MATH6102

Business Mathematics

Week 7

Differentiation
 Chapter Outline

 The Derivative
 Rules of Differentiation
 Marginalities
 Elasticity of Demand
DIFFERENTIATION
• Differential is the change of the independent
variable caused by the variable change.
y  ax n

dy n 1
 a ( n) x
dx
RULES OF DIFFERENTIATION
RULE 1 Derivative of a Constant:
y=5
dy
0
dx
RULE 2 Derivative of xn:
y = x3
dy
 3 x 31  3 x 2
dx
RULE 3 Constant Factor Rule:
y = 3x2
dy
 3(2) x 21  6 x1
dx
RULE 4 Sum or Difference Rule
y = 4x2 + 3x
dy
  f  x   g  x    4(2) x 21 + 3(1) x11  8 x  3
dx
MARGINALITIES
• Total-cost function is c = f(q).
dC
• Marginal cost is defined as dQ .
• Total-revenue function is r = f(q).
dR
• Marginal revenue is defined as dQ .
Example: Marginal Cost
5000
If a manufacturer’s average-cost equation is AC  0.0001Q  0.02Q  5 
2

Q
find the marginal-cost function. What is the marginal cost when 50 units are produced?
Solution: The cost is  5000 
C  QxAC  Q 0.0001Q  0.02Q  5 
2

 Q 
C  0.0001Q 3  0.02Q 2  5Q  5000
Marginal cost when Q = 50,
dC
MC   0.0003Q 2  0.04Q  5
dQ
MC  0.0003 50   0.04 50   5
2

MC  3.75
ELASTICITY OF DEMAND
• The elasticity of demand is the percentage
change in the quantity of goods demanded by
the percentage of price changes.
% dQ
E
%dP
dQ P
E x
dP Q
Thank You