Mathematics for

Business –
Differentiation

Instructor: Manyadze T
Room 4, Prefab 1
Email: tmanyadze@cut.ac.zw

1
 Differentiation: Basic Concepts

In this Chapter, we will

encounter some important
concepts.
 The Derivative
 Product and Quotient Rules,
Higher-Order Derivatives
 The Chain Rule
 Marginal Analysis, Implicit
Differentiation.
2
 The Derivative
 Calculus is the mathematics of change, and the
primary tool for studying change is a procedure
called differentiation.
 In this section, we will introduce this procedure
and examine some of its uses, especially in
computing rates of change.
 Rate of changes, for example velocity,
acceleration, the rate of growth of a population,
and many others, are described mathematically
by derivatives.
3
 The Derivative
A Difference Quotient for the function f(x): The express
f ( x  h)  f ( x )
h
The Derivative of a Function: The derivative of the
function f(x) with respect to x is the function f’(x) given
by
f ( x  h)  f ( x )
f ( x)  lim
h 0 h
The process of computing the derivative is called
differentiation. f(x) is differentiable at x=c if f’(x)
exists
4
 Example 2

Find the derivative of the function f ( x )  2 x 2

 16 x  35
Solution:

The difference quotient for f(x) is

f ( x  h)  f ( x) 2( x  h) 2  16( x  h)  35  2 x 2  16 x  35

h h
4 xh  2h 2  16h
  4 x  2h  16
h
Thus, the derivative of f(x) is the function
f ( x  h)  f ( x )
f ( x)  lim  lim(4 x  2h  16)  4 x  16
h 0 h h 0

5
Slope as a Derivative: The slope of the tangent
line to the curve y=f(x) at the point (c,f(c)) is

mtan  f (c)
Instantaneous Rate of Change as a Derivative :
The rate of change of f(x) with respect to x when
x=c is given by f’(c)
Remarks: Since the slope of the tangent line at
(a,f(a)) is f’(a), the equation of the tangent line is

y  f (a)  f (a)( x  a) The point-slope form

6
 Example 5
A manufacturer determines that when x thousand units of a
particular commodity are produced, the profit generated will be
p( x)  400 x 2  6800 x  12000
dollars. At what rate is profit changing with respect to the level of
production x when 9 thousand units are produced?
Solution:
We find that
p ( x  h)  p ( x )
p( x)  lim
h 0 h

 lim
 
 400( x  h) 2  6800( x  h)  12000  (400 x 2  6800x  12000)
h 0 h
 400h 2  800hx  6800h
 lim  800 x  6800
h 0 h
7
Thus, when the level of production is x=9, the profit is changing
at the rate of p(9)  800(9)  6800  400dollars per
thousand units.

Which means that the tangent line to the profit curve y=p(x) is
sloped downward at point Q where x=9. Therefore, the profit
curve must be falling at Q and profit must be decreasing when
9 thousand units are being produced.
8
Significance of the Sign of the derivative f’(x): If the
function f is differentiable at x=c, then
f is increasing at x=c if f’(c)>0 and
f is decreasing at x=c if f’(c)<0

9
Section 2.2 Techniques of
Differentiation
The Constant Rule: For any constant c, we have
d
 c  0
dx
That is, the derivative of a constant is zero
Proof: Since f(x+h)=c for all x
f ( x  h)  f ( x ) cc
f ( x)  lim  lim 0
d
 c  0
h 0 h h0 h
dx

10
The Power Rule For any real number n
d
[ x n ]  nx n 1
dx
In words, to find the derivative of xn, reduce the
exponent n of x by 1 and multiply your new power
of x by original exponent.
For Example
d
( x 3 )  3x 2
dx
1 1
d d 1 
( x)  (x ) 
2
x 2
dx dx 2

11
The constant Multiple Rule If c is a constant and f(x)
is differentiable then so is cf(x) and
d d
 cf ( x)  c  f ( x)
dx dx
That is, the derivative of a multiple is the multiple of the
derivative

For Example
d d
(3 x )  3 ( x 4 )  3(4 x 3 )  12 x 3
4

dx dx

d 7 d 1/ 2 1 3 / 2 7 3 / 2
( )  (7 x )  7( x )  x
dx x dx 2 2
12
The Sum Rule: If f(x) and g(x) are differentiable then so is the sum
of s(x)=f(x)+g(x) and
d d d
[ f ( x )  g ( x)]  [ f ( x)]  [ g ( x)]
dx dx dx
That is, the derivative of a sum is the sum of the separate derivative

For Example
d 2 d 2 d
( x  7)  ( x )  (7)  2( x 3 )  0  2 x 3
dx dx dx

d d 5 d 7
(2 x  3x )  2 ( x )  3 ( x )  2(5 x 4 )  3(7 x 8 )
5 7

dx dx dx
8
 10 x  21x
4

13
Example 6

It is estimated that x months form now, the

population of a certain community will be
p( x )  x  20 x  8000
2

a. At what rate will the population be changing with

respect to time 15 months from now?

b. By how much will the population actually change

during the 16th month?

14
 Solution:
a. The rate of change of the population with respect to
time is the derivative of the population function. That
is Rate of change  p( x)  2 x  20
The rate of change of the population 15 months from now
will be p(15)  2(15)  20  50 people per month

b. The actual change in the population during the 16th month

is p (16)  p(15)  8576  8525  51 people
Note: Since the rate varies during the month, the actual
change in population during 16th month differs from the
monthly rate of the change at the beginning of the month.
15
Example 7

The gross domestic product (GDP) of a certain country was

N (t )  t 2  5t  106
billion dollars t years after 1995.
a. At what rate was the GDP changing with respect to time in
2005?
b.Solution:
At what percentage rate was the GDP changing with respect to
time in 2005?
a. The rate of change of the GDP is the derivative N’(t)=2t+5.
The rate of change in 2005 was N’(10)=2(10)+5=25 billion
dollars per year.
b. The percentage rate of change of the GDP in 2005 was
N (10) 25
100  100  9.77% per year
N (10) 256
16
 Example 8
Let p( x)  2 x  3x  12 x  5 , find all x where p’(x)>0, p’(x)=0 and
3 2

p’(x)<0.

Solution:
Based on the techniques of
differentiation, we have
p( x)  2(3x 2 )  3(2 x)  12  0
 6 x 2  6 x  12
 6( x  1)( x  2)
So the solution is
p’(x)=0 at x=-1 and 2
p’(x)>0 at x<-1 and x>2
p’(x)<0 at -1<x<2
17
Example 9

The position at time t of an object moving along a line is given by

s (t )  t  6t  9t  5
3 2

a. Find the velocity of the object and discuss its motion between
times t=0 and t=4.
b. Find the total distance traveled by the object between times
t=0 and t=4.
c. Find the acceleration of the object and determine when the
object is accelerating and decelerating between times t=0 and
t=4.

18
 Solution:
ds
a. The velocity is v(t )   3t 2  12t  9 . The object will be
dt
stationary when
v(t )  3t 2  12t  9  3(t  1)(t  3)  0
that is, at times t=1 and t=3. Otherwise, the object is either
advancing or retreating, as described in the following table.
Interval Sign Description
of v(t) of Motion
Advancing
0<t<1 + from s(0)=5 to
s(1)=9
Retreating
1<t<3 - from s(1)=9 to s(3)=5
The motion of an object:
s ( t )  t 3  6t 2  9 t  5 Advancing
3<t<4 + from s(3)=5 to
s(4)=9 19
 Product and Quotient Rules; Higher-Order
Derivative
The derivative of a product of functions is not the product of
separate derivative!! Similarly, the derivative of a quotient of
functions is not the quotient of separate derivative.
Suppose we have two function f(x)=x3 and g(x)=x6

20
The Product Rule If the two functions f(x) and
g(x) are differentiable at x, then we have the derivative of the
product P(x)=f(x)g(x) is
d
 f ( x) g ( x)  f ( x) d [ g ( x)]  g ( x) d [ f ( x)]
dx dx dx
or equivalently,
( fg )  fg   gf 
Example 11
Using the product rule to find the derivative of the function
y  3 x 2 (2 x  x 2 )
1
2 3
Solution: y( x )  x ( 2 x  x 2 )  3 x 2 (2  2 x )
3
2 5 2 5 2 5
4 3 2 3 10 8
 x  x  2x 3  2x 3  x3  x3
3 3 3 3
21
 Example 12

A manufacturer determines that t months after a new

product is introduced to the market, x(t )  t  3t hundred
2

units can be produced and then sold at a price of

3
p (t )  2t  30
2

dollars per unit .

a. Express the revenue R(t) for this product as a function
of time .
b. At what rate is revenue changing with respect to time
after 4 months? Is revenue increasing or decreasing at
this time?
22
 Solution:
a. The revenue is given by
R(t )  x(t ) p (t )  (t 2  3t )(2t 3 / 2  30)
hundred dollars.
b. The rate of change of revenue R(t) with respect to time is given
by the derivative R’(t), which we find using the product rule:
R(t )  (t 2  3t )
d
dt
  d
 2t 3 / 2  30  (2t 3 / 2  30) [t 2  3t ]
dt
 3 
 (t 2  3t )  2( t 1/ 2 )  (2t 3 / 2  30)[2t  3]
 2 

At time t=4, the revenue is changing at the rate R’(4)=-14

Thus, after 4 months, the revenue is changing at the rate of 14
hundred dollars per month. It is decreasing at that time since
R’(4) is negative.
23
The Quotient Rule If the two functions f(x) and g(x) are
differentiable at x, then the derivative of the quotient Q(x)=f(x)/g(x)
is given by d d
g ( x) [ f ( x)]  f ( x) [ g ( x)]
d f ( x) dx dx
[ ] 2
if g ( x)  0
dx g ( x) g ( x)
or equivalently, f ' gf '  fg '
( ) 
g g2
Example 13
Using the quotient rule to find the derivative of the function

Solution:
3( 2  z )  (3 z  9)(1) 15
W ( z )  
(2  z ) 2
(2  z ) 2

24
A Word of Advice: The quotient rule is somewhat cumbersome,
so don’t use it unnecessarily.

Example 15
2 x 4 x 1
Differentiate the function y 2
   .
3x 3 5 x
Solution:
Don’t use the quotient rule! Instead, rewrite the function as
2 2 1 4
y x  x   1  x 1
3 3 5
and then apply the power rule term by term to get
dy 2 1
 (2 x 3 )   0  0  ( 1) x  2
dx 3 3
4 1 4 1 1
  x 3   x  2   3   2
3 3 3x 3 x

25
The Chain Rule: If y=f(u) is a differentiable function of
u and u=g(x) is in turn a differentiable function of x,
then the composite function y=f(g(x)) is a differentiable
function of x whose derivative is given by the product
dy dy du

dx du dx
or, equivalently, by
dy
 f ( g ( x )) g ( x )
dx

Note: One way to remember the chain rule is to pretend

the derivative dy/du and du/dx are quotients and to
“cancel” du.

26
Example 19
dy
if y  ( x  2)  3( x  2)  1
2 3 2 2
Find
dx
Solution:
We rewrite the function as y  u  3u  1,
3 2

where u  x 2  2 . Thus,
dy du
 3u 2  6u and  2x
du dx
and according to the chain rule,
dy dy du
  (3u 2  6u )(2 x)
dx du dx
 [3( x 2  2) 2  6( x 2  2)]( 2 x) replace u with x 2  2
 3( x 2  2)[ x 2 ](2 x)  6 x 3 ( x 2  2)
27
Example 20

The cost of producing x units of a particular commodity

is
1 2
C ( x)  x  4 x  53
3
dollars, and the production level t hours into a particular
production run is
x (t )  0.2t  0.03t units
2

At what rate is cost changing with respect to time after 4

hours?

28
 Solution:
dC 2 dx
We find that dx  3 x  4 and
dt
 0.4t  0.03

So according to the chain rule, we have

dC dC dx  2 
   x  4 (0.4t  0.03)
dt dx dt  3 
When t=4, the level of production is x(4)=3.32 units,
and by substituting t=4 and x=3.32 into the formula for
dC dC 2 
dt , we get dt   (3.32)  4[0.4(4)  0.03]  10.1277
t 4 3 

Thus, after 4 hours, cost is increasing at the rate of

approximately $10.13 per hour.
29
Marginal Analysis and Approximations Using Increments
In economics, the use of the derivative to approximate
the change in a quantity that results from a 1-unit
increase in production is called marginal analysis
For instance, suppose C(x) is the total cost of producing x units of
a particular commodity. If x0 units are currently being produced,
then the derivative
C ( x0  h)  C ( x0 )
C ( x0 )  lim
h 0 h
is called the marginal cost of producing x0 units. The limiting
value that defines this derivative is approximately equal to the
difference quotient of C(x) when h=1; that is
C ( x0  1)  C ( x0 )
C ( x0 )   C ( x0  1)  C ( x0 )
1 30
Marginal Cost: If C(x) is the total cost of producing x
units of a commodity. Then the marginal cost of
producing x0 units is the derivative C ( x0,)which
approximates the additional cost C ( x0  1)  C ( x0 ) incurred
when the level of production is increased by one unit,
from x0 to x0 +1, assuming x0 >>1.

31
Marginal Revenue and Marginal Profit:
Suppose R(x) is the revenue function generated
when x units of a particular commodity are
produced, and P(x) is the corresponding profit
function, when x=x0 units are being produced, then

The marginal revenue is R( x 0 ), it approximates

R( x0  1)  R( x0 ) , the additional revenue generated
by producing one more unit.

The marginal profit is P ( x 0 ) , it approximates

P ( x0  1)  P ( x0 ) , the additional profit obtained by
producing one more unit, assuming x0 >>1.

32
Example 22

A manufacturer estimates that when x units of a particular

1 2
commodity are produced, the total costC ( x )will
 xbe  3 x  98
8 1
( x) price
dollars, and furthermore, that all x units will be sold when pthe (75  is
x)
3
dollars per unit.

a. Find the marginal cost and the marginal revenue.

b. Use marginal cost to estimate the cost of producing the ninth unit.
c. What is the actual cost of producing the ninth unit?
d. Use marginal revenue to estimate the revenue derived from the
sale of the ninth unit.
e. What is the actual revenue derived from the sale of the ninth unit?

33
 Solution:
a. The marginal cost is C’(x)=(1/4)x+3. The total revenue is
R( x)  xp( x)  x((75  x) / 3)  25 x  x 2 / 3 , the marginal revenue is
R’(x)=25-2x/3.
b. The cost of producing the ninth unit is the change in cost as x
increases from 8 to 9 and can be estimated by the marginal cost
C’(8)=8/4+3=$5.
c. The actual cost of producing the ninth unit is C(9)-C(8)=$5.13
which is reasonably well approximated by the marginal cost C’(8)
d. The revenue obtained from the sale of the ninth unit is
approximated by the marginal revenue R’(8)=25-2(8)/3=$19.67
e. The actual revenue obtained from the sale of the ninth unit is
R(9)-R(8)=$19.33.
34
Marginal analysis is an important example
of a general Incremental approximation
procedure

35
Example 25

In each case, find the differential of y=f(x).

a. f ( x)  x 3  7 x 2  2
b. f ( x )  ( x 2
 5)(3  x  2 x 2
)
Solution:

a. dy  f ( x)dx  [3x 2  7(2 x)]dx  (3x 2  14 x)dx

b. By the product rule,
dy  f ( x)dx  [( x 2  5)(1  4 x)  (2 x)(3  x  2 x 2 )]dx
 (8 x 3  3x 2  14 x  5)dx

36
Implicit Differentiation and Related
Rates
So far the functions have all been given by equations of the form
y=f(x). A function in this form is said to be in explicit form.
For example, the functions
x 3
1
y  x 2  3x  1 y  and y  1 x2
2x  3
are all functions in explicit form
Sometimes practical problems will lead to equations in which
the function y is not written explicitly in terms of the independent
variable x. For example, the equations such as
x 2 y 3  6  5 y 3  xy and x 2 y  2 y 3  3x  2 y
are said to be in implicit form.
37
Example 26

Find dy/dx if x y  y  x
2 2 3

Solution:
We are going to differentiate both sides of the given equation with
respect to x. Firstly, we temporarily replace y by f(x) and rewrite
the equation as x 2 f ( x)  ( f ( x)) 2  x 3. Secondly, we differentiate both
sides of this equation term by term with respect to x:
d 2 d 3
[ x f ( x)  ( f ( x)) 2 ]  [x ]
dx dx
 2 df d 2  df
 x dx  f ( x) dx ( x )  2 f ( x) dx  3 x 2
              d 3
(x )
d 2 d dx
[ x f ( x )] [( f ( x )) 2 ]
dx dx
To be continued
38
Thus, we have
df df df
x2
 f ( x)(2 x)  2 f ( x)  3x 2
gather all terms
dx dx dx
2 df df
x  2 f ( x)  3x 2  2 xf ( x) on one side of the equation
dx dx
df
[ x 2  2 f ( x)]  3x 2  2 xf ( x) combine terms
dx
df 3 x 2  2 xf ( x) df
 2 solve for
dx x  2 f ( x) dx

Finally, replace f(x) by y to get

dy 3 x 2  2 xy

dx x2  2 y

39
 Application to Economics
Example 28

Suppose the output at a certain factory is Q  2 x 3  x 2 y  y 3

units, where x is the number of hours of skilled labor
used and y is the number of hours of unskilled labor. The
current labor force consists of 30 hours of skill labor and
20 hours of unskilled labor.
Question: Use calculus to estimate the change in unskilled
labor y that should be made to offset a 1-hour increase in
skilled labor x so that output will be maintained at its
current level.

40
 Solution:
If output is to be maintained at the current level, which is the value
of Q when x=30 and y=20, the relationship between skilled labor x
and unskilled labor y is given by the equation
80,000  Q(30,20)  2 x 3  x 2 y  y 3
The goal is to estimate the change in y that corresponds to a 1-unit
increase in x when x and y are related by above equation. As we
know, the change in y caused by a 1-unit increase in x can be
approximated by the derivative dy/dx. Using implicit
differentiation, we have
0  6x2  x2
dy
 2 xy  3 y 2
dy
dx dx
dy
 (x2  3y2 )  6 x 2  2 xy
dx
dy 6 x 2  2 xy
 2
dx x  3y2
Now evaluate this derivative when x=30 and y=20 to conclude that
dy 6(30) 2  2(30)( 20)
Change in y    3.14 hours
dx x  30 (30) 2  3( 20) 2
y  20

41
In certain practical problems,
problems x and y are related
by an equation and can be regarded as a function
of a third variable t, which often represents time.
Then implicit differentiation can be used to relate
dx/dt to dy/dt. This kind of problem is said to
involve related rates.

A procedure for solving related rates problems

1. Find a formula relating the variables.
2. Use implicit differentiation to find how the rates are related.
3. Substitute any given numerical information into the equation in
step 2 to find the desired rate of change.
42
Example 29

The manager of a company determines that when

q hundred units of a particular commodity are
produced, the cost of production is C thousand
dollars, where C 2  3q 3  4275 . When 1500 units
are being produced, the level of production is
increasing at the rate of 20 units per week.
What is the total cost at this time and at what rate
is it changing?

43
 Solution:
We want to find dC/dt when q=15 and dq/dt=0.2. Differentiating
the equation C 2  3q 3  4275implicitly with respect to time,
we get
dC  2 dq 
2C  33q  0
dt  dt 
so that dC 9q 2 dq

dt 2C dt
When q=15, the cost C satisfies
C 2  3(15)3  4275  C 2  4275  3(15)3  14400  C  120
and by substituting q=15, C=120 and dq/dt=0.2 into the formula
for dC/dt, we obtain
dC  9(15) 2 
  (0.2)  1.6875 thousand dollars per week.
dt  2(120) 
44
Summary
 Definition of the Derivative
f ( x  h)  f ( x )
f ( x)  lim
h 0 h
 Interpretation of the Derivative

Slope as a Derivative: The slope of the tangent line to

the curve y=f(x) at the point (c,f(c)) is mtan  f (c )
Instantaneous Rate of Change as a Derivative: The
rate of change of f(x) with respect to x when x=c is
given by f’(c)

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 Sign of The Derivative

If the function f is differentiable at x=c, then

f is increasing at x=c if f (c ) >0
f is decreasing at x=c if f (c ) <0
Techniques of Differentiation
d d d d
 c  0 [ x n ]  nx n 1  cf ( x)  c  f ( x)
dx dx dx dx
d d d
[ f ( x )  g ( x )]  [ f ( x )]  [ g ( x )]
dx dx dx

d
 f ( x) g ( x)  f ( x) d [ g ( x)]  g ( x) d [ f ( x)] The Product Rule
dx dx dx
d d
g ( x) [ f ( x)]  f ( x) [ g ( x)]
d f ( x) dx dx
[ ] 2
if g ( x)  0 The Quotient Rule
dx g ( x) g ( x)
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The Chain Rule
dy dy du dy
  f ( g ( x)) g ( x)
dx du dx dx
d n 1 d
[h( x)]  n[h( x)]
n
[ h( x)] The General Power Rule
dx dx
The Higher -order Derivative
d2y
or f ( x) The Second Derivative
dx 2
dny (n)
n
or f ( x ) The nth Derivative
dx
 Application of Derivative
Tangent line, Rectilinear Motion, Projectile Motion
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Marginal Analysis and Approximation by increments
The marginal cost is C ( x0 ) , it approximates C ( x0  1)  C ( x0 ) ,
the additional cost generated by producing one more unit.
C ( x0  1)  C ( x0 ) C ( x0  h)  C ( x0 )

 C ( x0  1)  C ( x0 )  C ( x0 )  lim
1 h 0 h

f ( x0  x)  f ( x0 )  f ( x0 )x Approximation by Increment

Marginal Revenue Marginal Profit

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