ARSI UNIVERSITY – DEPARTMENT OF ECONOMICS

Chapter Four: Integration 𝒙𝟑

Example: the function 𝐹(𝑥) = is an anti-derivative of 𝒇(𝒙) = 𝒙𝟐
4.1. The Concept of Integration 𝟑

The previous chapters were devoted to differential calculus, which 𝒅 𝒙𝟑

because ( ) = 𝒙𝟐 .
𝒅𝒙 𝟑
measures the rate of change of functions. Differentiation, we learned,
is the process of finding the derivative 𝑭’(𝒙) of a function, 𝑭(𝒙). However, 𝑭(𝒙) is not the only anti-derivative of 𝒙𝟐 . Note that all of
Frequently in economics, however, having known the rate of change the following are the anti-derivatives of 𝒙𝟐 .
of a function we want to find the original function. Reversing the
𝒅 𝒙𝟑 𝒅 𝒙𝟑 𝒅 𝒙𝟑
process of differentiation and finding the original function from the ( + 𝟐) = 𝒙𝟐 ( − ) = 𝒙𝟐 ( + √𝟓) = 𝒙𝟐
𝒅𝒙 𝟑 𝒅𝒙 𝟑 𝒅𝒙 𝟑
derivative is called INTEGRATION, or ANTI-DIFFERENTIATION. The
original function, 𝑭(𝒙) is called the integral, or anti derivative, of
Therefore, it follows that for any real constant number 𝑪 the anti-
𝑭’(𝒙).
𝒙𝟑
derivative of 𝒙𝟐 is + 𝑪. This is because of the fact that,
𝟑
Example: let 𝒇(𝒙) = 𝑭’(𝒙) then the integral of the function is
mathematically expressed as: 𝒅 𝒙𝟑
( + 𝑪) = 𝒙𝟐
𝒅𝒙 𝟑
∫ 𝒇(𝒙)𝒅𝒙 = 𝑭(𝒙) + 𝒄
4.2. Properties of Integration – Indefinite Integrals
The expression ∫ 𝒇(𝒙)𝒅𝒙 read as the integral of 𝒇 of 𝒙 with respect to 𝒙. For 𝑪 any real constant number the following are properties of
- The symbol ∫ is an integral sign indefinite integrals functions:
- 𝒇(𝒙) is an integrand
Property #1:
- 𝒄 is the constant of the integration
𝒏
𝒙𝒏+𝟏
∫ 𝒙 𝒅𝒙 = + 𝑪 where 𝒏 ≠ −𝟏
Definition: 𝒏+𝟏
The function 𝑭(𝒙) is said to be an anti-derivative of 𝒇(𝒙) if:
Property #2:
𝑭′ (𝒙) = 𝒇(𝒙) for every x in the domain of 𝒇(𝒙).
∫ 𝒆𝒙 𝒅𝒙 = 𝒆𝒙 + 𝑪
The process of finding anti-derivatives is called anti-differentiation or
Property #3:
𝑭(𝒙)
indefinite integration. 𝟏
∫ 𝒅𝒙 = 𝐥𝐧|𝒙| + 𝑪 where 𝒙 ≠ 𝟎
𝒅𝑭 𝒙
The equation 𝑭′ (𝒙) = 𝒇(𝒙) can sometimes be written as 𝒅𝒙 = 𝒇(𝒙).

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Property #4: The indefinite integral of constant times a function is the
constant times the indefinite integral of the function.
∫ 𝒌𝒇(𝒙)𝒅𝒙 = 𝒌 ∫ 𝒇(𝒙)𝒅𝒙 where 𝒌 𝒊𝒔 𝒄𝒐𝒏𝒔𝒕𝒂𝒏𝒕
Property #5: The indefinite integral of the sum/difference of two
functions is the sum/difference of the indefinite integrals.
∫[𝒇(𝒙) ± 𝒈(𝒙)]𝒅𝒙 = ∫ 𝒇(𝒙)𝒅𝒙 ± ∫ 𝒈(𝒙)𝒅𝒙
Solution:
Recall that marginal cost is the derivative of the total cost function
and that fixed cost is cost at a zero production level. So we want to
find TC from the given MC.
We find the indefinite integral of 𝑴𝑪 = 𝟎. 𝟑𝑸𝟐 + 𝟐𝑸 and determine
the arbitrary integration constant using TC when Q=0 is given to be
$2000. Therefore,

𝑻𝑪 = ∫(𝑴𝑪) 𝒅𝑸 = ∫(𝟎. 𝟑𝑸𝟐 + 𝟐𝑸 ) 𝒅𝑸

Property #6: The indefinite integral of a constant function with value 𝑻𝑪 = 𝟎. 𝟏𝑸𝟑 + 𝟐𝑸𝟐 + 𝟐𝟎𝟎𝟎
𝒌 is 𝒌𝒙 + 𝑪. And the TC of producing 20 units is
∫ 𝒌𝒅𝒙 = 𝒌𝒙 + 𝑪 𝑻𝑪 = 𝟎. 𝟏(𝟐𝟎)𝟑 + 𝟐(𝟐𝟎)𝟐 + 𝟐𝟎𝟎𝟎 = $𝟑, 𝟐𝟎𝟎

Examples: consider the indefinite integrals of the following 4.3. Techniques of Integration (Reading Assignment)
4.3.1. Integration by Substitution
𝒂) ∫ 𝟓 𝒅𝒙 = 𝟓𝒙 + 𝑪
4.3.2. Integration by Part
4.3.3. Integration by Partial Fraction
𝒃) ∫(𝟒𝒙𝟑 + 𝟐𝒙 − 𝟏)𝒅𝒙 = 𝒙𝟒 + 𝒙𝟐 − 𝒙 + 𝑪
𝟏
𝒄) ∫ (𝒆𝒙 + ) 𝒅𝒙 = 𝒆𝒙 + 𝐥𝐧|𝒙| + 𝑪 4.4. The Definite Integral
𝒙 The definite integral is used to compute areas, probabilities, average
𝟒 −𝟐
𝒅) ∫ ( 𝟑 ) 𝒅𝒙 = 𝟐 + 𝑪 values of functions, future values of continuous income streams, and
𝒙 𝒙
many other quantities.

Unlike the indefinite integral, which is a set of functions containing all

Application of Indefinite Integrals in Economics
the anti-derivatives of 𝒇(𝒙), the definite integral is a real number
Example: if the Marginal Cost (MC) of producing a commodity is given
which can be evaluated, using the fundamental theorem of calculus.
by 𝑴𝑪 = 𝟎. 𝟑𝑸𝟐 + 𝟐𝑸 and if the fixed cost is $2000 what is the total
cost of producing 20 units Definition:

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𝒂
Let 𝒇 be a continuous function on an interval [𝒂, 𝒃], the definite
∫ 𝒇(𝒙) 𝒅𝒙 = 𝑭(𝒂) − 𝑭(𝒂) = 𝟎
integral of 𝒇 from 𝒂 to 𝒃 is denoted as: 𝒂

𝒃 Property #3: The definite integral can be expressed as the sum of

∫ 𝒇(𝒙) 𝒅𝒙 component sub-integrals.
𝒂 𝒄 𝒃 𝒄
Where 𝒇(𝒙) is the integrand; 𝒂 is the lower limit of integration; and ∫ 𝒇(𝒙) 𝒅𝒙 = ∫ 𝒇(𝒙) 𝒅𝒙 + ∫ 𝒇(𝒙) 𝒅𝒙, given that 𝒂 ≤ 𝒃 ≤ 𝒄
𝒃 is the upper limit of integration. 𝒂 𝒂 𝒃

Property #4: The sum or difference of two definite integrals with

The definite integral of the above kind is evaluated as:
identical limits of integration is equal to the definite integral of the
𝒃
𝒃
∫ 𝒇(𝒙) 𝒅𝒙 = 𝑭(𝒙)𝒂 = 𝑭(𝒃) − 𝑭(𝒂) sum or difference of the two functions.
𝒂 𝒃 𝒃 𝒃
Example: evaluate the definite integrals given below: ∫ 𝒇(𝒙) 𝒅𝒙 ± ∫ 𝒈(𝒙) 𝒅𝒙 = ∫ [𝒇(𝒙) ± 𝒈(𝒙)] 𝒅𝒙
𝒂 𝒂 𝒂
𝟔 𝟑
𝒂) ∫ 𝟖𝒙 𝒅𝒙 𝒃) ∫ (𝟔𝒙𝟐 + 𝟓)𝒅𝒙 Property #5: The definite integral of constant times a function is equal
𝟐 𝟏
to the constant times the definite integral of the function.
Solutions: 𝒃 𝒃
𝟔
𝟔 ∫ 𝒌𝒇(𝒙) 𝒅𝒙 = 𝒌 ∫ 𝒇(𝒙) 𝒅𝒙
𝒂) ∫ 𝟖𝒙 𝒅𝒙 = 𝟒𝒙𝟐 𝟐 = 𝑭(𝟔) − 𝑭(𝟐) ⇒ 𝟒(𝟔)𝟐 − 𝟒(𝟐)𝟐 = 𝟏𝟐𝟖 𝒂 𝒂
𝟐
𝟑
𝟑
𝒃) ∫ (𝟔𝒙𝟐 + 𝟓) 𝒅𝒙 = (𝟒𝒙𝟑 + 𝟓𝒙)𝟏 = 𝑭(𝟑) − 𝑭(𝟐) 4.4.2. Integral and area under the curve
𝟏
The area under a curve between two points can be found by doing a
⇒ (𝟒(𝟑)𝟑 + 𝟓(𝟑)) − (𝟒(𝟏)𝟑 + 𝟓(𝟏)) = 𝟕𝟐
definite integral between the two points. To find the area under the
4.4.1. Properties of Definite Integral
curve 𝒚 = 𝒇(𝒙) between 𝒙 = 𝒂 and 𝒙 = 𝒃, integrate 𝒚 = 𝒇(𝒙)
Below are basic properties of definite integrals:
between the limits of 𝒂 and 𝒃.
Property #1: Reversing the order of the limits of integration changes
Example: what is the area between the curve for the function 𝒚 =
the sign of the definite integral.
𝒃 𝒂 𝒙𝟒 − 𝟐.
∫ 𝒇(𝒙) 𝒅𝒙 = − ∫ 𝒇(𝒙) 𝒅𝒙
𝒂 𝒃 Solution: the graph of the given function is plotted as follows:
Property #2: If the upper limit of integration equals the lower limit of
integration, the value of the definite integral is zero.

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The shaded area is the area that we want to compute. We can easily
work out that the curve crosses the x-axis at x = -2 and x = 2. To find
the area, therefore, we integrate the function between -2 and 2.

You may also be asked to find the area between the curve and the y-
=  10.67 sq. unit axis. To do this, integrate with respect to y.

Areas under the x-axis will come out negative and areas above the x-
axis will be positive. This means that you have to be careful when
finding an area which is partly above and partly below the x-axis.

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4.5. Economic Applications of Integrals
4.5.1. Consumers and Producers Surplus
An inverse demand function 𝑷 = 𝒇(𝑸), represents the different
prices consumers are willing to pay for different quantities of a good.
Consumer surplus is a buyer’s willingness to pay minus the amount
the buyer actually pays for it. Total benefit to consumers, called
consumers’ surplus, is depicted by the shaded area in the following
graph.

Mathematically,
𝑸
Producer’s surplus = 𝑷𝑸 − ∫ 𝒈(𝑸)𝒅𝑸
𝟎

Example: if the inverse demand function is given as 𝑷 = 𝟏𝟏𝟎 − 𝑸𝟐

and assuming that at market equilibrium 𝑸 = 𝟗 then estimate the
consumers’ surplus.

Solution:
𝟗
Mathematically,
Consumer’s surplus = ∫ (𝟏𝟏𝟎 − 𝑸𝟐 )𝒅𝑸 − 𝑷𝑸
𝑸 𝟎
Consumer’s surplus = ∫ 𝒇(𝑸)𝒅𝑸 − 𝑷𝑸 𝟏 𝟗
(𝟏𝟏𝟎𝑸 + 𝑸𝟑 ) 𝟎 = [𝑭(𝟗) − 𝑭(𝟎)] − 𝑷𝑸
𝟎 𝟑
And similarly, the inverse supply function 𝑷 = 𝒈(𝑸), represents the = (𝟕𝟒𝟕 − 𝟎) − (𝟐𝟗)(𝟗) = 𝟒𝟖𝟔
prices at which producers will supply different quantities of a good.
Example: Given an inverse supply function as 𝑷 = (𝑸 + 𝟔)𝟐 and
Producer surplus is an economic measure of the difference between assuming that at market equilibrium at 𝑸 = 𝟑 estimate the
the amount a producer of a good receives and the minimum amount producer’s surplus.
the producer is willing to accept for the good. Solution:
𝟑
Producer’s surplus = 𝑷𝑸 − ∫ ((𝑸 + 𝟔)𝟐 )𝒅𝑸
𝟎

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𝟏 𝟑 𝟏
 A producer’s marginal cost is given as 𝑴𝑪 = 𝟖 𝑸𝟐 − 𝑸 + 𝟑𝟐𝟎. What
𝑷𝑸 − (𝑸 + 𝟔)𝟑 𝟎 = 𝑷𝑸 − [𝑭(𝟑) − 𝑭(𝟎)]
𝟑 is the 𝑻𝑪 of producing 2 extra units if 6 units are currently being
𝟏 produced?
= [(𝟑)(𝟖𝟏)] − (𝟗𝟑 − 𝟔𝟑 ) = 𝟕𝟐
𝟑
Solution
4.5.2. Total Function Derivation from Marginal Function 𝟖 𝟖
𝟏
Using integrals total functions and their values can be estimated from 𝑻𝑪(𝟖) − 𝑻𝑪(𝟔) = ∫ (𝑴𝑪)𝒅𝑸 = ∫ ( 𝑸𝟐 − 𝑸 + 𝟑𝟐𝟎) 𝒅𝑸
𝟔 𝟔 𝟖
a given marginal functions. Take a look at into the following practical 𝟏 𝟑 𝟏 𝟐 𝟖
[ 𝑸 − 𝑸 + 𝟑𝟐𝟎𝑸] 𝟔
application exercises: 𝟐𝟒 𝟐
𝟏
 A firm’s Marginal Cost function is given as 𝑴𝑪 = 𝑸𝟐 − 𝟔𝑸 + 𝟏𝟐𝟓 = 𝟔𝟑𝟖𝟑
where 𝑸 is the unit of output produced. Fixed cost is given to be
$𝟐𝟖𝟎. Find the 𝑻𝑪 as a function of 𝑸.  A firm’s marginal revenue is 𝑴𝑹 = 𝟒𝟐𝟓 − 𝟎. 𝟓𝑸 − 𝟎. 𝟏𝟓𝑸𝟐 , then
find the total revenue 𝑻𝑹
Solution: Solution:
𝟐
𝑻𝑪 = ∫(𝑴𝑪)𝒅𝑸 = ∫(𝑸𝟐 − 𝟔𝑸 + 𝟏𝟐𝟓 )𝒅𝑸 𝑻𝑹 = ∫(𝑴𝑹)𝒅𝑸 = ∫ (𝟒𝟐𝟓 − 𝟎. 𝟓𝑸 − 𝟎. 𝟏𝟓𝑸 ) 𝒅𝑸

𝟏 𝟑 𝑻𝑹 = 𝟒𝟐𝟓𝑸 − 𝟎. 𝟐𝟓𝑸𝟐 + 𝟎. 𝟎𝟓𝑸𝟑 + 𝑪

𝑻𝑪 = 𝑸 − 𝟑𝑸𝟐 + 𝟏𝟐𝟓𝑸 + 𝑪
𝟑 𝑻𝑹 = 𝟒𝟐𝟓𝑸 − 𝟎. 𝟐𝟓𝑸𝟐 + 𝟎. 𝟎𝟓𝑸𝟑
Substituting the 𝑭𝑪 information 𝑻𝑪(𝑸 = 𝟎) = 𝟐𝟖𝟎 we can get Note: since when there are no sales (i.e. when 𝑸 = 𝟎) there is no 𝑻𝑹.
𝟏 Thus, in integrating 𝑴𝑹 functions to find 𝑻𝑹 functions the constant of
𝟐𝟖𝟎 = (𝟎)𝟑 − 𝟑(𝟎)𝟐 + 𝟏𝟐𝟓(𝟎) + 𝑪 ⇒ 𝑪 = 𝟐𝟖𝟎
𝟑 integration 𝑪 always be equal to 𝒛𝒆𝒓𝒐.
𝟏 𝟑
Thus, 𝑻𝑪 = 𝑸 − 𝟑𝑸𝟐 + 𝟏𝟐𝟓𝑸 + 𝟐𝟖𝟎
𝟑  Find the additional total revenue derived from increasing daily
Note: in integrating a 𝑴𝑪 fucntion to get the 𝑻𝑪 function, the 𝑭𝑪 will
sales from 𝟓 to 𝟗 units, given 𝑴𝑹 = 𝟐𝟕𝟎 − 𝟖𝑸
always be the constant of the integration.
Solution:
𝟗 𝟗
 Find the total cost function given the marginal cost function 𝑴𝑪 = 𝑻𝑹(𝟗) − 𝑻𝑹(𝟓) = ∫ (𝑴𝑹)𝒅𝑸 = ∫ (𝟐𝟕𝟎 − 𝟖𝑸) 𝒅𝑸
𝟓 𝟓
𝑸𝟐 − 𝟓𝑸 + 𝟖𝟗 for a fixed cost is $𝟐𝟐𝟓.
Answer: 𝟗
𝟏 = [𝟐𝟕𝟎𝑸 − 𝟒𝑸𝟐 ]𝟓 = 𝟐𝟏𝟎𝟔 − 𝟏𝟐𝟓𝟎 = 𝟖𝟓𝟔
𝑻𝑪 = 𝑸𝟑 − 𝟐. 𝟓𝑸𝟐 + 𝟖𝟗𝑸 + 𝟐𝟐𝟓
𝟑

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