictly speaking applicable only when the function
involved is a one-to-one mapping.

Check Your Progress Exercise – 5

1. Use the chain rule to compute the derivative dy/
dy/dx

2. Check whether the following functions are monotonic or not and find the inverse
functions if it exists.
a) y = ½x
½x + 3 b) y = x2

3.8 THE RULE

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This rule deals with the evaluation of the limit of a function as x→ (where

can be either finite or infinite), when the numerator m(x) and the denominator n(x) either

1) Both tend to zero as x→ , thus resulting in an expression in the form, or

2) Both tend to as x→
x→ , thus resulting in an expression in the form of (or , or ,
or )
Even though the limit of f (x) cannot be evaluated as the expression stands under these two
circumstances, its value can nevertheless be found by using the formula

( rule)

Example 1.
1. Find the limit of as x→1

Solution:

We could evaluate this limit by factoring, but let’s see the application of the

rule.
Since

Example 2: Find the limit of as

Solution: m(x) and n(x) becomes infinite as ,( )

Note: It may turn out that the right-side expression ( ) again falls in to the , or ( )

format, same as the left side expression. In such an event, we may reapply the

rule (i.e. ).

Students must check that the expression has 0/0 or ∞∕∞ form before applying the

rule.

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Check Your Progress Exercise - 6

Use the rule to evaluate the following limits.

a) b)

c) d)

3.9 HIGHER ORDER DERIVATIVES

In our previous discussion we have considered only the first derivative of a function
. In this section we will see the concept of second derivative, and derivatives of even
high orders.

The derivative of a function is the first derivative. The derivative of the first derivative is

called the second derivative.

derivative. The second derivative of the function f denoted by or

indicates that has been differentiated with respect to x twice.

If exists for all x values in the domain, the function is said to be twice
differentiable; if, in addition is continuous, the function is said to be twice
continuously differentiable.

Example1: Find the first and second derivative of the function f (x )=3x2-5x
(x)=3x -5x+15

Solution:
Solution:
The first derivative of the function is f’(x) = 6x
6x-5
And the second derivative is =6

Since is a measure of the rate of change of the function f, is also the measure of
the rate of change of the first derivative,

The second derivative can be differentiated with respect to x to produce a third derivative and
so on.

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