MINISTRY OF EDUCATION AND TRAINING

NATIONAL ECONOMICS UNIVERSITY

MATHEMATICS FOR ECONOMICS AND BUSINESS

CALCULUS AND ITS APPLICATIONS

LECTURER : Dr.TONG THANH TRUNG

HA NOI 11/2022
 PART 2

Functions of one variable

2

3 Integration and It’s applications

PROGRAM
STRUCTURE

4 Functions of several variables

5 Review
CALCULUS AND ITS APPLICATIONS

LECTURER : Dr. TONG THANH TRUNG

HA NOI 11/2022

Copyright © 2019 - Trường Đại học Kinh tế Quốc dân

v1.0014105206
CHAPTER II: FUNCTIONS OF ONE VARIABLE

LESSON 2.1. Functions of one variable:

Fundamental concepts

LESSON 2.2. Limits and Continuity

LESSON 2.3. Differentiation

LESSON 2.4. Applications of differentiation

 CHAPTER II
FUNCTIONS OF ONE VARIABLE
LESSON 2.1 FUNDAMENTAL CONCEPTS FOR FUNCTION
OF ONE VARIABLE

LESSON 2.1’S GOALS: YOU WILL BE ABLE TO UNDERSTAND

Phân tích nội dung khoa học kiến

thTthtPhân
Some basictích concepts
nội dung khoa
forhọc
functions of
2.1.1
2 Phân tích nội dung khoa học kiến thức “Động lực
one variable
học chất điểm”

2
2.1.2 Functions used in economics
 Chapter II: 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 v
 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).
EXAMPLE 2: f(x) = 5x+2

f
y = f(x)

X Y
Domain Range
 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
range. Denote: = ( )
* 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 represents the function, the letter
is the independent variable representing the input value of ,
and is the dependent variable or output value of at .
 Some basic concepts
Def 2: Let a function = ( ).
Domain Convention ■ Unless otherwise specified, we
assume the domain of a function to be all real numbers
for which ( ) is defined as a real number. We refer to
this as the natural domain of .
 Real number corresponding to through rule is
called the value of that function at .
 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.
 Some basic concepts
EXAMPLE 3: Find the domain and the range of the following
functions:
a. =3 −4 +5
b. = 4−

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

consists of all points ( , ) where is in the domain of
and = ( ), that is, all points of the form ( , ( )).
By the set notation, the graph is , | ∈
 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: = = −
General form: = +
a: the slope; b: y-the intercept
 Non-Linear function:
 Quadratic functions: f(x) = ax2 + bx + c ( ≠ )
 Linear Functions and Non-Linear functions

 Polynomial functions: = + + ⋯+
 Rational functions:

= : is inversely proportional to

 Absolute value functions: =| − |

 Exponential functions: = , =
 Logarithm functions: = , = , =
 Composite functions

Def 5: Composition of Functions ■ Given functions

( ) and ( ), the composition ( ( )) is the function
of formed by substituting = ( ) for in the
formula for ( ).
 Composite functions

EXAMPLE 4: =2 and = . Find the

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

 = (number of items sold)(price per item)

= ( )
 The cost function ( ) is the cost of producing
units of the commodity.
The profit function ( ) is the profit obtained
from selling units of the commodity and is given by
the difference = revenue − cost = − ( )
 II. FUNCTIONS USED IN ECONOMICS

 The average cost function is = ⋅

Similarly, the average revenue function and

average profit function ( ) are given by

= and A =
 II. FUNCTIONS USED IN ECONOMICS

EXAMPLE 5: Studying a Production Process Market research

indicates that consumers will buy thousand units of a
particular kind of coffee maker when the unit price is
= −0.27 + 51
dollars. The cost of producing the thousand units is
= 2.23 + 3.5 + 85 thousand dollars.
a. What is the average cost of producing 4,000 coffee makers?
 II. FUNCTIONS USED IN ECONOMICS

b. How much revenue ( ) and profit ( ) are obtained from

producing thousand units (coffee makers)?
c. For what values of is production of the coffee makers
profitable?
 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
 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)
1, 2, 3 (P.56)
 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

 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.
 Limits and Continuity

For some functions, at some certain points, we can’t do

that.

= at = ?

 What should we do?

 Look at the value at a very nearby point f(x).
 For MANY functions, as gets closer to , ( )
always approaches certain value, and we call it a limit.
 I. Limits of function one variable
1. Definitions
Def 1: As x approaches the , the limit of ( ) is , written
lim ( ) =
→
if all values of ( ) are close to for values of that are
sufficiently close, but not equal, to . The limit must be a
unique real number.
One-sided limits: The notation lim ( )= to indicate the
→

limit from the right (that is, where > ).

The notation lim ( )= to indicate the limit from the left

→

(that is, where < ).

I. Limits of function one variable
I. Limits of function one variable
 I. Limits of function one variable

Theorem 2.1: Existence of a Limit ■ The two-sided

limit lim ( ) = exists if and only if the two one-sided
→
limits lim ( )= and lim ( )= both exist and
→ →
are equal, and then
lim ( ) = lim ( ) = lim ( ) =
→ → →

EXAMPLE 1:
 I. Limits of function one variable

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

approach the number as increases without bound, we
write lim ( ) = .
→
Similarly, we write lim ( )= when the function values
→
( ) approach the number M as decreases without bound.

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

→
infinite limit if ( ) increases or decreases without
bound as → . We write lim ( ) = +∞ if ( )
→
increases without bound as → or lim ( ) = −∞ if
→
( ) decreases without bound as →
 I. Limits of function one variable

EXAMPLE 2:
2. Limit Properties (Page 66)
Limits of function one variable
 II. Continuity of function one variable
Def 4: A function f is continuous at if all three of
these conditions are satisfied:
 is defined (the output at exists)
 lim exists (the limit as → exists)
→
 = ( ) (the limit of the given function
→
at is the same as output)
If ( ) is not continuous at = , it is said to have a
discontinuity there.
Def 5: A function is continuous over an open
interval , if and only if it is continuous at each
point in , .
 II. Continuity of function one variable

Def 6: A function f is continuous on the closed

interval [ , ] if it is continuous on the open interval
, and lim = ( ) and = ( ).
→ →

EXAMPLE 3: Consider continuity of the function f,

2 − 1, <2
given by: =
+ 2, ≥2
 Basic Terminologies

Limits

One-sided limits: Left limit and right limit

Limits at Infinity

Infinite Limits

Continuity
 Limits and Continuity

Exercises: (Bitt)

Limits and Continuity:

From Ex 7 to 26 (Pages 75)
From Ex 53 to 60 (Pages 76 - 77)
Ex 5 to 16, 20 – 28, 39, 40, 41 (Page 88)
Ex 43, 44 (P. 88)
Ex 51, 52 (P90)
Ex 5, 6, 7 (P. 92)
 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)
 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

 LESSON 2.3: Derivatives

I. Definitions
Def 1: Let the function = ( ). The average rate of
change of y with respect to x, as x change from
to is the ratio of the change in output to the
change of input:
= , where ≠ .
EXAMPLE 1: Let a function y = f = . Find the
average of change as
a) changes from 1 to 3.
b) changes from 2 to 3.
=> 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 ( x0  x)  f ( x0 )
lim
x 0 x

 If it does exist, measure the instantaneous

rate of change of f(x) at
 Derivatives

Def 2: The derivative of a function = ( ) at the

point 0 is the slope of the tangent line at that point

f ( x0  x)  f ( x0 )
lim  f '( x0 )
x  0 x
If ′( ) exists, then we say that is differentiable at
point 0.
Def 3: We say that the function is differentiable over
( , ) if it is differentiable at each point in ( , ).
 Derivatives

EXAMPLE 1:
It is estimated that x months from now, the
population of a certain community will be
= + 20 + 8,000.
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?
The derivative calculation Rules: The power rule, the
Sum-Difference rules, The Product rule, Quotient rule,
chain rule.
 Derivatives

EXAMPLE 2: The gross domestic product (GDP) of

a certain country was = + 5 + 106 billion
dollars t years after 2000.
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?
 Derivatives

EXAMPLE 3: The cost of producing units of a

particular commodity is = + 4 + 53
dollars, and the production level hours into a
particular production run is
= 0.2 + 0.03 units.
At what rate is cost changing with respect to time
after 4 hours?
 II. Higher-order Derivatives
Consider the function given by
6 4 3
y  f ( x)  x  3 x  2 x  5 x  7
Its derivative ’ is given by:
5 3 2
y '  f '( x)  6 x  12 x  6 x  5.
The derivative function ′ can also be differentiated. We can
think of the derivative of ’ as the rate of change the slope of
the tangent lines of . It can also be regarded as the rate at
which ’( ) is changing. We use the notation ’’ for the
derivative ( ’)’. That is, ’’( ) = ( ’( ))’.
We call ’’ is second derivative of .
Continuing in this manner, we have
f '''( x)  ( f ''( x))' (The third derivative of f)
'
f  n

( x)  f  n 1
( x)  (for all n  4) (The nth derivative of f)
 III. Differential Expression

Now suppose that we have a function given by

= ( ). A change in from to + Δ yields
a change in from ( ) to ( + Δ ). This
change in is given by:
Δ = +Δ −
 III. Differential Expression

Definition: For = ( ), we define , called the

differential of , by = Δx, and it is called the
differential expression of , by
=
 Basic Terminologies

Increment of the function

Derivative

Differentiable on ( , )

Higher order derivatives

Derivative calculation rules

Differential expression
 EXERCISES

Exercises:
(Laurence D. Hoffmann-Eleventh Edition)
Ex 33-39 (Page 115)
Ex 44, 45, 46 (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 (P142 - 143)
Ex 53, 54, 55, 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)
 EXERCISES

Exercises (Bitt)
Ex 1-84, PAGE 173-175 (TENTH EDITION)
Ex 1-42, PAGE 182-183 (TENTH EDITION)
 CHAPTER II
FUNCTIONS OF ONE VARIABLE
LESSON 2.4 APPLICATIONS OF DIFFERENTIATION
LEC 2.4’S GOALS: YOU WILL BE ABLE TO UNDERSTAND
2.4.1 Increasing and decreasing functions
2
Phân tích nội dung khoa học kiến
thTthtPhân tích nội dung khoa học
2
2.4.2 Maximum
Phân and
tích nội dung
học chất điểm”
minimum
khoa học kiến thứcproblems
“Động lực ật lí 1

2.4.3
2 Using derivatives to find absolute maximum
and minimum values.ật lí 10

2.4.4 Some Maximum-Minimum problems in

2 business and economics.í

2.4.5
2 Marginality and Elasticityậ lí 10
I. INCREASING AND DECREASING FUNCTIONS

Def 1: Let a function = ( ).

 A function is increasing if its graph moves upward
from left to right. More exactly, a function is
increasing if ∀ , ∈ : < ⇒ < ( )

 A function is decreasing if its graph moves

downward from left to right. More exactly, a
function is decreasing if
∀ , ∈ : < ⇒ > ( )
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.
I. INCREASING AND DECREASING FUNCTIONS
I. INCREASING AND DECREASING FUNCTIONS
I. INCREASING AND DECREASING FUNCTIONS
EXAMPLE 1: Find the intervals of increase and decrease
for the function
=
−2
 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
 2.1. Definitions
Def 2: A critical value of a function is any number
, in the domain of function, for which the tangent
line at ( , ( )) is horizontal or for which the
derivative does not exist. That is, c is a critical value
if ( ) exists and ’( ) = 0 or ’( ) does not exist.
Def 3: Let be the domain of .
 ( ) is a relative minimum if there exists within
an open interval = ( − , + ) such that
( ) < ( ), for all in \{ }.
 ( ) is a relative maximum if there exists within
an open interval = ( − , + ) such that
( ) > ( ), for all in \{ }.
Relative maximum or minimum values,
collectively referred to as relative extrema
(singular: extremum).

A function may have more

than one relative maximum
2.2. Using first derivatives to find maximum
and minimum values.
Theorem 4.1: If a function has a relative extreme value
( ) on an open interval, then is a critical value, so
’( ) = 0 or ’( ) does not exist.

Theorem 4.2: (The first–derivative test for relative

extrema)
For any continuous function that has exactly one critical
value in an open interval ( , ):
a) The function has a relative minimum at if ’( ) < 0
on ( , ) and ’( ) > 0 on ( , ). That is, is decreasing
to the left of and increasing to the right of .
b) f has a relative maximum at if ’( ) > 0 on ( , ) and
’( ) < 0 on ( , ). That is, is increasing to the left of
and decreasing to the right of .
c) has neither a relative maximum nor a relative
minimum at if ’( ) has the same sign on ( , ) as on
( , ).
EXAMPLE 2: Find the relative extrema of the function
given by:
a) = − − +2

b) =
EXAMPLE 3: Find the intervals of increase and decrease
and the relative extrema of the function
= 3−2 −
EXAMPLE 4: An office supply company sells
markers per year for $ / . The demand
equation for these markers is given by:
= 10 – 0.001 .

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 ( ) = 5,000 + 2 . What is

the company’s maximum profit?
 2.3. Using second derivatives to find
maximum and minimum values.
CONCAVITY:

Let a function = ( ) defined on interval . We

say is concave if

+ 1− ≥ + 1− ( ),
∀ , ∈ ,0 ≤ ≤ 1
CONCAVE DOWN: SLOPE DECREASING

CONCAVE DOWN: f’(x) decreasing

CONCAVE DOWN: f’’(x)<0 (for all x)

THE SECOND-DERIVATIVE TEST FOR RELATIVE EXTREMA

Theorem 4.3: (The second-derivative test for

relative extrema)
Suppose that is differentiable for every in
an open interval ( , ) and that there is a critical
value in ( , ) for which ’( ) = 0. Then:
a) ( ) is a relative minimum if ’’( ) > 0.
b) ( ) is a relative maximum if ’’( ) < 0.
c) For ’’( ) = 0, the first-derivative test can be
used to determine where ( ) is a relative
extremum.
 EXAMPLE

EXAMPLE 5: Find the relative maximum and

minimum values of the following functions:

1 3 1 2
a) f ( x)  x  x  2 x  1
3 2
1 3
b) g ( x)   x  6 x 2  11x  50 ; over (0, 3).
3
 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), are in dollars.
= 100 − ; = −6 + 89 + 100
 III. USING DERIVATIVES TO FIND ABSOLUTE
MAXIMUM AND MINIMUM VALUES

Definition: Suppose that is a function with domain .

( ) is absolute minimum if ≤ , for all in .
( ) is absolute maximum if ≥ , for all in .

Another definition: Suppose that = ( ) is a

function with domain . The number is called
absolute maximum of if ≤ , for all in
and there is exist ∈ such that = .

Similarly, we define for absolute minimum.

 III. USING DERIVATIVES TO FIND ABSOLUTE
MAXIMUM AND MINIMUM VALUES

Theorem 4.4: Maximum-Minimum Principle 1

Suppose that is continuous function defined over a closed
interval [ , ]. To find the absolute maximum and minimum values
over [ , ]:
a) Firstly, find ’( )
b) Then determine all critical values in [ , ]. That is, find all in [ , ]
for which ’( ) = 0 or ’( ) does not exist.
c) List the values from step b) and the endpoints of the interval:
, ,…, ,
d) Evaluate ( ) for each value in step
, , ,…, , ( )
The largest number of these is the absolute maximum of f over [ , ].
The smallest number of these is the absolute minimum of f over [ , ].
 EXAMPLES
EXAMPLE 7: Find the absolute maximum and
minimum values of = − 3 + 2 over the
interval [−3; − ].
 FINDING ABSOLUTE MAXIMUM AND MINIMUM
VALUES OVER OTHER INTERVALS

Theorem 4.5: Maximum-Minimum Principle 2

Suppose that is a function such that ’( ) exists for
every in an interval , and that there is exactly one
(critical) value in , for which ’( ) = 0. Then
 ( ) is absolute maximum value over if ’’( ) < 0
 Or ( ) is the absolute minimum value over if
’’( ) > 0.
Note: Theorem 4.5 holds no matter what the interval is-
whether open, closed, or infinite in length. If ’’( ) = 0,
either we must use Maximum-Minimum Principle 1 or
we must know more about the behavior of function
over the given interval.
 IV. SOME MAXIMUM-MINIMUM PROBLEMS IN
BUSINESS AND ECONOMICS

EXAMPLE 8: A company uses a truck to deliver its

products. To estimate costs, the manager models
gas consumption by the function
1 800
= ( +5 )
2,000
gal/mile, assuming that the truck is driven at a
constant speed of miles per hour for ≥ 5. The
driver is paid $18 per hour to drive the truck 400
miles, and gasoline costs $4.25 per gallon.
Highway regulations require 30 ≤ ≤ 65.
a. Find an expression for the total cost ( ) of the
trip. Sketch the graph of ( ) for the legal speed
interval 30 ≤ ≤ 65.
b. What legal speed will minimize the total cost
of the trip? What is the minimal total cost?
 MAXIMUM-MINIMUM PROBLEMS, BUSINESS AND
ECONOMICS APPLICATIONS

EXAMPLE 9: The total cost, in dollars, of

producing units of certain products is given by
1
= 8 + 20 +
100
a) Find the average cost, = ⋅
b) Find ′( ) and ′( ).
c) Find the minimum of ( ) and assume that
( ) has minimum at . Find ′( ).
d) Compare and ′( ).
EXAMPLE 10: (Studying Maximum and Minimum Traffic Flow)
For several weeks, the highway department has
been recording the speed of freeway traffic flowing
past a certain downtown exit. The data suggest that
between 1: 00 and 6: 00 . . on a normal weekday,
the speed of the traffic at the exit is approximately
= − 10.5 + 30 + 20 miles per hour, where
is the number of hours past noon. At what time
between 1: 00 and 6: 00 . . is the traffic moving the
fastest, and at what time is it moving the slowest?
 V. MARGINALITY
Definitions:
Let ( ), ( ) and ( ) represent, respectively, the total cost,
revenue, and profit from the production and sale of items.
 The marginal cost at , given by ′( ), is the approximate
cost of the + 1 item:
≈ + − ( )
 The marginal revenue at , given by ’( ), is the approximate
revenue from the + 1 item:
≈ + − ( )
 The marginal profit at , given by ’( ), is the approximate
profit from the + 1 item:
≈ + − ( )
 VI. MARGINAL VALUES
EXAMPLE 10: Quentin is the business manager for a
company that manufactures digital cameras. He
determines that when hundred cameras are
produced, the total profit will be thousand dollars
where: = −0.0035 + 0.07 + 25 − 200
Quentin plans to use marginal profit to make
decisions regarding future production.
a. What is the marginal profit function?
b. The current level of production is = 10 (1,000
cameras). Based on the marginal profit at this level of
production, should Quentin recommend increasing or
decreasing production to increase profit?
 VI. MARGINAL VALUES

c. What decision should Quentin make if the current

level of production is = 50 (5,000 cameras)?
What if = 80 (8,000 cameras are being produced)?
 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%?
 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?
 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
 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 = 2 would be

calculated as:

 8  10 
   100 20 percent
 10  % %  2  % 
 2.20  2.00  10 percent
   100
 2.00 
 ELASTICITY- CALCULATION
Let an economic function: Y = F(X)

X
We have: 100  % change in X
X
Y ( X )
100  % change in Y
Y
Hence:
% change inY Y X
EY , X   
% change in X X Y
 ELASTICITY- CALCULATION

When the change is very small:

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

EXERCISES (Hoffman-Edition 11)

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)
 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)

 LESSON 2.3: EXPONENTIAL AND
LOGARITHMIC FUCNTIONS
1 Exponential Functions

2 Logarithmic Functions

Applications: Uninhibited and

PROGRAM 3
STRUCTURE
Limited Growth Models

4 Applications: Decay

x
5 The Derivatives of a and log a x
 2.3.1: Exponential Functions

Def 3.1: An exponential function f is given by

x
f ( x)  a ,
Where x is any real number, a > 0, and a1 .
Then a is called the base. x
x 1 x
Examples: f ( x)  2 , f ( x)    , f ( x )   0.3 .
 3
Def 3.2:
1 n
 1
e  lim 1  h  h  lim  1    2.7182182
h 0 n 
 n
 2.3.1: Exponential Functions
x
Consider a exponential function: y  a (0  a  1)
If 0  a  1 then the given function is decreasing
function.
If a  1 then the given function is increasing
function.
 2.3.2: Logarithmic Functions
 Def 3.3: A logarithm is defined as follows:
y
y  log a x (0  a  1) means a  x
 The number log a x is the power y to which we raise a to get
x.
 The number a is called the logarithmic base. We read log a x
as “the logarithm, base a, of x”.
 For logarithm base 10, log10 x is the power y such that 10 y  x
We denote y  lg x or y  log x (Common logarithm)
y
 For logarithm base e, y  log e x means e  x. We denote
by y  ln x . We called Natural logarithm
 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.
Graph of logarithmic functions

a>1

logax

0<a<1
 Basic properties of logarithms
Theorem 3.1: Properties of logarithms
For any positive numbers , , and , with , ≠1
and any real number k:
P1: log a ( MN )  log a M  log a N
M
P2: log a  log a M  log a N
N
P3: log a  M k   k  log a M
P4: l og a a  1
P5: log a1  0
log b M
P6: log a M  (The change-of-base formula)
log b a
 2.3.3: Derivatives of exponential
and logarithmic functions
The derivatives of exponential functions:
x ' x ' u '
a   a x
 ln a; e   e ; a   a
x u( x)
 ln a  u '( x)
The derivatives of logarithmic functions:
' 1 ' 1 ' f '( x)
 log a x   ;  ln x   ;  log a f ( x)  
x  ln a x f ( x)  ln a
 2.3.4: GROWTH RATE AND
DECAY MODEL

This part can you yourself study.

 Exercises (Bitt)

From 11 to 54 P319.

From 89 to 100 P321

From 92 to 105 P336

From 18 to 38 P369
 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
 THE AREA UNDER A CURVE

Examples:
 Want to find the area
of a block of land
CONSUMER SURPLUS
PRODUCER SURPLUS
 THE AREA UNDER A CURVE
Imagine that we want to
calculate the area under a
curve which can be defined as
a function ( ) where ∈ [ , ]
Divide the interval into equal
subintervals, ∆
Riemann sum:
= [ ( 1) + ⋯ + ( )]∆
is an approximation of the
area of the given region.
When → ∞, tend exact the
value of the area.
 when h small =>
A(x0+h) – A(x0) A(x0+h)-A(x0)~hf(x0)

x0+h
~ hf(x0)

x0 x0+h

A(x): area up to x
 THE AREA AND THE DIFFERENTIATION

Thus:
A(x 0  h)  A(x 0 )
  f (x 0 ) as h   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).
 LESSON 3.1: ANTI-DERIVATIVE AND
INDEFINITE INTEGRALS
I. DEFINITIONS:
Def 3.1: Antidifferentiation ■ A function ( ) is said to
be an antiderivative of ( ) if = ( ) for every in
the domain of ( ).
The process of finding antiderivatives is called
antidifferentiation or indefinite integration.
Remark:
+) If ( ) is an antiderivative of a function ( ) then
( ) + (where is a constant) is also antiderivative of
a function ( ).
+) If two functions and have the same derivative
over an interval, then ( ) = ( ) + .
 INDEFINITE INTEGRALS
Def 3.2: The family of all antiderivatives of ( ) is
written ∫ = + and is called the
indefinite integral of ( ).

Denote:  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  x  3x '  2x  3
2
II. BASIC INTEGRATION FORMULAS

Basic Integration formulas: (P379 Hoff) (P391 Bitt)

1.  kdx  kx  C (k is a constant)
r 1
r x
2.  x dx   C , provided r  1
r 1
1
3.  dx  ln x  C
x
ax b ax
4.  be dx  e  C
a
 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).
'
4.   f ( x)dx   f ( x)
5.  f '( x)dx  f ( x)  C
 EXAMPLE

EXAMPLE 2: Determine the following indefinite

Examples: Evaluate and the check by
integrals anddifferentiation:
the check by differentiation:
 4 1 4  52 
1.   x   x  dx
 8 x 5 
 2 x 1 
2.   e  2 dx
 x 
2

 4 
3
3. x  x dx
III. INTEGRATION TECHNIQUES:
SUBSTITUTION
du
1.   u C
2 u
r 1
u
2.  u r du   C , provided r  1
r 1
1
3.  du  ln u  C
u
au b au
4.  be du  e  C
a
du 1
5.  2    C
u u
III. INTEGRATION TECHNIQUES: SUBSTITUTION
EXAMPLE 3: Find the following indefinite integral
a. ∫

b. ∫

c. ∫

EXAMPLE 4: Finding a Function from Its Slope Function

Find the function ( ) whose tangent has slope
3 + 1 for each value of and whose graph
passes through the point (2, 6).
 INTEGRATION BY PARTS

Integration by parts: ∫ = −∫

EXAMPLE 5: Find the following indefinite integrals:

a. ∫ +3
b. ∫
 INTEGRATION BY PARTS

Tips on Using Integration by Parts

1. If you have had no success using substitution,
try integration by parts.
2. Use integration by parts when an integral is of
the form ∫ .
Match it with an integral of the form ∫ by
choosing a function to be = ( ), where can
be differentiated, and the remaining factor to be
= , where ( ) can be integrated.
 INTEGRATION BY PARTS

3. Find du by differentiating and by integrating.

4. If the resulting integral is more complicated than

the original, make some other choice for and .
 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.
 IV. Applications of Indefinite Integrals
EXAMPLE 7: Finding Total Cost from Marginal Cost

A manufacturer has found that the marginal cost of a

certain product is 3 − 60 + 400 dollars per unit
when units have been produced. The total cost of
producing the first 2 units is $900. What is the total
cost of producing the first 5 units?
 INDEFINITE INTEGRALS

EXAMPLE 8:
A company determines that the marginal
cost, MC, of producing the unit of a
product is given by = − 2 . Find
the total-cost function, , assuming that
( ) is in dollars and that fixed costs are
$7000.
 INDEFINITE INTEGRALS

EXAMPLE 9: The manager of a shoe store

determines that the price (dollars) for each pair
of a popular brand of sports sneakers is
changing at the rate of
300
=−
+9
when (hundred) pairs are demanded by
consumers. When the price is $75 per pair, 400
pairs ( = 4) are demanded by consumers.
 INDEFINITE INTEGRALS

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

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 price of
$90 per pair?
 INDEFINITE INTEGRALS

EXAMPLE 10: The price (dollars per unit) of a

particular commodity is increasing at the rate
=
when hundred units of the commodity are
supplied to the market. The manufacturer supplies
200 units ( = 2) when the price is $2 per unit.
a. Find the supply function ( ).
b. What price corresponds to a supply of 500 units?
INDEFINITE INTEGRALS
 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

 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,

 Basic Terminologies

 Antiderivative, Antidifferentiation

 Indefinite integral

 Constant of Integration, Integrand

 Substitution

 Integration by parts
 LESSON 3.2: DEFINITE INTEGRALS

We known that:

INDEFINITE INTEGRAL DOES NOT

HELP US IN THE CALCULATION OF AREA
=> DEFINTE INTEGRAL
 I. DEFINITIONS

Area as the Limit of a Sum

Consider the area of the region under the curve =
( ) over an interval ≤ ≤ , where ≥0
and is continuous, as illustrated in follow figure.
 DEFINITE INTEGRALS

EXAMPLE 1: Evaluate each of the following integrals:

a. ∫ 3 −
b. ∫

c. ∫
II. INTEGRATION RULES
 III. INTEGRATION TECHNIQUES
1. Substitution
When using a substitution = ( ) to evaluate a
definite integral ∫ you can proceed in either of
these two ways:
1. Use the substitution to find an antiderivative ( ) for
( ), and then evaluate the definite integral using the
fundamental theorem of calculus.
2. Use the substitution to express the integrand and
in terms of and and to replace the original limits of
integration, and , with transformed limits = ( )
and = ( ).
EXAMPLE: Evaluate the following definite integrals:
a. ∫ 2 − 5 3 +1
b. ∫
2. Integration by parts
= −

EXAMPLE: Compute = ∫ 3 − 1
 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.
IV. AN APPLICATION OF DEFINITE INTEGRALS


EXAMPLE 1: Studying Consumers’ and Producers’ Surplus
A tire manufacturer estimates that (thousand) radial
tires will be purchased (demanded) by wholesalers when
the price is = = −0.1 + 90 dollars per tire, and
the same number of tires will be supplied when the price
is = = 0.2 + + 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.
 EXAMPLE
EXAMPLE 2: Given the demand and supply functions are
= − 5 and = + +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
 EXAMPLE

. .
EXAMPLE 3: Given = , =
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.
 Basic Terminologies

 Definite integral

 The area

 Substitution

 Integration by parts

 Consumer surplus

 Producer surplus
 EXERCISES (Bitt)

 From 43 to 58, Pages 422, 423

 From 106 to 114, P425.

 EXERCISES (Hoff-Eleventh)

 From 5 to 14, 22, 24, 26 Page 503

 Ex 33, 34, 36 Page 504.

 LESSON 3.3: IMPROPER INTEGRAL
Let’s try to find the area of the region under the graph
1
of y  2 over the interval 1, 
x
 LESSON 3.3: IMPROPER INTEGRAL

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

of ( ) over the interval [ , +∞).
Note that this region is of infinite extent.
=> ∫

 improper Integral
∫ ;∫ ;∫
 IMPROPER INTEGRAL
I. DEFINITIONS:
Definition 3.1: The Improper Integral∫ ■
If ( ) is continuous for ≥ , then
 b

 f ( x)dx  lim  f ( x)dx

b
a a
If the limit exists, the improper integral is said to
converge to the value of the limit. If the limit does
not exist, the improper integral diverges.
EXAMPLE 1: Determine whether the following
integral is convergent or divergent and calculate its
value if it is convergent: ∫ 5 .
EXAMPLE 1: Evaluate the improper integral
∫
 IMPROPER INTEGRAL

b b

Definition 3.2:  f ( x)dx  lim  f ( x)dx

a 
 a
 c 

 f ( x)dx   f ( x)dx   f ( x)dx,

  c

where can be any real number.

In order ∫ to converge, both integrals on
the right in the second part of the definition must
converge.
 II. Examples

EXAMPLE 1: Determine whether the following

integral is convergent or divergent, and calculate its
value if it is convergent:

a) d

b) e d
EXAMPLE 2: Finding Present Value of an Income Flow
Uday wishes to endow a scholarship at a local college
with a gift that provides a continuous income stream at
the rate of 25,000 + 1,200 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?
 IMPROPER INTEGRALS

Bittinger

Exercises from 1 to 28, pages 496

Exercises 43-48 (P497)

 IMPROPER INTEGRALS

Hoff-Eleventh

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

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

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

P

4.1.1 Some
Phân basic concepts
tích nội of multivariate
dung khoa học kiến
2 thTthtPhân tích nội dung khoa học
functions

2
4.1.2 Partial derivativesí 10

4.1.3
2 Hessian matrix/ concavity
Thiết kế và sử dụng E-book chương:“Động lực học chất điểm”-Vật lí 10

2
4.1.4 Total differentials
 4.1.1 SOME BASIC CONCEPTS OF
MULTIVARIATE FUNCTIONS

Definition 4.1: A function of two variables is a rule

assigns to each ordered pair ( , ) in a given set
(the domain of f ) exactly one real number, denoted
by ( , ).
EXAMPLE 1: Let a profit function ( , ) = 4 + 6 .
Find (25,10).
Solution: 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.
 FUNCTION OF SEVERAL VARIABLES

EXAMPLE 2:
 = ( ℎ , , ,..)
 =
 = ( , ℎ , ,..)
Function of several variables (or multivariate function):
=> = ( 1, . . , ) is a function of variables.
 1, . . , : independent variables/ arguments
 : dependent variable
NOTE Domain Convention: Unless otherwise
stated, we assume that the domain of is the set
of all ( , ) for which the expression ( , ) is
defined.
 4.1.2 PARTIAL DERIVATIVES
Finding partial derivatives:
Consider the function f is given by
2 3 2
z  f ( x, y )  x y  xy  4 y  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  27 x 2  3 x  37.
Note that, now we have a function of only one
variable. Taking the first derivative with respect
to , we have 54 + 3.
In general, without replacing with a specific
number, we can consider is fixed.
 4.1.2 PARTIAL DERIVATIVES
Then becomes a function of alone, and we
can calculate its derivative with respect to .
This derivative is called the partial derivative of
with respect to . Notation for this partial
derivative is:
or or
When we fix and treat it as a constant. The
expressions , and are then also treated
as constants. We have: = = =2 +
 4.1.2 PARTIAL DERIVATIVES

Similarly, we find or or by fixing (treating

as a constant) and calculating the derivative with
respect to .

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

Definition 4.2: For = ( , ), the partial derivatives

with respect to and are:
f f ( x  h, y )  f ( x , y ) '
= lim or f x
x h 0 h
f f ( x, y  h )  f ( x, y ) '
and = lim or f y
y h 0 h
EXAMPLE 3:
For , , = −3 +2 −5 −2 +5
Find ; and (another notations: , and )
 4.1.2 PARTIAL DERIVATIVES
Solution: In order to find , is considered as the
variable and all remain variables and are treated
as constants. From
, , = −3 +2 −5 −2 +5
We get =3 −3 +2 −2
Similarly, we have
f 4
 6 xy  10 yz
y
f 2 3
 2 x  20 y z  5
z
 PRACTICE

EXAMPLE 4: Find the partial derivatives of the

following functions:

a ) f ( x, y, z )  x 3 yz  3 xy 2 z 3  2 xz  5 z 4  2 yx  5 z  4
3 xy 2  2 y
b) w  e
 3x  2 y 
c) w  ln  
 4 y  5x 
d ) w  e3 x 5 y  (2 x 2  3 xy )
 CHAIN RULE
Theorem 4.1: If =( , ,…, ) is a
function on a ball about and the function
= ( 1, . . , ) is a function on a ball about
( ), then = ( ) = ( 1( ), 2( ), … , ( )) is
a function at and its derivative is defined by
the formula:

dy y dx1 (t0 ) y dx2 (t0 ) y dxn (t0 )

(t0 )  ( x(t0 ))   ( x(t0 ))     ( x(t0 )) 
dt x1 dt x2 dt xn dt
EXAMPLE 5: = ⋅ ( )
dTR TR dp TR dQ
   
dp p dp Q dp

This result can be extended for the function

= ( , , … , ) where = ,…, , ∀ = 1, .
We have:
f f x1 f x2 f xn
        i  1, n.
ti x1 ti x2 ti xn ti
 CHAIN RULE

EXAMPLE 6:
Consider the Cobb-Douglas production function
=4 . . . Suppose that the inputs and
vary with time and the interest rate , via the
expressions:
2
10t 2
K (t , r )  and L(t , r )  6t  250r
r
Evaluate the rate of change of output with
respect to when = 10 and = 0.1.
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 (10, 0.1) = 10,000 and (10, 0.1) = 625, at

= 10 and = 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.
 4.1.3. HIGHER-ORDER PARTIAL
DERIVATIVES
Remark: Consider the function = ( , ), as you
known and are functions of two variables.

We continue find the first partial derivatives of

and with respect to and . Then will be
second-order partial derivatives of the original
function = ( , ). Its notations are as follows:
2 f 2 f 2 f 2 f
2
, , and
x xy yx y 2
 SECOND-ORDER PARTIAL DERIVATIVES
Definition 4.3: Second-order partial derivatives
2 f   f  ''
1) 2
    f xx , Take the partial with respect to x,
x x  x 
and then with respect to x again.
2 f   f  ''
2)     f xy Take the partial with respect to x,
yx y  x 
and then with respect to y.
2 f   f  ''
3)     f yx Take the partial with respect to y,
xy x  y 
and then with respect to x.
2 f   f  ''
4) 2
    f yy Take the partial with respect to y,
y y  y 
and then with respect to y again.
4.1.4 HESSIAN MATRIX AND CONCATIVITY

Second order partial derivatives:

2
 f (x, y)
  2f (x, y) 
 xx yx 
 
  2f (x, y)  2f (x, y) 
 xy yy  


=> Hessian matrix

 HESSIAN MATRIX AND CONCATIVITY

Theorem 4.2:

 A function ( , ) is concave down in ( , ) if its

Hessian matrix is negative definite

 A function ( , ) is concave up in ( , ) if its

Hessian matrix is positive definite.
 4.1.5 TOTAL DIFFERENTIAL
Assume that the function z = ( , ) has partial
derivatives and all its partial derivatives are
continuous. Then

Definition 4.4: The first-order total differential for the

function = ( , ) is defined by = + .
 4.1.5 TOTAL DIFFERENTIAL
Assume that the function = ( , , … , ) has
partial derivatives and all its partial derivatives are
continuous. Then
Definition 4.5: The first-order total differential for the
function = ( , , … , ) is defined by
' ' '
dy  f  dx1  f  dx2  ...  f  dxn .
x1 x2 xn
EXAMPLE 7: Let a production function
y  f ( x1 , x2 , x3 )  Ax1 x2 x3 ,  ,  ,   0
Total differential of the production function is given by
dy  A    x1 1 x2 x3  dx1  A    x1 x2 1 x3  dx2  A    x1 x2 x3 1  dx3 .
 TOTAL DIFFERENTIAL CONTINUE
Definition 4.6: The second-order total differential for
function = ( , ) is
= ⋅ +2 ⋅ + ⋅
Theorem 4.3: If the function y = ( , ) defined on
ℝ is twice continuously differentiable and >0
whenever at least one of or is nonzero, then
y = ( , ) is strictly convex function.
Theorem 4.4: If the function y = ( , ) defined on is
twice continuously differentiable and > 0 whenever
at least one of or is nonzero, then y = ( , )
is strictly concave function.
 Basic Terminologies
Functions of several variables

(Multivariate functions)

Domain and Range

Partial derivatives

Higher-order partial derivatives

Hessian matrix

Total differential
 EXERCISES (Hoff-Eleventh)

 From 5 to 16, Pages 571

 Ex 26, 27, 28, 29 - 40 (P571 - 572)

 Ex 48, 49, 50, 55, 64, 65 (P572 - 574)

LESSON 4.2 MAXIMUM-MINIMUM PROBLEMS

4.2.1 Def 1: Let a function of two variables: = ( , )

1) The given function has a relative maximum at (a, b) if

, ≤ ( , ) for all points in a certain rectangular
region containing (a, b);

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

, ≥ ( , ) for all points in a certain rectangular
region containing (a, b).
Critical Points
The points ( , ) in the domain of ( , ) for which
both , = 0 and , = 0 are said to be
critical points of .
Like the critical numbers for functions one
variable, these critical points play an important role
in the study of relative maxima and minima.
4.2.2 Problems
Problem: Find the relative maximum and
minimum values of the function = ( , ).
To find the relative maximum and minimum value
of f:
1. Find , , , , ,
2. Solve the system of equations = 0, = 0.
Let (a, b) represents a solution.
 D-TEST

( , ) ( , )
3. Evaluate D, where =
( , ) ( , )
= , ⋅ , − , ⋅ ,
4. Then:
a) f has a maximum at (a, b) if D > 0 and , <0
b) f has a minimum at (a, b) if D > 0 and , >0
c) f has neither a maximum nor a minimum at (a, b) if
D< 0. The function has a saddle point at (a, b).
d) This test is not application if D = 0.
 MAXIMUM-MINIMUM PROBLEMS

EXAMPLE 1: Find the relative maximum and

minimum values of the following functions:

a. = +4 −5 + 7 + 16 − 5

b. = −4 −8 −6 + 10 + 3
 MAXIMUM-MINIMUM PROBLEMS

EXAMPLE 2: A company produces units of

commodity and units of commodity . All the
units can be sold for = 100 − dollars per unit
of and = 100 − dollars per unit of . The
cost (in dollars) of producing these units is given
by the joint-cost function , = + + .
What should and be to maximize profit?
 MAXIMUM-MINIMUM PROBLEMS

EXAMPLE 3: McKinley Martin is the business

manager of an electronics store. He determines that
when he charges dollars per unit for the standard
Kindle eBook reader and dollars per unit for the
enhanced model, he will sell 400 − − standard
units and 600 − 2 − enhanced units. He further
determines that the total cost of marketing and
maintaining inventory for the Kindle readers will be
dollars, where
= − 280 + − 380 + 60000
 MAXIMUM-MINIMUM PROBLEMS

a. Note that and must be nonnegative and must

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

b. What prices and should McKinley charge to

minimize cost?
 Basic Terminologies

Relative maximum

Relative minimum

Critical points

Saddle points
 EXERCISES (Hoff-Eleventh)

 From 5 to 21, Pages 588 - 589

 Ex 29, 30, 31 (P599)

LESSON 4.3 CONSTRAINED OPTIMIZATION
PROBLEMS
We begin by discussing some important economics
examples of constrained optimization problems.
EXAMPLE 1: (Utility Maximization Problem)
The consumer wants to , ,…,
+ +⋯+p ≤ ,
≥ 0 , ≥ 0, … , ≥ 0.
represents the amount of commodity .
( , , … , ): measures the individual’s level of
utility or satisfaction.
, , … , denote the prices of commodities and I
denote the individual’s income.
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 of input i
The firm’s goals is to choose ( , ,…, ) to maximize its profit:
n
  x1 , x2 ,..., xn   pf  x1 , x2 ,..., xn    w i xi
i 1
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 ).
LESSON 4.3 CONSTRAINED OPTIMIZATION PROBLEMS
Now we discuss the simplest constrained maximization
problem, that of maximizing a function = ( , ) of two
variables subject to a single equality constraint , = .
The Method of Lagrange Multipliers
To find a maximum or minimum values of a function = ( , )
subject to the constraint , = (∗) .
1. Form a new function (Lagrange function)
= , + [ − ( , )],
the variable is called a Lagrange multiplier.
2. The necessary condition:
+ Find the first partial derivatives
= − ; = − ; = − ( , );
LESSON 4.3 CONSTRAINED OPTIMIZATION PROBLEMS

+ Solve the system

 L'x  f x'   g x'  0 (1)
 ' ' '
L
 y  f y   g y =0 (2)
 L'  b  g  x, y   0 (3)
 
Let ( , , ) represent a solution of this system. Then we
normally must determine whether ( , ) yields a maximum or
minimum of the f.
3. The sufficient condition of problem:
+ Find second partial derivatives of the Lagrange function:

L''  0; L'' x  L''x   g x' ; L'' y  L''y   g 'y ; L''xx ; L''xy ; L''yx ; L''yy ;
LESSON 4.3 CONSTRAINED OPTIMIZATION PROBLEMS
+ Form Hessian matrix
 0  g x'  g y' 
 
H    g x' L''xx L''xy 
  g 'y L''yx L''yy 


And evaluate determinant of Hessian matrix | |.

+ Substitute ( , , ) into | | we obtained = ( , , ).
4. Conclusion:
+ If > 0, then the given function subject to the constraint (∗)
has maximum at ( , ).
+ If < 0, then the given function subject to the constraint (∗)
has minimum at ( , ).
LESSON 4.3 CONSTRAINED OPTIMIZATION PROBLEMS

EXAMPLE 1: Find the maximum and minimum values

of the following function: =2 −3 (1)
Subject to the constraint + = 13 (∗)

EXAMPLE 2: Find the maximum and minimum values

of the following function: =6 −4 −3 (1)
Subject to the constraint + 3 = 19 (∗)
EXAMPLE 3:
A manufacturer has $600,000 to spend on the
production of a certain product and determines
that if units of capital and units of labor are
allocated to production, then units will be
produced, where is given by the Cobb-Douglas
production function , = 120 . Suppose
each unit of labor costs $3,000 and each unit of
capital costs $5,000. How many units of labor and
capital should be allocated to maximize
production?
EXAMPLE 4:
A manufacturer of television sets makes two models,
the Deluxe and the Standard. The manager estimates
that when hundred Deluxe sets and hundred
Standard sets are produced each year, the annual
profit will be ( , ) thousand dollars, where
, = −0.3 − 0.5 − 0.4 + 85 + 125 − 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?
EXAMPLE 5:
A manager has been allotted $8,000 to spend on
the development and promotion of a new product.
It is estimated that if thousand dollars are spent
on development and thousand dollars on
promotion, approximately , = 50 units of
the product will be sold.
a. How much money should the manager allocate
to development and how much to promotion to
maximize sales?
b. Suppose the manager is allotted an extra $1,000
for development and promotion. Use the Lagrange
multiplier to estimate the change in the maximum
sales level.
 Basic Terminologies

Constrained optimization
Constraint
Lagrange Multiplier
Lagrange Function
 EXERCISES (Hoff-Eleventh)

 From 1 to 12, Pages 616

 Ex 18, 19, 21, 22, 25 (P617)

 Constrained optimization problems

Bitt
 Exercises from 5 to 8, page 586

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

 I wish all our class
members will receive
high results in the final
exam!