Calculus for Business Decisions

21st August 2021 IoBM

Topics: Introduction to Differential Equations

Introduction to Differential Equations

A differential equation is an equation which relates one or more than one functions with their
derivatives. They can be of the form:

dy
=f ( x)
dx
dy
=f ( x , y)
dx
And more depending on the number of variables and nature of the system they represent. In this course
we are only going to cover basic types which can be solved by direct integration or separation of
variables.

In solving the differential equations of the form above, we want an answer in the form of :

y=F(x) + C

For general solution, we don’t need to find C means it is a family of solutions.

For particular solution, we are given with a point (x,y) which can be used to find C which will give a
unique solution.

Example:

Solve the following differential equation by finding both general and particular solutions:

dy
=3 x2 +2 x
dx
The resulting system should satisfy y=10 for x=0 (This will give you your particular solution).

Solution:

dy
=3 x2 +2 x
dx
Integrating both sides using ‘x’ as variable of integration.
 dy
∫ dx dx=∫ ( 3 x 2+ 2 x ) dx
y=x 3 + x 2+ C
This is our general solution.

Now we use (x,y)=(0,10) to find particular solution.

Put x=0 and y=10 in our general solution:

10=03 +02 +C
Or C=10

Put C=10 in general solution:

y=x 3 + x 2+ 10
This is your particular solution for our problem;

Example:

Solve the following differential equation by finding both general and particular solutions:

dy 2 x
=e + 4 x 2 +2
dx
The resulting system should satisfy y=12 for x=0 (This will give you your particular solution).

Solution:

dy 2 x
=e + 4 x 2 +2
dx

Integrating both sides using ‘x’ as variable of integration.

dy
∫ dx dx=∫ ( e ¿ ¿ 2 x+ 4 x 2 +2)dx ¿
e 2 x 4 x3
y= + +2 x+C
2 3
This is your general solution. Now put x=0 and y=12 in general solution to get particular solution:

3
e 2(0) 4(0)
12= + +2(0)+C
2 3
 1
12= + C
2
23
C=
2
Put in general solution:

e 2 x 4 x3 23
y= + +2 x+ (This is our particular soluiton)
2 3 2
Separable Differential Equations:

A differential equation that can be written in the form:

dy f ( x )
= →A
dx g ( y)
Or

dy g ( y )
= →B
dx f ( x )
Is called separable as we can separate functions of different variables as:

For case A:

g ( y ) dy=f ( x ) dx
For case B:

dy dx
=
g( y) f (x)
We can then evaluate their integrals to solve our differential equation.

For case A:

∫ g ( y ) dy= ∫ f ( x ) dx
For case B:

dy dx
∫ =∫
g( y) f ( x)

Example:

Solve the following differential equation. Find both general and particular solutions:

dy 2 x 2
=
dx y
The solution should satisfy y=10 for x=0.

Solution:

First separate variables.

y dy=2 x 2 dx
Now integrate both sides.

∫ y dy= ∫ 2 x 2 dx
y2 2 x3
+C 1= +C 2
2 3
Take C1 on right side.

y 2 2 x3
= +C 2−C 1
2 3

Take C=C2-C1

y 2 2 x3
= +C
2 3

2 4 x3
y= +2C
3
1
4 x3
y=
3( + 2C ) 2

This is our general solution.

Put x=0 and y=10 in our general solution.

1
4 (0)3
10= ( 3
+2 C ) 2

1
2
10=( 2C )
Taking square on both sides:

100=2C
Or C=50

Put in our general solution.

 1
4 x3
y=( 3 )
+ 2(50) 2

3 1
4x
y=( + 100) 2
3
This is our particular solution.

Example:

Solve the following differential equation. Find both general and particular solutions:

dy y
=
dx x
The solution should satisfy y=30 for x=10.

Solution:

dy y
=
dx x
Separating variables:

dy dx
=
y x
Integrating both sides:

dy dx
∫ =∫
y x

ln ¿ y∨¿+C 1=ln ¿ x∨¿+ C 2 ¿¿

Take C1 on right side:

ln ¿ y∨¿=ln ¿ x∨¿+ C 2−C 1 ¿ ¿

Take C3=C2-C1

ln ¿ y∨¿=ln ¿ x∨¿+ C 3 ¿ ¿
Now apply natural exponent on both sides.

e ln |y|=e ln |x|+C 3 =e ln|x|. e C 3

Take C=e C 3

| y|=C∨x∨¿
This is our general solution.

Put x=10 and y=30 in our general solution.

|30|=C∨10∨¿
Or 30=10C

Or C=3

Put in general solution:

| y|=3∨x ∨¿
This is our particular solution.

Example:

Solve the following differential equation. Find both general and particular solutions:

dy e x
=
dx e y

Solution:

e y dy=e x dx
Integrating both sides.

∫ e y dy= ∫ e x dx
e y +C 1=e x +C 2
Take C3=C2-C1

e y =e x +C 3
Take ln on both sides.

ln ( e y ) =ln ( e x ) + ln ⁡(C 3)
Take C=ln(C3)
y=x +C

Investment flows

Net investment, I(t), can be written as a rate of change of capital stock, K(t):

dK
I=
dt
We can calculate capital formation during a certain time period (between t1 and t2) by taking a definite
integral of I(t) over that time period.
t2

∫ I ( t ) dt
t1

Example:

Suppose investment flow is given as:

I ( t )=1000 √ t
Calculate:

a) The capital formation from the end of the first fiscal year to the fifth fiscal year.
b) The number of years required before the capital stock exceeds 50000$.

Solution:

a) The capital formation from the end of the first fiscal year to the fifth fiscal year.

Here we have t1=1 and t2=5.

We will integrate the investment flow function between t1 and t2.

t2 5

∫ I ( t ) dt =∫(1000 √ t) dt
t1 1

5 5 1
2
¿ ∫ (1000 √ t) dt=1000∫ ( t ) dt
1 1

n+1
x
∫ x n dx= n+1
 5
3

[ ] ( ) 3 5
5 1 2 3 3
1000 t
1000∫ ( t ) dt=
1 3
2 2
[ ] 2
( 2
=1000 . t 2 =1000 . 5 2 − . 1 2
3 1 3 3 )
2 1

3 3
2 2 2 2 2 2000
¿ 1000 ( 3 3 3 )
. 5 − . 1 =1000 . ( 11.18034−1 ) =
3
( 10.18034 )=666.6667 ( 10.18034 )=6786.89367 $

b) The number of years required before the capital stock exceeds 50000$.

Here we will start integration from the beginning at t1=0 and our goal is to find t2=T at which point your
investment exceeds 50000$.
T 1
2
1000∫ ( t ) dt =50000
0

We will now apply the integral:

3 T 3 3 3
2
3 [ ]
1000 . t 2 =
0
2000 2 2 2000 2
3
T −0 =
3
T ( )

We now equate it with 50000 to find T

3
2000 2
T =50000
3

3
3∗50000 150000
T 2= = =75
2000 2000
3
T 2 =75
2
Take power on both sides
3
2
T =75 3
T =17.7845 Years.

Example:

Suppose investment flow is given as:

I ( t )=2000 t
Calculate:

a) The capital formation from the end of the first fiscal year to the eighth fiscal year.
b) The number of years required before the capital stock exceeds 40000$.

Solution:

a) The capital formation from the end of the first fiscal year to the eighth fiscal year.

Here we have t1=1 and t2=8.

We will integrate the investment flow function between t1 and t2.

t2 8

∫ I ( t ) dt =∫ (2000t )dt
t1 1

8 8
¿ ∫ (2000 t) dt =2000 ∫ t dt
1 1

x n+1
n
∫ x dx= n+1
8 8
2000 ( t 2 ) 8
2000∫ t dt=
1 2 [ 1
1
2]
=2000 . t 2 [ ] 1

8
1 2 8
2000 [ ]
2
. t =1000 [t 2 ] 1=1000 [ 82−12 ] =1000 [ 64−1 ] =63000 $
1

b) The number of years required before the capital stock exceeds 40000$.

Here we will start integration from the beginning at t1=0 and our goal is to find t2=T at which point your
investment exceeds 40000$.
T
2000∫ t dt=40000
0

We will now apply the integral:

T
1 2 2000 2 2
2000 [ ]
2
.t =
0 2
( T −0 ) =1000T 2
We now equate it with 40000 to find T

1000 T 2 =40000

40000
T 2= =40
1000

T 2=40
1
Take power on both sides
2
1
T =40 2
T =6.324 Years

Application of differential equations:

dK
Suppose we want to find K(t) from a given differential equation in the form of =I (t)
dt
We will simply solve this differential equation using the integral which will give us our general
solution. Then we will use some given initial condition to find ‘C’ which we will use to find its
particular solution.

Example:

Find K(t) for:

dK
=t+ 1
dt

Also, find its particular solution given for t=0 we have K=1000

Solution:
dK
=t+ 1
dt

We will first integrate using the variable t:

 dK
∫ dt =∫ ( t+ 1 ) dt
dt

t2
K +C 1= +t +C 2
2

Take C=C2-C1

t2
K= +t +C
2

This is your general solution.

Now use (t,K)=(0,1000) for C:

02
1000= +0+C
2

C=1000

Put C=1000 in general solution:

t2
K= +t +1000
2

This is your particular solution.

Example:

Find K(t) for:

dK
=t
dt

Also, find its particular solution given for t=0 we have K=2000
Solution:

dK
=t
dt

We will first integrate using the variable t:

dK
∫ dt =∫ t dt
dt

t2
K= +C
2

This is your general solution.

Now use (t,K)=(0,2000) to find C:

02
2000= +C
2
C=2000
Put in general solution:
t2
K= +2000
2
This is your particular solution.