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Lecture 4 - TKT

The document outlines Lecture 4 on functions of one variable and their derivatives, covering differentiation rules, applications in economics such as marginal value and elasticity, and single optimization techniques. It includes definitions, examples, and problems related to these concepts. Key topics include higher-order derivatives, convex and concave functions, and economic interpretations of derivatives.

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andeptrailatui1994
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3 views7 pages

Lecture 4 - TKT

The document outlines Lecture 4 on functions of one variable and their derivatives, covering differentiation rules, applications in economics such as marginal value and elasticity, and single optimization techniques. It includes definitions, examples, and problems related to these concepts. Key topics include higher-order derivatives, convex and concave functions, and economic interpretations of derivatives.

Uploaded by

andeptrailatui1994
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 7

05/10/2023

Lecture 4
Functions of one variable and
Derivatives in Use

Contents
• Some rules for differentiation
• Application in Economics:
+ Marginal value
+ Elasticity
+ Single optimization

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Simple rules for differentiation


The derivative of a function f was defined by the
formula:

If this limit exists, we say that f is differentiable at x.


The process of finding the derivative of a function is
called differentiation.

(c)’ = 0 • (u + v)’ = u’ + v’
(x)’ = x-1 • (u.v)’ = u’v + v’u
(ax)’ = axlna '
 u  u' v  v' u
(ex)’ = ex •   
1  v v2
(ln x )'  (v  0) => (ku)’ = ku’ (k: constant)
x

Problem: 6.7 (1,3 page 183)

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Differentiate these following functions

Higher-order derivatives
• The derivative f’ of a function f is often called the first derivative of f.
If f’ is also differentiable, then we can differentiate f’ in turn.
• The result (f ‘)’ is called the second derivative, written more concisely
as f’’ .
• We use f’’ (x) to denote the second derivative of f evaluated at the
particular point x.

Problem: 6.9 (1-3 page 193)

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Convex and Concave Functions


• Suppose that f is continuous in the interval I and twice differentiable
in the interior of I .
• Then we can introduce the following definitions:

Rate of change - Marginal value


(p.165-6.4)
• Economists often use the word “marginal” to indicate a derivative.
- The marginal propensity to consume is the derivative of the
consumption function with respect to income
- The marginal product (or productivity) of labour is the derivative of
the production function with respect to labour input.
- The marginal cost is the derivative of the cost function
• Ex: Let C(x) denote the cost in millions of dollars for removing x% of the
pollution in a lake. Give an economic interpretation of the equality C(50) = 3.
Starting at 50%, for each1%of pollution that is removed, the extra cost
is about 3 million dollars.
Problem: 6.4 (3,6 and 7)

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Elasticity (p.228_7.7)

Problem: 7.7 (1-4,6,7 page 232)

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Single optimization (p.266_280; 8.3-8.5)

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12

12

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 d  d (TR  TC )
 dQ  0  dQ
0
 
 2  2
 d   d (TR  TC )  0
0
 dQ 2
 dQ 2

Or MR=MC

Problem: 8.5 (1, 3, 4 and 5a page 280)

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