Calculus for Economists

For first year economics students

Course teacher: Demilie B.

Email: [email protected]

Course Objective:
• To develop knowledge and practical skills in differential and integral
calculus.
• As well, it is intended to illustrate various applications of calculus to
technical problems.
Calculus for Economists

• Chapter outline:
1. Revision of Function and Limit: Fundamental concepts
2. The Derivatives
3. Univariate Calculus and Multivariate Calculus
4. Integration
Calculus for Economists

• Assessment form

Assessment method Weight

Assignment(Indiv/group) 20%

Quizzes/Tests 30%

Final Exam 50%

Text Books:

• Barnet R.A. and M.R. Ziegler, (1994), Applied Mathematics for

Business Economics, Life Sciences and Social Sciences, 4th edition,
MacMillan College Publishing Company.
• Laurence D. Hoffmann, Gerald L. Bradley and Kenneth H. Rosen,
Applied Mathematics for Business Economics, Life Sciences and
Social Sciences
• Chiang A.C, (1984), Fundamental Methods of Mathematical
Economics, McGraw Hill, Inc.
• Knut Sydsæter and Peter Hammond: Mathematics for Economics I and
II. Ethiopian Edition
• Knut Sydsæter and Peter Hammond: Essentials of Mathematics for
Economics.
 Chapter one
1. Revision of Function and Limit
1.1. Types of Functions and Application in Economics
• Multivariable Functions
• Inverse and Implicit Functions
• Exponential and Logarithmic functions
• Monotonic and Homogeneous Functions
1.2 Limit and Application in Economics
• The Concept of Limit
• The Limit Theorems
• Continuous Functions and criteria for continuity
• Economic Applications of limit and continuity
 Introduction:
• Chiang begins by discussing the importance of mathematics in economic
theory. He argues that mathematical techniques are indispensable for:
• Precision: Mathematics allows for precise definitions and clear logical
structure in economic models.
• Economic Modeling: Complex relationships between economic variables
can be more easily represented mathematically.
• Problem Solving: Using mathematical methods, economists can derive
solutions to problems that would otherwise be difficult to analyze verbally
or graphically.
• The author stresses that economics has evolved from primarily qualitative
analysis to one that frequently requires quantitative methods. He references
key economic theories, such as consumer theory and production theory,
which rely heavily on mathematical tools like optimization, calculus, and
linear algebra.
• Chiang also touches on the idea of variables and constants, explaining that
economic models typically involve relationships between variables like
price, quantity, and income. Variables can be dependent (determined by the
model)
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Chapter I: Functions of one variable

LESSON 2.1: Fundamental concepts for
function of one variable

I. Some basic concepts for functions of one variable

In everyday life, a variable may depend on one or
more changing variables.
 plant’s growth depends on sunlight and rainfall
 speed depends on distance traveled and time taken
 output depends on capital and labor
salary depends on education, experience, etc. EXAMPLE 1:
y = f(x) = 5x+2 ; y = g(x) = 5x2 + 3x + 4;
y = h(x) = (5x+1)/(3x-2).

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 Functions:…….

• A function is a rule that assigns to each object in a set A exactly one object
in a set B. The set A is called the domain of the function, and the set of
assigned objects in B is called the range.
• The function itself will be denoted by a letter such as f. The value that the function f assigns
to the number x in the domain is then denoted by f(x) (read as “f of x”), which is often

given by a formula, such as .

 Con’d

• Functions are often defined using more than one formula, where each
individual formula describes the function on a subset of the domain. A
function defined in this way is sometimes called a piecewise-defined function.

• Here is an example of such a function.

Determining the natural domain of a function:

• It often amounts to excluding all numbers x that result in dividing by 0 or in

taking the square root of a negative number.

• This procedure is illustrated in the following example.

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EXAMPLE 2: f(x) =
5x+2

f
y = f(x)

Y
Range

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Some basic
concepts
Def 1: A function is a rule that assigns to each object in a set A
exactly one object in a set B. The set A is called the domain of
the function, and the set of assigned objects in B is called the
Denote: 𝑦 =
ƒ(𝑥)
range.
*It is important to remember that a function assigns one
and only one number in the range (output) to each number in
the domain (input).
* In this notation, the symbol ƒ represents the function,
the letter
𝑥 is the independent variable representing the input
value of ƒ , and 𝑦 is the dependent variable or output
value of ƒ at 𝑥.

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Some basic
concepts
Def 2: Let a function 𝑦 = 𝑓(x).
Domain Convention ■ Unless otherwise specified, we
assume the domain of a function 𝑓 to be all real numbers
x for which 𝑓(x) is defined as a real number. We refer to
this as the natural domain of 𝑓.
Real number 𝑦0 corresponding to 𝑥0 through rule ƒ

is called the value of that function at 𝑥0.

Gather all the values of the function when the
independent variable changes in the domain set is
called the Range of values of that function.

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Some basic
concepts
EXAMPLE 3: Find the domain and the range of the
following functions:
a. ƒ 𝑥 = 3𝑥2 − 4𝑥 + 5
b. 𝑦 = 4 − 𝑥 2

Def 3: The Graph of a Function ■ The graph of a

function
𝑓 consists of all points (x, 𝑦) where x is in the domain
of 𝑓
and 𝑦 = 𝑓(x), that is, all points of the form (x,
𝑓(x)). By the set notation, the graph is x, 𝑓
x | x ∈𝐷

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Linear Functions and Non-Linear

functions

Def 4: A linear function is a function that changes at a

constant with respect to its independent variable.
The graph of a linear function is a straight
line. Example: y = 𝑓 x = 4x − 3
General form: 𝑦 = 𝑎x + 𝑏
a: the slope; b: y-the intercept
 Non-Linear function:
 Quadratic functions: f(x) = ax2 + bx + c (𝑎 ≠
0)

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Linear Functions and Non-Linear

functions
 Polynomial functions: 𝑃 x = 𝑎 𝑛 x 𝑛 + 𝑎 𝑛 −1 x 𝑛 −1 +
⋯ + 𝑎0

𝑦 = xk : 𝑦 is inversely proportional to
 Rational functions:

x
𝑦
1−
x
x 3 −3x+
= 2
𝑝 x
𝑦 =
q x

 Absolute value functions: 𝑦 = |x − 2|

 Exponential functions: 𝑦 = 5 x , 𝑦 = e x
 Logarithm functions: 𝑦 = 𝑙𝑜𝑔 𝑎 x , y = 𝑙𝑔 x , 𝑦 =
𝑙𝑛 x

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Composite
functions

Def 5: Composition of Functions ■ Given

functions ƒ(𝑢) and 𝑔(𝑥), the composition
ƒ(𝑔(𝑥)) is the function of 𝑥 formed by
substituting 𝑢 = 𝑔(𝑥) for 𝑢 in the formula for
ƒ(𝑢).

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Composite
functions

EXAMPLE 4: ƒ 𝑥 = 2 𝑥 and 𝑔 𝑥 = 𝑥 2 Find

. composite functions ƒ(𝑔(𝑥)) and
the

𝑔(ƒ(𝑥)).

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II. FUNCTIONS USED IN

ECONOMICS
We will study several functions associated with the marketing of a
particular commodity.
The demand function 𝐷(𝑥)for the commodity is the
price
𝑝 = 𝐷(𝑥) that must be charged for each unit of the
commodity if 𝑥 units are to be sold (demanded).
The supply function 𝑆(𝑥) for the commodity is the unit
price
𝑝 = 𝑆(𝑥) at which producers are willing to supply 𝑥
units to the market.
The revenue 𝑅(𝑥) obtained from selling 𝑥 units of
the commodity is given by the product

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II. FUNCTIONS USED IN

ECONOMICS

𝑅 = (number of items sold)(price per

𝑥 item)

 The =cost
𝑥𝑝(𝑥)
function 𝐶(𝑥)
producing 𝑥
is the cost of

units of the commodity.

The profit function 𝑃(𝑥) is the profit
obtained from selling 𝑥 units of the
commodity and is given by the difference 𝑃 𝑥
= revenue − cost = 𝑅 𝑥 − 𝐶(𝑥)

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II. FUNCTIONS USED IN

ECONOMICS

= � ⋅
𝐴𝐶 𝑥
 The average cost function is
𝐶 𝑥�
Similarly, the average revenue function 𝐴𝑅
𝑥
and average profit function 𝐴𝑃(𝑥) are
𝐴𝑅 = 𝑅𝑥𝑥 and A𝑃 =
𝑃 𝑥𝑥
𝑥 𝑥
given by

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II. FUNCTIONS USED IN

ECONOMICS

EXAMPLE 5: Studying a Production Process Market

research indicates that consumers will buy 𝑥
thousand units of a particular kind of coffee maker
when the unit price is
𝑝 𝑥 = −0.27𝑥 + 51
dollars. The cost of producing the 𝑥 thousand units is
𝐶 𝑥 = 2.23𝑥2 + 3.5𝑥 +
85 thousand dollars.
a. What is the average cost of producing 4,000 coffee
makers?

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II. FUNCTIONS USED IN

ECONOMICS

b. How much revenue 𝑅(𝑥) and profit 𝑃(𝑥) are

obtained from producing 𝑥 thousand units (coffee
makers)?
c. For what valuesof 𝑥 is production of the coffee
makers profitable?

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Basic Terminologies
 Function of one variable
 Domain
 Range
 Linear function and Non-linear
function
 Composite functions
 Demand function, Supply
functions,
 Revenue function, Total cost
function,…
 Profit function

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EXERCISE
2.1
Eleventh Edition
Exercises: from 39 to 48 (P. 27 - 28)
53 (P.28)
37 – 42 (P. 41)
46, 47, 49, 54, 57 (P. 42 -
43)
3, 4, 5 (P.56), 16, 18, 20
(P57)

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LESSON 2.2: LIMITS AND

CONTINUITY

By the end of this lesson we’ll able to:

 understand about limits of a function

of one variable

 continuity of function of one variable

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LESSON 2.2: LIMITS AND

CONTINUITY
 To understand what is really going on in differential
calculus, we first need to understand about the limits.

In the studying of calculus, what happens to the

value of a function as the independent variable gets
very close to a particular value is very important.

 Consider function: S(t) = 20 + 5t

If we want to know the distance traveled after
10 hours, what would we do?
We substitute t = 10 into the above equation.

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Limits and
Continuity
For some functions, at some certain points, we can’t do
that.

𝑓 = x at x0 =
x 𝑠i𝑛x 0?
 What should we do?
 Look at the value at a very nearby point f(x).

MANY functions, as x gets closer to x 0 ,

𝑓(x)
 For

always approaches certain value, and we call it a limit.

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I. Limits of function one

variable
1. Definitions
Def 1: As x approaches the 𝑥0, the limit of ƒ(𝑥) is 𝐿,

lim ƒ(𝑥) =
written

𝐿
𝑥→𝑥 0
if all values of ƒ(𝑥) are close to 𝐿 for values of 𝑥
that are sufficiently close, but not equal, to 𝑥0. The
limit 𝐿 must be a unique real number.
𝑥→𝑥 0

lim ƒ(𝑥) = 𝐿1 to
+

𝑥 the
limit from the
One-sided right The
limits: (thatnotation
is,
The notationlim ƒ(𝑥) = 𝐿2 to indicate the limit from
where
indicate

> 𝑥0).
the left 𝑥→𝑥 0
−
(that is, where 𝑥
< 𝑥0).

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I. Limits of function one

variable

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I. Limits of function one

variable

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I. Limits of function one

variable

lim ƒ(𝑥) = 𝐿 exists if and

Theorem 2.1: Existence of a Limit ■ The two-
sided limit
only𝑥→𝑥
if the two one-sided
lim
0 ƒ(𝑥) = 𝐿 𝑥→𝑥
lim−
0
limits 𝑥→𝑥 1
ƒ(𝑥) = 𝐿2 both
+
and
0

lim− ƒ(𝑥) =lim ƒ(𝑥) = lim ƒ(𝑥)

are equal, and existand
𝑥→𝑥 𝑥→𝑥0 𝑥→𝑥
=𝐿
then
+
0 0

EXAMPLE 1:

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I. Limits of function one

variable

ƒ(𝑥) approach the number 𝐿 as 𝑥 increases

Def 2: (Limits at Infinity) If the value of the function

without bound, we write lim ƒ(𝑥) = 𝐿.

𝑥 →+
∞ ƒ(𝑥) = 𝑀 when the function
lim
𝑥 →−
Similarly, we write
ƒ(𝑥) approach the
∞ number
valuesM as decreases without
bound.

Def 3: (Infinite Limits) We say that lim ƒ(𝑥) is an

𝑥→𝑥
infinite limit if ƒ(𝑥) increasesor 0

bound as 𝑥 → 𝑥0 . lim
witho
𝑥→𝑥
ƒ(𝑥) = +∞ bound ƒ(𝑥)
decreases We write ut
if as 0𝑥 → 𝑥 0
𝑥→𝑥
lim
ƒ(𝑥) decreases without bound asƒ(𝑥)
𝑥 = −∞
increases without or
0

→ 𝑥0
if

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I. Limits of function one

variable

EXAMPLE 2:
2. Limit Properties (Page 66)

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Limits of function one

variable

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II. Continuity of function one

variable
Def 4: A function f is continuous at 𝑥0 if all

 ƒ 𝑥0 (the output at 𝑥0 exists)

three of these conditions are satisfied:

(the limit as 𝑥 → 𝑥0
is

 lim ƒ s𝑥
defined exist
𝑥→𝑥 0 = ƒ(𝑥 0 ) (the limit of the given
exists)
𝑙i𝑚 ƒ
 𝑥→𝑥 𝑥
0 𝑥 is the same as output)
0
function
If 𝑓(x) is not continuous at x = x 0 ,it is said to have
at

a discontinuity there.
Def 5: A functionƒ is continuous over
an 𝑎, 𝑏 if and only if it is continuous at
open
interv
each
𝑎, 𝑏 .
al
point
in

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II. Continuity of function one

variable

Def 6: A function f is

[𝑎, 𝑏] if it is continuous on the open interval

continuous on the closed interval

𝑎, 𝑏 and lim ƒ 𝑥 = ƒ(𝑎) and 𝑙i𝑚 ƒ 𝑥 = ƒ(𝑏).

𝑥→𝑎 +
𝑥→𝑏 −
EXAMPLE 3: Consider continuity

2𝑥 − 1, ƒ o 𝑟 𝑥
of the function f,
ƒ
= {< 2
𝑥 𝑥 + 2, ƒo𝑟 𝑥
given

≥2
by:

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Basic Terminologies

 Limits

 One-sided limits: Left limit and right limit

 Limits at Infinity

 Infinite Limits

 Continuity

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Limits and
Continuity

Exercises: (Hoffman)

Limits and Continuity:

From Ex 12 to 26, 32, 34, 36 (Pages 75)
From Ex 53 to 60 (Pages 76 - 77)
Ex 7 to 16, 20 – 28, 39, 40, 41

(Page 88-89)
Ex 43, 44 (P. 88-89)
Ex 51, 52 (P90)
Ex 5, 6, 10 (P. 92)

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Limits and
Continuity

Exercises: (Bitt)

Limits: From Ex 19 to 80 (Pages 106-

108)
Ex 19 to 36 (Page 118)
Ex 77 to 84 (Page 121)
Continuity: Ex 50 to 72 (Pages 119-120)

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LESSON 2.3:
Derivatives

Lesson 2.3’s goals: consolidating your

knowledge about derivative.
By the end of this lesson we’ll be better able to:

 understand the derivative concepts

 understand the meaning of derivatives

 practice the derivative calculation rules

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LESSON 2.3:
Derivatives

Def 1: Let the function 𝑦 = ƒ(𝑥). The average

I. Definitions

rate of change of y with respect to x, as x

change from 𝑥1 to 𝑥2 is the ratio of the
change in output to the change of input:
𝑦2 −𝑦1
=
ƒ 𝑥2 , where 𝑥1 ≠ 𝑥 .
𝑥 2 −𝑥 1 2
− ƒ−𝑥
EXAMPLE𝑥 2
1: 1 𝑥1 a
Let function y = f𝑥
= 𝑥 3 . Find the average of change as
a) 𝑥 changes from 1 to 3.
b) 𝑥 changes from 2 to 3.

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=> want some measure to indicate the

rate of change at a point
Instantaneous rate of
change
 Given a function f(x), the following
value: f (x  x)  f (x )
lim
x0
0
x
0

 If it does exist, measure the

at 𝑥0
instantaneous rate of change of f(x)

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Derivative
s
function 𝑦 =
ƒ (𝑥) at the point 𝑥0 is the slope of
Def 2: The derivative of a

the tangent line at that point

0
x0
f (x0 x
x)  f (x0 )
 f '(x )
If ƒ′(𝑥 0 ) exists, then we say that ƒ
lim

differentiable at point 𝑥0.

is

Def 3: We say that the function ƒ is

(𝑎, 𝑏) if it is differentiable at each point 𝑥0 in (𝑎,

differentiable over

𝑏).

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Derivative
s
EXAMPLE 1:
It is estimated that x now,
months from population of a certain the
community will be
𝑃 the population
𝑥 = 𝑥 2 be
+ changing
20𝑥to+time 15 months
8,000.from now?
a. At what rate will
with respect
b.By how much will the population actually
change during the 16th month?
The derivative calculation Rules: The power
rule, the Sum-Difference rules, The Product
rule, Quotient rule, chain rule.

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Derivative
s

EXAMPLE 2: The gross domestic product

(GDP)
a of
certaincountrywas 𝑁𝑡 = 𝑡 2 +5𝑡 + 106billio
dollars t years after 2000. n

a.At what rate was the GDP changing with

respect to time in 2020?
b. At what percentage rate was the GDP
changing
with respect to time in 2020?

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Derivative
s

EXAMPLE 3: The cost of producing 𝑥

particular commodity is 𝐶 𝑥 = 𝑥 + 4𝑥 +
units of a 1 2
3
53
dollars, and the production level 𝑡
hours into a particular production run is
𝑥 𝑡 = 0.2𝑡2 + 0.03𝑡 units.
At what rate is cost changing with respect
to time after 4 hours?

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II. Higher-order
Derivatives
Consider the function given by
y  f (x)  x 6  3x 4  2x3  5x  7
Its derivative ƒ ’ is given by:
y ' f '(x)  6x 5 12x3  6x 2  5.
The derivative function ƒ ′ can also be differentiated.
We can think of the derivative of ƒ ’ as the rate of
change the slope of the tangent lines of ƒ . It can
ƒ ’(𝑥) ƒ’’ for
notation derivative (ƒ’)’. That is, ƒ’’(𝑥) = the
also be
which regarded as the rate
is changing.We use at the

(ƒ’(𝑥))’.
We call ƒ’’ is second derivative
of ƒ . Continuing
f '''(x) in
( f this
''(x)) (The third derivative of f)
'

manner, we have (for all n  4) (The n derivative of th

f n  (x)   f n 1 f)

(x) 
'

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III. Differential
Expression

Now suppose that we have a function

𝑦 = ƒ(𝑥). A change in 𝑥 from 𝑥0 to 𝑥0 + Δ𝑥

given by

yields a change in 𝑦 from ƒ(𝑥 0 ) to ƒ(𝑥 0 +

Δ𝑥). This change in 𝑦 is given by:
Δƒ 𝑥0 = ƒ 𝑥0 + Δ𝑥 − ƒ 𝑥0

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III. Differential
Expression

Definition: For 𝑦 = ƒ(𝑥), we define 𝑑𝑥,

called the differential of 𝑥, by 𝑑𝑥 = Δx, and
it is called the differential expression of 𝑦 ,
by 𝑑𝑦
𝑑𝑦 = ƒ ′ 𝑥 𝑑𝑥

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Basic Terminologies

 Increment of the function

 Derivative

 Differentiable on (𝑎 , 𝑏 )

 Higher order derivatives

 Derivative calculation rules

 Differential expression

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EXERCISES

Exercises:
(Laurence D. Hoffmann-Eleventh Edition)
Ex 33-39 (Page 115)
Ex 44, 45, 46, 48 (Page 116)
Ex 63, 64, 65 (P. 119)
Ex 51, 52, 54 (P. 129)
EX 55, 57, 60, 64 (P130)
Ex 13, 14, 18, 36, 37, 38, 39 (P142 - 143)
Ex 53, 54, 55, 56, 68, 69 (P144 - 145)
Chain rules:
Ex 15, 16, 17, 36, 37, 38 (P. 156)
Ex 61 – 68 (P. 157)
Ex 73, 74 (P. 158), 78, 81 (p159)

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EXERCISES

Exercises (Bitt)
Ex 1-84, PAGE 173-175 (TENTH EDITION)
Ex 1-42, PAGE 182-183 (TENTH EDITION)

Exercises: (Laurence D. Hoffmann)

Ex 19 to 28; 31,32 (Page
125)
Ex 52 to 63 (Page 126-127)

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CHAPTER II
FUNCTIONS OF ONE VARIABLE
LESSON 2.4
APPLICATIONS OF DIFFERENTIATION
LEC 2.4’S GOALS:
Increasing and YOU WILL functions
decreasing BE
ABLE 2.
TO 24.UNDERSTAND
1 Maximum and minimum problems
22.4.
2 Using derivatives to find absolute
2.24. maximum and minimum values.
3 Some Maximum-Minimum problems
2.24. in business and economics.
4 Marginality and Elasticity
2.24.
5

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I. INCREASING AND DECREASING

FUNCTIONS
Def 1: Let a function 𝑦 = 𝑓(x).
A function is increasing if its graph moves upward
from left to right. More exactly, a function 𝑓 is
increasing if ∀x 1 , x 2 ∈ 𝐷: x 1 < x 2 ⇒ 𝑓 x 1 <

𝑓(x 2 )
 A function is decreasing ifits graph moves
downward from left to right. More exactly, a
function 𝑓 is decreasing if
∀x 1 , x 2 ∈ 𝐷: x 1 < x 2 >
⇒ 𝑓 x1 𝑓(x 2 )

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I. INCREASING AND DECREASING

FUNCTIONS

If the graph of a function climbs or rises as you

move from left to right, we say that the function is

increasing.

If the graph descends or falls as you move from

left to right, the function is decreasing.

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I. INCREASING AND DECREASING

FUNCTIONS

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I. INCREASING AND DECREASING

FUNCTIONS

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I. INCREASING AND DECREASING

FUNCTIONS

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EXAMPLE 1: Find the intervals of increase and

𝑥2
decrease for the function
ƒ 𝑥
𝑥−
=
2

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II. MAXIMIUM/ MINIMUM

PROBLEMS
 Profit maximizing
Cost minimizing/ risk minimizing/
efficient portfolios
 Optimal inventory
 Key formulas:
 Profit = Revenue – Cost
 Revenue = price. Sales
 Price is given if the product is
under competitive market
 Price may vary with sales if the firm has
some monopoly power

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2.1.

Def 2: A critical value of a function ƒ

Definitions
is any

𝑐, in the domain of function, for which the

number

tangent line at (𝑐, ƒ(𝑐)) is horizontal or for

is a critical value if ƒ(𝑐) exists and ƒ’(𝑐) = 0

which the derivative does not exist. That is, c

or ƒ’(𝑐) does not exist.

Def 3: Let 𝐷 be the domain of ƒ .
ƒ(𝑐) is a relative minimum if there exists
within 𝐷 an open interval 𝐷1 = (𝑐 − ð, 𝑐 +


ð) such that ƒ(𝑐) < ƒ(𝑥), for all 𝑥 in 𝐷1\

{𝑐}.
ƒ(𝑐) is a relative maximum if there
exists within 𝐷 an open interval 𝐷1 = (𝑐 −


ð, 𝑐 + ð) such that ƒ(𝑐) > ƒ(𝑥), for all 𝑥

in 𝐷1\{𝑐}.

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Relative
maximu or value
collectiv
m minimum to s,
ely
(singular: referre as extre
extremum). d relative ma

A function may have more

than one relative maximum

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2.2. Using first derivatives to find

maximum and minimum

Theorem 4.1: If a function ƒ has a relative extreme

values.
value ƒ(𝑐) on an open interval, then 𝑐 is a critical
value, so ƒ’(𝑐) = 0 or ƒ’(𝑐) does not exist.

Theorem 4.2: (The first–derivative test for relative

For any continuous function ƒ that has exactly

extrema)

one critical value 𝑐 in an open interval (𝑎, 𝑏):

a) The function ƒ has a relative minimum at 𝑐 if
ƒ’(𝑥) < 0 on (𝑎, 𝑐) and ƒ’(𝑥) > 0 on (𝑐, 𝑏). That
is, ƒ is decreasing to the left of 𝑐 and increasing
to the right of 𝑐.

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b) f has a relative maximum at 𝑐 if ƒ ’ (𝑥) > 0 on

(𝑎, 𝑐) and ƒ’(𝑥) < 0 on (𝑐, 𝑏). That is, ƒ is
increasing to the left of 𝑐 and decreasing to the
of 𝑐.neither a relative maximum nor a relative
ƒ has
minimum at 𝑐 if ƒ’(𝑥) has the same sign on (𝑎, 𝑐)
right
c)

as on (𝑐, 𝑏).

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EXAMPLE 2: Find the relative extrema of the function ƒ

given by:
a) ƒ 𝑥 = 𝑥 3 − 𝑥 2 − 𝑥
+2
b) 𝑦 =
2𝑥+1
e
3𝑥+4

EXAMPLE 3: Find the intervals of increase and decrease

and the relative extrema of the function
𝑦 = 3 − 2𝑥 − 𝑥 2

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for $𝑝/ y The 𝑥

EXAMPLE 4: office compan sells

𝑚𝑎𝑟𝑘e𝑟 .for these markers is given demand

markers per
Anyear supply

𝑝 = 10 – 0.001𝑥.
equation by:

a)What price should the company charge per

marker in order to maximize revenue? What is
the maximum revenue?

b)If the cost function is 𝐶(𝑥) = 5,000 + 2𝑥.

What is the company’s maximum profit?

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2.3. Using second derivatives to

find maximum and minimum
values.
CONCAVITY:

Let a function 𝑦 = ƒ(𝑥) defined on

interval 𝐼. We say ƒ isconcave if

ƒ 𝑡𝑥1 + 1 − 𝑡𝑥2 ≥ 𝑡 ƒ 𝑥1 + 1 − 𝑡ƒ(𝑥 2 ),

∀𝑥1, 𝑥2 ∈ 𝐼, 0 ≤ 𝑡 ≤ 1

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CONCAVE DOWN: SLOPE DECREASING

CONCAVE DOWN: f’(x) decreasing

CONCAVE DOWN: f’’(x)<0 (for all x)

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THE SECOND-DERIVATIVE TEST FOR RELATIVE EXTREMA

Theorem 4.3: (The second-derivative

Suppose that ƒ is differentiable for every

relative extrema)
test for

𝑥 in an open interval (𝑎, 𝑏) and that there

is a critical value 𝑐 in (𝑎, 𝑏) for which ƒ’(𝑐)
= 0. Then:
a) ƒ(𝑐) is a relative minimum if ƒ’’(𝑐) > 0.
b) ƒ(𝑐) is a relative maximum if ƒ’’(𝑐) < 0.
c) For ƒ’’(𝑐) = 0, the first-derivative test
can be used to determine where ƒ(𝑥) is
a relative extremum.

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EXAMPLE

EXAMPLE 5: Find the relative maximum

and minimum values of the following
functions:
a 1 1
f (x)  x3  x 2  2x 1
) 3 2
b g(x)   1 x3   11x  50 ; over (0,
) 6x 2 3
3).

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EXAMPLES

EXAMPLE 6: Find the maximum profit and the

number of units that must be produced and
sold in order to yield the maximum profit.
Assume that revenue, R(x), and cost, C(x),
𝑅𝑥
are in = 100𝑥 − 𝑥2; 𝐶 𝑥 =3 𝑥
dollars. − 6𝑥 + 3 2
89𝑥 + 100 1

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III. USING DERIVATIVES TO FIND ABSOLUTE

MAXIMUM AND MINIMUM VALUES

Definition: Suppose that ƒ is a function with

domain 𝐼. ƒ(𝑐) is absolute minimum if ƒ 𝑐 ≤
ƒ 𝑥 , for all 𝑥 in 𝐼. ƒ(𝑐) is absolute maximum
if ƒ 𝑐 ≥ ƒ 𝑥 , for all 𝑥 in 𝐼.

Another definition: Suppose that 𝑦 = ƒ(𝑥) is a

function with domain 𝐼. The number 𝑀 is
called absolute maximum of ƒif ƒ 𝑥 ≤ 𝑀,
for all 𝑥 in 𝐼 and there is exist 𝑐 ∈ 𝐼 such
that ƒ 𝑐 = 𝑀.

Similarly, we define for absolute minimum.

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III. USING DERIVATIVES TO FIND ABSOLUTE

MAXIMUM AND MINIMUM VALUES

Suppose that ƒ is continuous function defined over a

Theorem 4.4: Maximum-Minimum Principle 1

closed interval [𝑎, 𝑏]. To find the absolute maximum and

minimum values over [𝑎, 𝑏]:
a) Firstly, find ƒ’(𝑥)
b) Then determine all critical values in [𝑎, 𝑏]. That is, find
all 𝑐 in [𝑎, 𝑏]
for which ƒ’(𝑐) = 0 or ƒ’(𝑐) does not exist.
c) List the values from step b) and the endpoints of the

𝑎, 𝑐1 , … , 𝑐𝑛 , 𝑏
interval:

d) Evaluate ƒ(𝑥) for each value in step

ƒ 𝑎 , ƒ 𝑐1 , ƒ 𝑐2 , … , ƒ 𝑐𝑛 , ƒ (𝑏)
The largest number of these is the absolute maximum of f

[𝑎 , 𝑏]. The smallest number of these is the absolute

over

minimum of f over [𝑎 , 𝑏].

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EXAMPLES

minimumvalues of ƒ 𝑥 = 𝑥 3 − 3𝑥
EXAMPLE 7: Find the absolute maximum

+ 2 [−3; 1 .
and over
2
−
interval the

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FINDING ABSOLUTE MAXIMUM AND

MINIMUM VALUES OVER OTHER
INTERVALS
Theorem 4.5: Maximum-Minimum Principle
2
Suppose that ƒ is a function such that ƒ’(𝑥) exists
for every 𝑥 in an interval 𝐼, and that there is
exactly one (critical) value 𝑐 in 𝐼, for which ƒ’(𝑐)
= 0. Then
 ƒ(𝑐) is absolute maximum value over 𝐼 if
ƒ’’(𝑐) < 0
 Or ƒ(𝑐) is the absolute minimum value over 𝐼

ƒ’’(𝑐) > 0.
if

interval 𝐼 is- whether open, closed, or infinite in

Note: Theorem 4.5 holds no matter what the

length. If ƒ’’(𝑐) = 0, either we must use

Maximum-Minimum Principle 1 or we must
know more about the behavior of function over
the given interval.

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IV. SOME MAXIMUM-MINIMUM PROBLEMS

IN BUSINESS AND ECONOMICS

EXAMPLE 8: A company uses a truck to

deliver its products. To estimate costs, the

1
manager models gas consumption by the
𝐺𝑥 800( +
2,000
function
= 5𝑥)
gal/mile, assuming𝑥that the truck is driven at
a constant speed of 𝑥 miles per hour for 𝑥
≥ 5. The driver is paid $18 per hour to drive
the truck 400 miles, and gasoline costs
$4.25 per gallon.
require 30 ≤ 𝑥 ≤ 65.
Highway regulations

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a. Find an expression for the total cost 𝐶(𝑥)

of the trip. Sketch the graph of 𝐶(𝑥) for the
legal speed interval 30 ≤ 𝑥 ≤ 65.
b. What legal speed will minimize the
total cost of the trip? What is the
minimal total cost?

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MAXIMUM-MINIMUM PROBLEMS, BUSINESS AND

ECONOMICS APPLICATIONS

producing 𝑥 units of certain products is

EXAMPLE 9: The total cost, in dollars, of

1
𝐶 𝑥
10 𝑥
given by

0
3
= 8𝑥 + 20 + = � ⋅
𝐶 𝑥�

𝐴 the minimum of 𝑥𝐴(𝑥) and

a) Find the average
c) Find
cost,

𝐴(𝑥) 𝐶′(𝑥) and 𝐴′(𝑥)

at 𝑥.0 . Find 𝐶′
assume that
b) Find
(𝑥0).
has minimum

d) Compare 𝐴 𝑥0 and 𝐶′(𝑥0).

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EXAMPLE 10: (Studying Maximum and Minimum Traffic

Flow)
For several weeks, the highway department
has been recording the speed of freeway

The data suggest that between 1: 00 and 6:

traffic flowing past a certain downtown exit.

00 𝑃. 𝑀. on a normal weekday, the speed

𝑆 𝑡 = 𝑡 3 − 10.5𝑡2 + 30𝑡 + 20 miles per

of the traffic at the exit is approximately

𝑡 is the number of hours past noon. At what

hour, where

time between 1: 00 and 6: 00 𝑃. 𝑀. is the

traffic moving the fastest, and at what time is
it moving the slowest?

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V. MARGINALITY

Let 𝐶(𝑥), 𝑅(𝑥) and 𝑃(𝑥)

Definitions:
represent,

the production and sale of 𝑥 items.

respectively, the total cost, revenue, and profit from

𝑥, given by 𝐶′(𝑥),
𝑥 + 1 𝑡ℎ item:
 The
is the approximate x ≈ 𝐶 x + 1
marginal cost at
𝐶
− at
𝐶(x)
cost of the
′ 𝑥, given by 𝑅’(𝑥), is the
𝑥 + 1 𝑡ℎ item:
 The marginal revenue

𝑅 x ≈ 𝑅x + 1 −
approximate revenue from the

′ 𝑅(x)
𝑥, given by 𝑃’(𝑥), is the
approximate profit from the 𝑥 + 1 𝑡ℎ item:
 The marginal profit at

𝑃′ x ≈ 𝑃x + 1 −
𝑃(x)

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VI. MARGINAL VALUES

EXAMPLE 10: Quentin is the business manager
for a
company that manufactures cameras.

𝑥the 𝑃
digital determines that He

𝑃 𝑥 are
=
produced,
when total profit will be cameras
hundred

−0.0035𝑥3 + 0.07𝑥2 + 25𝑥 − 200

thousand dollars where:

Quentin plans to use marginal profit to

make decisions regarding future production.

b.The current level of production is 𝑥 = 10

a. What is the marginal profit function?

(1,000 cameras). Based on the marginal profit

at this level of production, should Quentin
recommend increasing or decreasing
production to increase profit?

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VI. MARGINAL VALUES

current level of production is 𝑥 = 50 (5,000

c. What decision should Quentin make if the

What if 𝑥 = 80 (8,000 cameras are being

cameras)?

produced)?

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VI. APPLICATION: ELASTICITY

Consider the following situation:

Production with no capital: Q = 2L0.6
 Should I expand the existing plant or open
a new plant with the same production
function?
 => what happens to Q when L is
doubled? Increases 2%, increases 1%?

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ELASTICITY
Q of interest:
 when L increases by 1%, by how many
percent total output increases
 when wage increases by 1%, by how many
percent supply for labor increases
 etc.
 Elasticity: measure the sensitivity of a
dependent variable with respect to a change
in an independent variable: how many
percentage change in Y in responding to 1
percent change in X?

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ELASTICITY
The price elasticity of demand is computed
as the percentage change in the quantity
demanded divided by the percentage
change in price.
Percentage change

in Quantity Demanded
Price Elasticity of Demand  Percentage change
in Quantity Price

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ELASTICITY

EXAMPLE 11: If the price of an ice cream cone

increases from $2.00 to $2.20 and the amount you
buy falls from 10 to 8 cones then how many is your
elasticity of demand?

Solution: The price elasticity of demand at 𝑝 = 2

would be calculated as:
 8  10 
 10 100 %
20 percent
10 percent %  2 
 2.20  2.00 
2.00  100
 
%

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ELASTICITY- CALCULATION
 Let an economic function: Y = F(X)

 We have: X
X 100  % change in X

Y ( X )
Y 100  % change in
 Hence: Y

EY ,  % changeinY  Y 
X
X
% changein X X
Y

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ELASTICITY- CALCULATION

When the change is very small:

EY ,  lim Y ( X )  X  dY 
X
X 0 X Y dX Y
X
Example:
Find price elasticity of demand at P =4?
 D1 = 30 – 3P
 D2 = 20 + 6P – P2

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ELASTICITY- CALCULATION

Back to D1:
 How does price elasticity of demand vary
with P?
 It increases with P in absolute value
 |E| <1: Inelastic
 |E| = 1: Unit elasticity
 |E| > 1: Elastic

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Basic Terminologies
 Increasing and decreasing functions

 Relative maximum and relative minimum

values
 Absolute maximum and Absolute
minimum
 Concavity

 Optimal problems in economics

 Marginality and Elasticity

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EXERCISES (Hoffmann-Edition
11)

Ex 11-14 (P168), 22-24 (P169)

Ex 6, 7, 8, 18, 19, 20 (P261)
Ex 24 – 34 (P262)
Ex 12, 15, 19, 20, 29 (P279-280)
Ex 3 – 6 (P287)
Ex 31 – 36, 39, 40, 41, 42 (P288 - 289)

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EXERCISES
(Bitt)
 From 1 to 46 Page 231 - 232; From 103 to 106
Pages 232

 From 49 to 85 Page 259; From 97 to 104 Pages

259-260.

 Marginal value: Ex 1 to 9 (P285); 17,18,19

(P286);

 Elasticity: Ex1 to 16 (P376)

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LESSON 2.3: EXPONENTIAL

AND LOGARITHMIC
FUCNTIONS
1 Exponential Functions

2 Logarithmic Functions

Applications: Uninhibited and

PROGRAM 3 Limited Growth Models
STRUCTURE

4 Applications: Decay

5 The Derivatives of
a and
x log a x

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2.3.1: Exponential Functions

 Def 3.1: An exponential function f is

given by

f (x)  a , x

Where x is any real number, a > 0,

and
x x
f (x) a 2is, called
a1 . Then
Examples: x  1  , f (x) 
f (x) the  base.
 Def 3
 
3.2: 1
 10.3 
n  .

lim 1  n
e  h0 lim  1  
 n
 2.7182182
h h

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2.3.1: Exponential
Functions
 Consider a exponential function: y  ax
(0  a  1)
 functio
If 0  a  1 then the given function is
n.
decreasing then the given functionis
If a  1 increasing
functio
n.

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2.3.2: Logarithmic
Functions
 Def 3.3: A logarithm is defined as follows:
y
y  loga x (0  a  1)means a  x

The number loga x is the power y to which we raise a
to get x.
 The number a is called the logarithmic base. loga x
We read as “the logarithm, base a, of x”.
For logarithm base 10, log x is the power y such that 10 y

We denote y  lg x y 10 log (Common
 xor
For logarithm base e, y x  elog x logarithm)
means e y  x. We
denote
by y  ln x. We called Natural
logarithm

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2.3.2: Logarithmic
Functions
 Consider a logarithmic function: y  log a

x (0  a  1)
 If 0  a  1 then the given function is
decreasing function.
 If a  1 then the given function is
increasing function.

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Graph of logarithmic functions

a>1

logax

0<a<1

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Basic properties of
logarithms
 Theorem 3.1: Properties of logarithms
 For any positive numbers 𝑀, 𝑁, 𝑎 and 𝑏,
with 𝑎, 𝑏 ≠ 1
and any real number k:
P1: log a (MN )  log a M  log a N
M
P2: loga N  loga M  log a N
P3: loga M k  k  log
a
M
P4: log a a 
P5: 1 log a 1
0 log M (The change-of-base formula)
P6: loga M  logb a
b

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2.3.3: Derivatives of exponential

and logarithmic functions
 The derivatives of exponential functions:

a   a e   e ; a   a
' ' '
x x
 ln a; x x u u ( x)
 ln
a  u '(x)
1 1 f '(x)
logThe
 ' ;  ln x  '
 ;  log f (x)
derivatives of logarithmica functions:  '

a x
 x  ln  f (x)  ln
 a x a

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2.3.4: GROWTH RATE

AND DECAY
MODEL
 This part can you yourself
study.

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Exercises (Hoffmann-Edition
11)

 Ex 52, 53, 55, 56 (P327).

 Ex 75, 77, 82, 84, 85 (P342-

343)

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Exercises
(Bitt)
 From 11 to 54
P319.
 From 89 to 100
P321
 From 92 to 105
P336
 From 18 to 38
P369

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CHAPTER III: INTEGRATION

 THIS CHAPTER’S GOALS: YOU WILL BE ABLE

TO
Understand the meaning of integration
 Indefinite and definite integrals
Know how to calculate integration
of basic functions
 Improper Integrals
 Some applications of integration

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THE AREA UNDER A CURVE

Examples:
 Want to find the
area of a block of
land

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CONSUMER SURPLUS
PRODUCER
SURPLUS

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THE AREA UNDER A CURVE

Imagine that we want to
calculate the area under a

as a function ƒ(𝑥) where 𝑥

curve which can be defined

∈ [𝑎, 𝑏]
Divide the interval into 𝑛
equal subintervals, ∆𝑥

𝑅 = [ƒ (𝑥1) + ⋯ +
Riemann sum:

ƒ (𝑥𝑛 )]∆𝑥
𝑅 is an approximation of
the area of the given

When 𝑛 → ∞, 𝑅 tend exact

region.

the value of the area.

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when h small
=> A(x0+h)-
A(x0+h) – A(x0) A(x0)~hf(x0)

~ hf(x0)

x0 x0+h

A(x): area up to x

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THE AREA AND THE DIFFERENTIATION

 Thus:
 h)  A(x )
A(x 0 0
  f (x ) as h  0
0
h

=> A’(x) = f(x)

 Meaning: derivative of the area =
function f(x)
 We called A(x) is anti-derivative of
function f(x).

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LESSON 3.1: ANTI-DERIVATIVE AND

INDEFINITE INTEGRALS
I. DEFINITIONS:
Def 3.1: Antidifferentiation ■ A function 𝐹(𝑥) is
antiderivative of ƒ(𝑥) if𝐹 𝑥 = ƒ(𝑥) for
every 𝑥 in the domain of ƒ(𝑥).
said
be an to
′
The process of finding antiderivatives is
called
antidifferentiation or indefinite integration.

+) If 𝐹(𝑥) is an antiderivative of a
Remark:

ƒ(𝑥)
function

𝐹(𝑥) + 𝐶 (where 𝐶 is a constant) is also

then

antiderivative of a function ƒ(𝑥).

+) If two functions 𝐹 𝐺 have the
derivative over an interval, then 𝐹(𝑥) =
and

𝐺(𝑥) + 𝐶.
same

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INDEFINITE INTEGRALS

ƒ(𝑥) is written ∫ ƒ 𝑥 𝑑𝑥 = 𝐹 𝑥 + 𝐶 and is

Def 3.2: The family of all antiderivatives of

called the indefinite integral of ƒ(𝑥).

Denot
e:  f (x)dx  F (x)  C  F '(x) 
f (x)
C is called the constant of
integration.
EXAMPLE 1:

 2x 3  dx  x 2
3x  C because   3x' 
x 2

2x  3

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II. BASIC INTEGRATION FORMULAS

Basic Integration formulas: (P379 Hoff)

(P391 Bitt)

1.  kdx  kxr  C (k is a constant)

r x
2.  x dx 1  C, provided r 
r 1
1 1
3. x dx  ln x 
C
b
4.  be dx
ax
a e ax

C

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RULES AND SOME PROPERTIES OF

INTEGRATION
Basic rules: (P380 Hoff)

1.  kf (x)dx  k  f (x)dx (k is a constant)

2.  [ f (x)  g(x)]dx   f (x)dx   g(x)dx

3. If  f (x)dx  F (x)  C, then  f (u)du  F (u)  C,

where u  g(x).

 f (x)dx  
'
4. f (x)

5.  f '(x)dx  f (x)  C

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EXAMPLE
EXAMPLE 2: Determine the
following indefinite integrals and the
check by differentiation:
2
4   1
  x
1.   8 x 5 
5
 dx
x4
2.  e 2 x x1 dx 2


3.  4 3
x

x  dx
2

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III. INTEGRATION TECHNIQUES:

SUBSTITUTION

 u
1. 2 C
du u r
u r 1
2. u du   C, provided r 
r 1
1 1
3. u du  ln u 
C
b
4.  be au
du 
a e au

C du
5. u 2   1  C
u

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III. INTEGRATION TECHNIQUES: SUBSTITUTION

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EXAMPLE 3: Find the following indefinite

a.∫ 3𝑥2+3𝑥+ 𝑥 𝑑
2𝑥 +
integral
1

𝑑
73𝑥 +
b. ∫ 1
2𝑥 +1+
1 2 𝑥
𝑙𝑛𝑥

∫
c.
𝑑𝑥
�
�

Find the function ƒ(𝑥)

EXAMPLE 4: Finding a Function from Its Slope

tangent has slope 3𝑥2 + 1 for each value

Function whose

of 𝑥 and whose graph passes through the

point (2, 6).

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INTEGRATION BY PARTS

Integration by parts: ∫ 𝑢𝑑𝑣 = 𝑢𝑣 − ∫ 𝑣𝑑𝑢

EXAMPLE 5: Find the following indefinite

integrals:
a. ∫ e−2𝑥 + 3𝑥 2 𝑑𝑥
b. ∫ 𝑥 2 e 3𝑥 𝑑𝑥

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INTEGRATION BY PARTS

Tips on Using Integration by Parts

1.If you have had no success using
substitution, try integration by parts.

is of the form ∫ ƒ 𝑥 𝑔 𝑥 𝑑𝑥.

2.Use integration by parts when an integral

 Match it with an integral of the form ∫ 𝑢𝑑𝑣

by choosing a function to be 𝑢 = ƒ(𝑥),
where can be differentiated, and the

𝑑𝑣 = 𝑔 𝑥 𝑑𝑥, where 𝑔(𝑥) can be

remaining factor to be

integrated.

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INTEGRATION BY PARTS

3. Find du by differentiating and 𝑣 by

integrating.

4.If the resulting integral is more

other choice for 𝑢 and 𝑑𝑣.

complicated than the original, make some

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IV. Applications of Indefinite

Integrals
EXAMPLE 6:
A town’s rate of population change is modeled
by P’(t) = 34t + 16, where t is the number of
years since 1990 and P’(t) is in thousands of
people per year.
a)Find the population model for this town if it is
known that in 2000, the town had a
population of 2,500,000.
b) Forecast the town’s population in 2055.

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IV. Applications of Indefinite

Integrals
EXAMPLE 7: Finding Total Cost from Marginal
Cost

cost of a certain product is 3𝑞2 − 60𝑞 + 400

A manufacturer has found that the marginal

dollars per unit when 𝑞 units have been

2 units is $900. What is the total cost of

produced. The total cost of producing the first

producing the first 5 units?

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INDEFINITE INTEGRALS

EXAMPLE 8:
A determinesthat the margin

is given by 𝑀𝐶 𝑥 𝑡ℎ
𝑥 unit
company
cost, M C, of the al

− 2𝑥. function, 𝑇𝐶
= 𝑥 3total-cost
producing
product Fin

𝑀𝐶(𝑥)
the of , d
assumingis in dollars and
a that fixed tha
costs are t
$7000.

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INDEFINITE INTEGRALS

store determines that the price 𝑝 (dollars)

EXAMPLE 9: The manager of a shoe

for each pair of a popular brand of sports

300
sneakers is changing at the rate of

𝑝′ 𝑥 = 𝑥 3
− 𝑥2 + 9
when 𝑥 (hundred) pairs2 are demanded by
consumers. When the price is $75 per
pair, 400 pairs (𝑥 = 4) are demanded by
consumers.

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INDEFINITE INTEGRALS

a. Find the demand (price) function 𝑝(𝑥).

b.At what price will 500 pairs of sneakers
be demanded? At what price will no
sneakers be demanded?
c. How many pairs will be demanded at a

$90 per pair?

price of

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INDEFINITE INTEGRALS

EXAMPLE 10: The price 𝑝 (dollars per unit)

of a particular commodity is increasing at

𝑝′ 𝑥
the rate 20
𝑥
7−𝑥
=
when 𝑥 hundred units of2 the commodity are

supplies 200 units (𝑥 = 2) when the price is

supplied to the market. The manufacturer

$2 per unit.
a. Find the supply function 𝑝(𝑥).
b. What price corresponds to a supply of 500
units?

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EXERCISES
(Hoff)
From Ex 21 to 30, P388

From Ex 48 to 54, P389

From Ex 15 to 35, Page 403

From Ex 54 to 58, Page 404

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EXERCISES
(Bittinger)

From Ex 59 to 66, P397

From Ex 1 to 12, P407

From Ex 81 to 100, Page 445

From 31 to 38, P452

From Ex 47 to 51, Page 453,

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Basic Terminologies
 Antiderivative, Antidifferentiation

 Indefinite integral

 Constant of Integration, Integrand

 Substitution

 Integration by parts

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LESSON 3.2: DEFINITE INTEGRALS

 We known
that:

INDEFINITE INTEGRAL DOES NOT

HELP US IN THE CALCULATION OF AREA
=> DEFINTE INTEGRAL

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I.
DEFINITIONS
Area as the Limit of a Sum

curve 𝑦 = ƒ(𝑥) over an interval 𝑎 ≤ 𝑥 ≤ 𝑏,

Consider the area of the region under the

where ƒ 𝑥 ≥ 0 and ƒ is continuous, as

illustrated in follow figure.

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DEFINITE INTEGRALS

EXAMPLE 1: Evaluate each of the following

a. ∫ 3𝑥 − 𝑥
1
integrals:
0
3 𝑑𝑥
𝑑
2𝑥 −
b. ∫0 3
2
𝑥
𝑑
c. 𝑥22 −2𝑥−3
∫1 𝑙𝑛𝑥� 𝑥
�

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II. INTEGRATION RULES

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III. INTEGRATION
TECHNIQUES

𝑢 = 𝑔(𝑥)
1. Substitution
When using a substitution
definite integral𝑎 ∫ ƒ 𝑥 𝑑𝑥
to evaluate 𝑏 a
you can proceed
these twoofways:
in either

𝐹(𝑥) for ƒ(𝑥), and then evaluate the definite

1.Use the substitution to find an antiderivative

integral using the fundamental theorem of

calculus.

and 𝑑𝑥 in terms of 𝑢 and 𝑑𝑢 and to replace the

2.Use the substitution to express the integrand

original limits of integration, 𝑎 and 𝑏, with

transformed limits 𝑐 = 𝑔(𝑎) and 𝑑 = 𝑔(𝑏).

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EXAMPLE: Evaluate the following definite

integrals:
a. ∫0 2𝑥 − 5 3𝑥 +
1

1𝑑𝑥1 4−3 𝑑
b. ∫ 3𝑥 +1+
0 𝑥
1 𝑥
2. Integration by parts
𝑏 � �
∫ 𝑢𝑑𝑣 = 𝑢𝑣│ �−
∫ 𝑣𝑑𝑢
𝑎
�

𝑎 𝑎
EXAMPLE: Compute 𝐼 =0 ∫ 3𝑥 − 1
2

e2𝑥+1 𝑑𝑥

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IV. AN APPLICATION OF DEFINITE INTEGRALS

Consumer surplus:
The additional benefits enjoyed by
consumers who pay less than they are
willing and able to pay for a good.

Producer surplus:
The additional benefits enjoyed by
producers who were able to sell for a price
higher than they would have been willing
to sell for a good.

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IV. AN APPLICATION OF DEFINITE INTEGRALS

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EXAMPLE 1: Studying Consumers’ and Producers’

A tire manufacturer estimates that 𝑞 (thousand)

Surplus

wholesalers when the price is 𝑝 = 𝐷 𝑞 = −0.1𝑞2

radial tires will be purchased (demanded) by

+ 90 dollars per tire, and the same number of

tires will be supplied when the price is 𝑝 = 𝑆 𝑞 =
0.2𝑞2 + 𝑞 + 50 dollars per tire.
a.Find the equilibrium price (where supply equals
demand) and the quantity supplied and
demanded at that price.
b.Determine the consumers’ and producers’
surplus at the equilibrium price.

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EXAMPLE
EXAMPLE 2: Given the demand and supply functions

𝐷 𝑥 = 𝑥−5 2 and 𝑆 𝑥 = 𝑥2
are

+𝑥+3
Find each of the following.
a) The equilibrium point
b) The consumer surplus at the equilibrium point
c) The producer surplus at the equilibrium point

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EXAMPLE

EXAMPLE 3: Given 𝐷 = e−𝑥+4.5, 𝑆𝑥 =

𝑥 e 𝑥−5.5
Find each of the following:
a) The equilibrium point
b) The consumer surplus at the equilibrium
point.
c) The producer surplus at the equilibrium
point.

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Basic Terminologies
 Definite integral

 The area

 Substitution

 Integration by parts

 Consumer surplus

 Producer surplus

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EXERCISES
(Bitt)
 From 43 to 58, Pages 422, 423

 From 106 to 114, P425.

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EXERCISES (Hoff-
Eleventh)

 From 5 to 14, 22, 24, 26 Page 503

 Ex 33, 34, 36 Page 504.

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LESSON 3.3: IMPROPER INTEGRAL

Let’s try to find the area of the region under the graph

of y 
1
over the interval 1,
x2
 

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LESSON 3.3: IMPROPER INTEGRAL

Let’s try to find the area of region under

graph of ƒ(𝑥) over the interval [𝑎, +∞).

the

=> 𝑎∫ ƒ 𝑥
Note∞that this region is of infinite extent.

𝑑𝑥

Integral 𝑎 ƒ 𝑥 𝑑𝑥; ∫+∞ ƒ 𝑥 𝑑𝑥; ∫+∞ ƒ 𝑥

 improper
∫−∞
𝑑𝑥
𝑎 −∞

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IMPROPER INTEGRAL
I.

Definition 3.1: The Improper Integral∫𝑎 ƒ 𝑥 𝑑𝑥

+∞
DEFINITIONS:

■If ƒ (𝑥) is continuous for 𝑥 ≥ 𝑎,

 b
then
a
f (x)dx b
lima  f
If the limit exists, the improper integral is said
(x)dx
to converge to the value of the limit. If the
limit does not exist, the improper integral
diverges.
EXAMPLE 1: Determine whether the following
0 ∫
integral is convergent +∞ or divergent and

5e−3𝑥 𝑑𝑥.
value if it
calculate its is convergent:

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+∞
EXAMPLE 1: Evaluate the integr
∫
𝑥e 𝑑𝑥
0 −3𝑥
improper al

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IMPROPER INTEGRAL

b
b
Definition 3.2:


f (x)dx a
lim  f
a
(x)dx
 c 

 f (x)dx 

∫ ƒ 𝑥 𝑑𝑥 to converge, both
 In order −∞+∞   f (x)dx  f (x)dx,
the
integrals on second part of the
right in the 

where 𝑐 can be any real number.

c
definition must
converge.

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II.
Examples
EXAMPLE 1: Determine whether the following
integral is convergent or divergent, and
calculate its value if it is convergent:
∞
a) ∫
3𝑥
𝑥23 +1 2
1
+∞ d𝑥
b) ∫ 𝑥e −𝑥 2

d𝑥 −∞

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EXAMPLE 2: Finding Present Value of an Income

Flow
Uday wishes to endow a scholarship at a local

income stream at the rate of 25,000 + 1,200𝑡

college with a gift that provides a continuous

dollars per year in perpetuity. Assuming the

prevailing annual interest rate stays fixed at 5%
compounded continuously, what donation is
required to finance the endowment?

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IMPROPER INTEGRALS

Bittinger

Exercises from 1 to 28, pages 496

Exercises 43-48 (P497)

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IMPROPER INTEGRALS

Hoff-Eleventh

Exercises 7, 12, 13, 15 - 28, pages 515

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CHAPTER IV
FUNCTIONS OF SEVERAL VARIABLES
LESSON 4.1 SOME CONCEPTS AND PARTIAL DERIVATIVES

THIS LESSON’S GOALS: YOU WILL BE ABLE TO UNDERSTAND

Some basic concepts of multivariate

4.21. functions
1
Partial derivatives
42.1.
2
4.21. Hessian matrix/ concavity
3
Total differentials
42.1.
4

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4.1.1 SOME BASIC CONCEPTS

OF MULTIVARIATE
FUNCTIONS

rule assigns to each ordered pair (𝑥, 𝑦) in a

Definition 4.1: A function of two variables is a

given set 𝐷 (the domain of f ) exactly one real

number, denoted by ƒ(𝑥, 𝑦).
EXAMPLE 1: Let a profit function 𝑃(𝑥, 𝑦) = 4𝑥
+ 6𝑦. Find 𝑃(25,10).
Solution: 𝑃 25,10 = 4 × 25 + 6 × 10 = 160.
 This result means that by selling 25 units of
the first product and 10 of the second, the
two-product firm will make a profit of $160.

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FUNCTION OF SEVERAL VARIABLES

EXAMPLE 2:
 𝑦 = ƒ (wo𝑟𝑘i𝑛𝑔 ℎo𝑢𝑟𝑠, e𝑑𝑢𝑐𝑎𝑡io𝑛 𝑙e𝑣e𝑙,
e𝑥𝑝e𝑟ie𝑛𝑐e, . . )
 𝑄 = 𝐴𝐾𝛼𝐿1−𝛼
 𝑈 = 𝑈( ƒoo𝑑, 𝑐𝑙o𝑡ℎi𝑛𝑔, 𝑙ei𝑠𝑢𝑟e, . . )
Function of several variables (or multivariate
function):
=> 𝑦= ƒ(𝑥 1 , . . , 𝑥𝑛 ) is a function of variables.
 𝑥1, . . , 𝑥𝑛: independent variables/ arguments
 𝑦: dependent variable

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NOTE Domain Convention: Unless

stated, we assume that the domain of ƒ is
otherwise
the set of all (𝑥, 𝑦) for which the expression
ƒ(𝑥, 𝑦) is defined.

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4.1.2 PARTIAL DERIVATIVES

Finding partial derivatives:
 Consider the function f is given by
z f (x, y)  x 2 y 3  xy 
4 y 2 1.
 Suppose for the moment that we fix y at 3.
Then
z  f (x,3)  x 2 (3)3  x  3  4(3) 2  1  27x 2 
3x  37.
 Note that, now we have a function of only

with respect to 𝑥, we have 54𝑥 + 3.

one variable. Taking the first derivative

 In general, without replacing 𝑦 with a

specific number, we can consider 𝑦 is
fixed.

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4.1.2 PARTIAL DERIVATIVES

 Then ƒ becomes a function of 𝑥 alone,

respect to 𝑥 . This derivative is called

and we can calculate its derivative with

the partial derivative of ƒ

to 𝑥 . Notation for this partial derivative is:
with respect

𝑧�or 6𝑧 or
 When we fix 𝑦 and6 ƒtreat
′�
6𝑥 it as a

6𝑥
constant. The expressions 𝑦 3, 𝑦 and 𝑦 2

asare then also 𝑧

� 6𝑥
Wetreated ′ = 6ƒ
= 6𝑧
=
2𝑥𝑦3 + 𝑦
constants. have:
� 6𝑥

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4.1.2 PARTIAL DERIVATIVES

Similarly, we find� 6𝑦
or 𝑧′
or by fixing 𝑥 6ƒ 6𝑧

𝑥 as a constant) and calculating the

6𝑦
(treating �

derivative with respect to 𝑦.

We
obtain: z 'y = y = z = 3x 2 y 2  x  8
f y y

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4.1.2 PARTIAL DERIVATIVES

Definition 4.2: For 𝑧 = ƒ(𝑥, 𝑦), the partial

derivatives with respect to 𝑥 and 𝑦 are:
f f (x  h, y)  f (x, or f x'
=
x h0lim h
y)
f = lim f (x, y  h)  f (x,
and y h0 h f y'
or y)
EXAMPLE 3:
For ƒ 𝑥, 𝑦, 𝑧 = 𝑥 3 − 3𝑥𝑦2 + 2𝑥𝑧 − 5𝑦 2 𝑧4
− 2𝑥 6+ƒ 5𝑧
𝑥 𝑦ƒ , ƒ
6ƒ 6ƒ ′ ′
Find 6𝑥 ;6𝑦 and
and ƒ6𝑧
(another notations:
′) 𝑧

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4.1.2 PARTIAL DERIVATIVES

6
6ƒ
, 𝑥 is
remain 𝑥variables 𝑦 and 𝑧
Solution: In order to find
considered
variable andasallthe

ƒ 𝑥, 𝑦, 𝑧 = 𝑥 3 − 3𝑥𝑦2 + 2𝑥𝑧 − 5𝑦 2 𝑧4
are treated as constants. From

− 2𝑥6 ƒ+ 5𝑧 2
We get6 = 3𝑥 − 3𝑦2 +
2𝑧 − 2 𝑥 we
Similarly,
have f
  6xy 10 yz 4

y
f
  2x  20 y z 
2 3

5z

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PRACTICE

EXAMPLE 4: Find the partial derivatives of

the following functions:

a) f (x, y, z)  x 3 yz  3xy 2 z 3  2xz   2 yx  5z 

5z 4 4
b)w  e 3 xy 2 y

 3x  2 y 
c) w  ln 
4 y  5x 
 
d ) w  e3 x 5 y 
(2x 2  3xy)

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CHAIN RULE
Theorem 4.1: If 𝑥 𝑡 = (𝑥1 𝑡 , 𝑥2𝑡 , … , 𝑥𝑛 𝑡) is
𝐶 functionon a ball about 𝑡0 and the
𝑦
1 = ƒ(𝑥 1 , . . , 𝑥𝑛 ) is a 𝐶1 function on a
a
function

𝑥(𝑡0), then 𝑦 = 𝑔(𝑡) = ƒ(𝑥 1 (𝑡), 𝑥2(𝑡), … ,

ball about

𝑥𝑛(𝑡)) is a 𝐶1 function at 𝑡0 and its

derivative is defined by the formula:
dy y dx (t0 ) y dx (t0 ) y 0
dt (t )  x1 (x(t ))  dt  (x(t0 ))  dt2    (x(t ))dt
0 0 1
2 n
dx
xn (t0 ) x

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𝑇𝑅= 𝑝 ⋅
𝑄(𝑝)
EXAMPLE 5:

dTR TR dp TR

   
dQ dp p dp
Q dp

This result can be extended for the

function
𝑦f= ƒ (𝑥
f1 , 𝑥x
2 , 1… f
, 𝑥𝑛 ) where 𝑥i= 𝑔 𝑡1, … ,i
f xn
  
𝑡𝑚 , ∀i = 1, 𝑛.
     1, n.
x2 x t We
n i
have:
t x t x t
i 1 i 2 i

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CHAIN RULE

EXAMPLE 6:
Consider the Cobb-Douglas production

𝑄 = 4𝐾0.75𝐿0.25. Suppose that the inputs 𝐾

function

and 𝐿 vary with time 𝑡 and the interest rate

𝑟, via the expressions:
10t
K (t, r) 2 and L(t, r)  2 
6t r 250r

𝑄
Evaluatethe rate of change of output wit

respect to 𝑡 when 𝑡 = 10 and 𝑟

h

= 0.1.

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Solution: First, note that

Q Q K Q L
   
t K t L t
 3K 0.25 L0.25 20t  r 1   K 0.75 L0.75 12t .

Since 𝐾(10, 0.1) = 10,000 and 𝐿(10, 0.1) =

625, at
𝑡 = 10 and 𝑟 = 0.1, the above expression
equals

310, 000 0.25

6250.25 20 10  0.11   10, 0000.756250.75 12 10 
3,960.

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4.1.3. HIGHER-ORDER
PARTIAL

Remark: Consider the function 𝑧 = ƒ(𝑥, 𝑦),

DERIVATIVES
as you 6 ƒ and 6 ƒ
known are functions of two
6𝑥 6𝑦
variables.
6ƒ
6
respectto 𝑥 and 𝑦 . Then will
6ƒ
We continue find the first partial 𝑥
6
an withof
derivatives
d 𝑦 be
function 𝑧 = ƒ(𝑥, 𝑦).original
second-order derivativesof the
partial Its notations are as
follows:
2 f 2 ,  2 ,f  2 fand 2 2 f
x xy yx y

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SECOND-ORDER PARTIAL DERIVATIVES

Definition 4.3: Second-order partial
derivatives
1)  f    f   f xx'' , Take the partial with respect to x,
2

x 2 x  
x and then with respect to x again.

2)  f    f   f xy'' Take the partial with respect to x,

2

y y  
x x and then with respect to y.

3)  f    f   f yx'' Take the partial with respect to y,

2

x x  
y y and then with respect to x.

4)  f2    f   f yy'' Take the partial with respect to y,

2

y y  
y and then with respect to y again.

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4.1.4 HESSIAN MATRIX AND

CONCATIVITY
Second order partial
derivatives:
 2 xx 
  f (x, y) 
yx  2 f (x, y)
  f (x,
2
 x y 
y)2  
 f y(x, y)  y
=> Hessian
matrix

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HESSIAN MATRIX AND CONCATIVITY

Theorem 4.2:
 A function ƒ (𝑥, 𝑦) is concave down in (𝑥,
𝑦) if its Hessian matrix is negative
definite
 A function ƒ (𝑥, 𝑦) is concave up in (𝑥,
𝑦) if its Hessian matrix is positive
definite.

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4.1.5 TOTAL
functio z = ƒ (𝑥, 𝑦)
DIFFERENTIAL
Assume that parti
the derivatives n all its partial
has al
derivatives
and are
continuous.
Then

the 𝑧 = ƒ(𝑥, 𝑦) is defined by 𝑑 𝑥 ƒ = ƒ 𝑑𝑥

Definition 4.4: The first-order total differential
′

+ ƒ ′ 𝑑𝑦.
for
function
𝑦

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4.1.5 TOTAL

Assume that the function 𝑦 = ƒ(𝑥 1 , 𝑥2, … , 𝑥𝑛 )

DIFFERENTIAL
has partial derivatives and all its partial
derivatives are continuous. Then

for the function 𝑦 = ƒ (𝑥1 , 𝑥2 , … , 𝑥𝑛 ) is

Definition 4.5: The first-order total differential

defined by dy  fx '  dx

1 1
f '
x
 dx
2
 ... f '
x
 dx 2 n

EXAMPLE 7:. Let na production

function y f (x , x , x )  Ax x   ,  ,
x ,
Total differential 1of the production
2
1
3
2

function is
3
0
given by  1     1    
dy  A   1 x2 x  dx
1 A   1 x31  dx
2  A   
1 x2 x  dx3
x x3 x 2 x 3 .

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TOTAL DIFFERENTIAL CONTINUE

differential for function 𝑦 = ƒ(𝑥 1 , 𝑥2) is

Definition 4.6: The second-order total

𝑑2 𝑦 = ƒ ′ ′ ⋅ 𝑑𝑥 2 + 2 ƒ ′ ′ ⋅ 𝑑𝑥 𝑑𝑥
⋅ 𝑑𝑥 2 +ƒ ′ ′
1
2 y = ƒ(𝑥 1 , 𝑥2 )
𝑥1𝑥1 𝑥1𝑥2 1 2
Theorem 4.3: 𝑥 2 𝑥If2 the function

ℝ is twice
of 𝑑𝑥1 or 𝑑2 𝑦𝑑𝑥 >20 is
defined on continuously
2 differentiable
whenever at least oneand

y = ƒ(𝑥 1 , 𝑥2) is strictly convex function.

nonzero, then

Theorem 4.4: If the function y = ƒ(𝑥 1 , 𝑥2) defined

on is twice continuously differentiable and 𝑑2 𝑦
> 0 whenever at least one of 𝑑𝑥1 or 𝑑𝑥2 is
nonzero, then y = ƒ(𝑥 1 , 𝑥2) is strictly concave
function.

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Basic Terminologies
 Functions of several variables

(Multivariate functions)
 Domain and Range

 Partial derivatives

 Higher-order partial derivatives

 Hessian matrix

 Total differential

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EXERCISES (Hoff-
Eleventh)

 From 5 to 16, Pages 571

 Ex 26 - 40 (P571 - 572)

 Ex 48, 49, 50, 55, 64, 65, 67 (P572 - 575)

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LESSON 4.2 MAXIMUM-MINIMUM

PROBLEMS

4.2.1 Def 1: Let a function of two variables: 𝑧 =

ƒ(𝑥, 𝑦)

1)The given function has a relative maximum at

(a, b) if ƒ 𝑥, 𝑦 ≤ ƒ(𝑎, 𝑏) for all points in a
certain rectangular region containing (a, b);

2)The function has a relative minimum at (a,

b) if ƒ 𝑥, 𝑦 ≥ ƒ(𝑎, 𝑏) for all points in a certain
rectangular region containing (a, b).

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The points (𝑎, 𝑏) in the domain of ƒ(𝑥, 𝑦)

Critical Points

for which both ƒ 𝑥 𝑎, 𝑏 = 0 and ƒ 𝑦 𝑎, 𝑏 = 0

are said to be critical points of ƒ .
Like the critical numbers for functions ƒ one
variable, these critical points play an
important role in the study of relative
maxima and minima.

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4.2.2
Problems

and minimum values of the function z =

Problem: Find the relative maximum

𝑓(x, 𝑦).
To find the relative maximum and minimum

1. Find ƒ ′ , ƒ ′ , ƒ ′ ′ , ƒ ′ ′ , ƒ ′ ′ , ƒ′ ′
value of f:
2. Solve𝑥the system 𝑦 𝑥𝑥 of 𝑥𝑦 𝑦𝑥 𝑦𝑦 𝑥
Letƒ (a,
′ =b)
0,represents
ƒ ′ = 0. a
equations
𝑦
solution.

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D-TEST

ƒ𝑥′ ′ ƒ𝑥′ ′
where 𝐷 = ƒ(𝑎,
𝑥′ ′ 𝑏)
𝑦 (𝑎,
ƒ𝑦′ ′ 𝑏)
𝑦
3. Evaluate D,
(𝑎,
𝑥 𝑏) (𝑎,
𝑦 𝑏)
𝐷 = 𝑥ƒ 𝑥′ ′ ⋅ ƒ 𝑦′ ′𝑦 𝑎, 𝑏 − ƒ𝑥′ 𝑦′ 𝑎, 𝑏 ⋅ ƒ ′ ′
𝑎, 𝑏 𝑦 𝑥
4. Then: 𝑎, 𝑏
a) f has a maximum at (a, b) if D > 0 𝑥 𝑎, 𝑏 <
f hasƒ ′a′ minimum at (a, b) if D > 0 𝑥
𝑥
0
𝑥 𝑎, 𝑏 >
ƒ ′ ′ neither a maximum nor a minimum
b) and

0
and
c) f has at
(a, b) if D< 0. The function has a saddle
point at (a, b).
d) This test is not application if D = 0.

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MAXIMUM-MINIMUM
PROBLEMS
EXAMPLE 1: Find the relative maximum
and minimum values of the following functions:

a. 𝑢 = 𝑥 3 + 4𝑦4 − 5𝑥2 + 7𝑥 + 16𝑦 − 5

b. 𝑢 = −4𝑥2 − 8𝑥𝑦 − 6𝑦3 + 10𝑦 + 3

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MAXIMUM-MINIMUM
PROBLEMS

EXAMPLE 2: A company produces 𝑥 units of

commodity 𝐴 and 𝑦 units of commodity 𝐵.
All the units can be sold for 𝑝 = 100 − 𝑥
dollars per unit of 𝐴 and 𝑞 = 100 − 𝑦
dollars per unit of 𝐵. The cost (in dollars) of

cost function 𝐶 𝑥, 𝑦 = 𝑥 2 + 𝑥𝑦 + 𝑦2 . What

producing these units is given by the joint-

should 𝑥 and 𝑦 be to maximize profit?

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MAXIMUM-MINIMUM
PROBLEMS
EXAMPLE 3: McKinley Martin is the business

determines that when he charges 𝑥 dollars

manager of an electronics store. He

and 𝑦 dollars per unit for the enhanced

per unit for the standard Kindle eBook reader

model, he will sell 400 − 𝑥 − 𝑦 standard

units and 600 − 2𝑥 − 𝑦 enhanced units. He
further determines that the total cost of
marketing and maintaining inventory for the

𝐶 dollars, where
Kindle readers will be

𝐶 = 𝑥 2 − 280𝑥 + 𝑦2 − 380𝑦 + 60000

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MAXIMUM-MINIMUM
PROBLEMS

a.Note that 𝑥 and 𝑦 must be nonnegative

and must also satisfy 400 − 𝑥 − 𝑦 ≥ 0 and
600 − 2𝑥 − 𝑦 ≥ 0. Describe the closed,
bounded region 𝑅 in the 𝑥𝑦 plane that
meets these requirements.

b.What prices 𝑥 and 𝑦 should McKinley

charge to minimize cost?

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Basic Terminologies

 Relative maximum

 Relative minimum

 Critical points

 Saddle points

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EXERCISES (Hoff-
Eleventh)

 From 5 to 21, Pages 588 – 589

 Ex 36, 37, 38 (P590)

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LESSON 4.3 CONSTRAINED

OPTIMIZATION
PROBLEMSsome
We beginby discussing
importanteconomics examples of constrained
optimization problems.

The consumer wants to 𝑚𝑎𝑥i𝑚i𝑧e 𝑈

EXAMPLE 1: (Utility Maximization Problem)

𝑥1 , 𝑥2 , … , 𝑥𝑛
𝑠𝑢𝑏 je𝑐𝑡 𝑡o 𝑝1 𝑥1 + 𝑝2 𝑥2 + ⋯ + p𝑛 𝑥𝑛 ≤ 𝐼,
𝑥1 ≥ 0 , 𝑥2 ≥ 0, … , 𝑥𝑛 ≥ 0.
𝑥i represents the amount of commodity i.
𝑈(𝑥1, 𝑥2, … , 𝑥𝑛): measures the
individual’s level of utility or satisfaction.
𝑝1 , 𝑝2 , … , 𝑝𝑛 denote the prices of
commodities and I denote the individual’s
income.

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LESSON 4.3 CONSTRAINED OPTIMIZATION PROBLEMS

EXAMPLE 2: (Profit Maximization of a Competitive Firm)
Suppose that a firm in a competitive industry uses n
inputs to manufacture its product.
Let y denote the amount of its output,
x1, x2 ,..., xn denote the amount of its input
y f (x1 , x2 ,..., xn ) denote the firm's
production function
p: the unit price of
output w i : denote the cost
n
of input i

(𝑥1, 𝑥2, … , 𝑥𝑛 ) to maximize its

The firm’s goals is to choose

profit:

  x1 , x2 ,..., xn   pf  x1 ,

x2 ,..., xn    w i xi
i1
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LESSON 4.3 CONSTRAINED OPTIMIZATION PROBLEMS

Under the constraints

n

pf (x1 , x2 ,..., xn )   w i xi  0,
i1

g1 (x)  b1 ,..., g k (x)  bk

x1  0,..., xn  0 where x  (x1 ,
x2 ,..., xn ).

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LESSON 4.3 CONSTRAINED OPTIMIZATION PROBLEMS

problem, that of maximizing a function 𝑧 = ƒ(𝑥, 𝑦) of

Now we discuss the simplest constrained maximization

𝑔 𝑥, 𝑦 = 𝑏.
two variables subject to a single equality constraint

The Method of Lagrange Multipliers

To find a maximum or minimum values of a function 𝑧
= ƒ(𝑥, 𝑦)
subject to the constraint 𝑔 𝑥, 𝑦 = 𝑏 (∗) .

𝐿=ƒ 𝑥, 𝑦 + 𝜆[𝑏 − 𝑔(𝑥, 𝑦)],

1. Form a new function (Lagrange function)

the variable 𝜆 is called a Lagrange multiplier.

= ƒ ′ − 𝜆𝑔 ′ ; 𝐿′ = ƒ ′ − 𝜆𝑔
+ Find𝐿�
2. The necessary condition:
𝑥 𝑥 𝑥 𝑦
;𝐿𝑦 = 𝑏 − 𝑔(𝑥, 𝑦);
�
′ ′
the ′
first partial derivatives

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LESSON 4.3 CONSTRAINED OPTIMIZATION PROBLEMS

+ Solve the system

 L'x
x '
x
f'
 
y   g =0
'
'y
L  f '
y

 L' g
Let (𝜆0, 𝑥0, 𝑦0) represent
   b  g  x, y 

 whether (𝑥0, 𝑦0)

0 a solution of this system.
Then we normally must determine
yields a maximum or minimum of the 0 f.
3. The sufficient condition of problem:
+ Find second partial derivatives (1) of the Lagrange
function: '' ; L'' ; L'' ; L''
L'' '' 0; L x  x  gx ;   L''y '' g y ; xx xy yx ;
' '

L y L (2) yy

L'' (3)

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LESSON 4.3 CONSTRAINED OPTIMIZATION PROBLEMS

+ Form Hessian
matrix  0 g '
x
g ' 
 y

H  g x' L''xx
' '' 
 g y L'' Lxy


And evaluate determinant of Hessian matrix |𝐻|.

 yx
L''yy

+ Substitute (𝜆0 , 𝑥0 , 𝑦0 ) into |𝐻| we obtained 𝐷 =

𝐻(𝜆0 , 𝑥0 , 𝑦0 ) .

+ If 𝐷 > 0, then the given function subject to the

4. Conclusion:

constraint (∗)
has maximum at (𝑥0 , 𝑦0 ).
+ If 𝐷 < 0, then the given function subject to the
constraint (∗)
has minimum at (𝑥0 , 𝑦0 ).

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LESSON 4.3 CONSTRAINED OPTIMIZATION PROBLEMS

𝑧 = 2𝑥 − (1
EXAMPLE 1: Find the maximum and minimum

3𝑦 )
values
of the following

𝑥2 + 𝑦2 = (∗
function: Subject to

13 )
the constraint

values of the following function: 𝑧 = 6𝑥𝑦 −

EXAMPLE 2: Find the maximum and minimum

4𝑥2 − 3𝑦2 (1)

Subject to the constraint 𝑥 + 3𝑦 = 19 (∗)

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A manufacturer has $600,000 to spend on

EXAMPLE 3:

determines that if 𝑥 units of capital and 𝑦

the production of a certain product and

then 𝑃 units will be produced, where 𝑃 is

units of labor are allocated to production,

𝑃 𝑥, 𝑦 = 120𝑥5 𝑦5 .
4
given by thefunction
Cobb-Douglas 1

Suppose each unit of labor costs $3,000

production

and each unit of capital costs $5,000. How

many units of labor and capital should be
allocated to maximize production?

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EXAMPLE 4:
A manufacturer of television sets makes two

that when 𝑥 hundred

models, the Deluxe and the Standard. The

Deluxe sets and 𝑦 hundred Standard sets are

manager estimates

𝑃(𝑥, 𝑦) thousand dollars, where

produced each year, the annual profit will be

𝑃 𝑥, 𝑦 = −0.3𝑥2 − 0.5𝑥𝑦 − 0.4𝑦2 + 85𝑥 +

125𝑦 − 2,500
The company can produce exactly 30,000 sets
each year. How many Deluxe and how many
Standard sets should be produced each year to
maximize annual profit?

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A manager has been allotted $8,000 to

EXAMPLE 5:

of a new product. It is estimated that if 𝑥

spend on the development and promotion

and 𝑦
thousand
on dollars are spent
development thousand dollars
𝑃 𝑥, 𝑦= 50𝑥3 2 𝑦 2 units
1
on
promotion, of
approximately the
product will be sold.

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a. How much money should the manager

allocate to development and how much to
promotion to maximize sales?

$1,000 for development and promotion. Use

b. Suppose the manager is allotted an extra

the Lagrange multiplier to estimate the

change in the maximum sales level.

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Basic Terminologies
 Constrained optimization
 Constraint
 Lagrange Multiplier
 Lagrange Function

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EXERCISES (Hoff-
Eleventh)
 From 1 to 12, Pages 616

 Ex 18, 19, 21, 22, 25 (P617)

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Constrained optimization
problems
Bitt
 Exercises from 5 to 8, page 586

 Exercises 32,33 and 40 (Pages 587-588)

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I wish all our class

members will receive
high results in the
final exam!

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