USE OF DERIVATIVES IN MATHEMATICS

AND ECONOMICS

Submitted to Group Members

Ma’am Sukaina Riaz Kainat Waseem
Jabeen
Eshya Qasim
Fizza Nadeem
Khadija Batool
Roshaane Gul
 INCREASING AND DECREASING FUNCTION
 A function is increasing when
f’(a)>0 at x=a
 A function is decreasing when

f’(a)<0 at x=a
Examples
 Y=3x2-14x+5

y’=6x-14
y(4)= 6(4)-14
= 24-14
= 10>0 function is increasing
 CONCAVE AND CONVEX FUNCTION
 A function is concave at x=a if second derivative is negative
 A function is convex at x=a if second derivative is positive
Examples
 Y= -2x3+4x2+9x-15
y’= -6x2+8x+9
y”= -12x+8
y(3)= -12(3)+8
= -28<0 concave
 y= (5x2-8)2
y= 2(5x2-8)(10x)
=20x(5x2-8)
= 100x3-160x
y”= 300x2-160
y(3)= 300(3)2-160
=2540>0 convex
 RELATIVE EXTREMA
A relative extrema is a point at which a function is at a relative maximum or minimum. To
be at a relative maximum or minimum at a point a, the function must be at a relative
plateau, i.e., neither increasing nor decreasing at a. If the function is neither increasing nor
decreasing at a, the first derivative of the function at a must equal zero or be undefined. A
point in the domain of a function where the derivative equal zero or is undefined is called
a critical point or value.

To distinguish mathematically between a relative maximum and minimum, the second

derivative test is used. Assuming f’ (a) = 0,

1. If f”(a) > 0, indicating that the function is convex and the graph of the function lies
completely above its tangent line at x = a, the function is at a relative minimum at x = a.

2. If f”(a) < 0, denoting that the function Is concave and a graph of the function lies
completely below its tangent line at x = a, the function is at a relative maximum at x = a.

3. If f” (a) = 0, the test is inconclusive.

 FOR EXAMPLE
 Find the relative extrema for the following functions by (1) finding the critical

value(s) and (2) determining it at the critical value (s) the function is at a
relative maximum or minimum.

 Given:
f(x) = - 7x^2 + 126x - 23

Solution:

1. Take the first derivative, set it equal to zero, and solve for x to find the

critical value(s).
f’(x) = - 14x + 126 = 0

x = 9. critical value
2. Take the second derivative, evaluated it at the critical value(s), and check

for concavity to distinguish between a relative maximum and minimum.

CONTINUE

f”(x) = -14
f”(9) = - 14 < 0. concave, relative maximum

 Example no. 2
Given:
f(x) = 3x^3 – 36x^2 + 135x – 13
Solution:
1. f’(x) = 9x^2 – 72x + 135 = 0
= 9(x^2 – 8x + 15) = 0
= 9(x – 3)(x – 5) = 0
x=3 x=5 critical value
2. f”(x) = 18x – 72
f”(3) = 18(3) – 72 = - 18 < 0. concave, relative maximum
f”(5) = 18(5) – 72 = 18 > 0. convex, relative minimum.
EXAMPLE NO.3
Given:

f (x) = 2x^4 – 16x^3 + 32x^2 +5

Solution:

1. f’(x) = 8x^3 – 48x^2 + 64x = 0

= 8x(x^2 – 6x + 8) = 0

= 8x(x – 2)(x – 4) = 0

x=0 x=2 x = 4. critical value

f”(x) = 24x^2 – 96x + 64

f”(0) = 24(0)^2 – 96(0) + 64 = 64 > 0. convex, relative minimum.

f”(2) = 24(2)^2 – 96(2) + 64 = - 32 < 0. concave, relative maximum.

f”(4) = 24(4)^2 – 96(4) + 64 = 64 > 0. convex, relative minimum.

 POINT OF INFLECTION
 An inflection point is a point on the graph of a function
at which the concavity changes. Points of inflection can
occur where the second derivative is zero.
 f”(a)=0 or is undefined
 Concavity changes at x=a
 Graph crosses its tangent line at x=a
EXAMPLE 1
Find the critical values and test to see if at the critical
values the function is having point of inflection.
Given:
y = (5-x)3
Solution:
Take the first derivative and put it equal to zero to find
the critical value.
 CONTINUE….
f’(y) = 3(5-x)2d/dx(5-x)
= 3(5-x)2(-1)
-3(5-x)2=0
x=0 x=5
Now take the second derivative of the equation.

y”= 6(5-x)

putting the critical value in the equation.

y”(5)= 6(5-5)=0 Test inconclusive

3. Continue taking the higher-order derivative and evaluating them at the critical value
to find the first higher-order derivative that does not equal to zero.

y”=-6

y’’(5)= -6<0

So as the non-zero value come from odd derivative it is at an inflection point.

Given:
EXAMPLE 2
y= (4-x)5
Solution:
Take the first derivative of the equation to find the critical value.
y’= 5(4-x)5-1d/dx(4-x)
= 5(4-x)4(-1)
Putting equal to zero to find the critical value
-5(4-x)4=0
x=0 x=4
Now take the second derivative of the equation.
y”= -20(4-x)4-1(-1)
= 20(4-x)3
putting the critical value in the equation.
y”= 20(4-4)3
= 20(0)3
=0
 CONTINUE
3. As the value came zero we will take the third derivative of the equation.
y”’= 60(4-x)2(-1)
= -60(4-x)2
Put the critical value
y”’= -60(4-4)2 = 0
Taking the fourth derivative
y””= -120(4-x)
And put the critical value in it
y””(4)= -120(4-4)
=0
Taking the fifth derivative
y””’= -120<0

As the value is non-zero so there is a point of inflection.

 OPTIMIZATION
Optimization is a process of finding the relative maximum and minimum of the function.

1. First take the first derivative and put it equal to zero and solve to find the critical values.

2. After finding the first derivative take the second derivative and evaluate the critical points and check the
conditions.

 f”(a)<0 the function is concave at a so it is relative maximum.

 f”(a)>0 the function is convex at a hence it is relative minimum.

 f”(a)= 0 the test is inconclusive.

EXAMPLE 1

f(x)= 2x3-30x2+126x+59

Solution:

Take the first derivative to find the critical values and set it to zero.

f’(x)= 6x2-60x+126=0

6x2-60x+126=0 By factorization

6(x-3)(x-7)= 0 The critical points are x=3 x=7

CONTINUE

Take the second derivative to check the concavity and evaluate the critical points.

f”(x)= 12x-60

(Putting the critical points in the equation)

f”(3)= 12(3)-60 = -24<0 concave, relative maximum

f”(7)= 12(7)-60 = 24>0 convex, relative minimum

The function is maximized at x=3 and minimized at x=7.

Example 2

Find the critical values and test for concavity to determine relative maxima or minima.

f(x)= x3-18x2+96x-80

Solution

Taking first derivative of the equation and set it to zero.

f’(x)= 3x2-36x+96=0
CONTINUE

Finding the critical points

f’(x)= 3(x-4)(x-8)=0
x=4 x=8
Take the second derivative
f”(x)= 6x-36
Now put the critical values in it
f”(4)= 6(4)-36
= -12<0 concave, relative maximum
f”(8)= 6(8)-36
= 12>0 convex, relative minimum
f”= 6x-36=0 x=6
As x=6 is the point of inflection
f(4) = (4)3-18(4)2+96(4)-80 = 80 (4,80) relative maximum
f(6) = (6)3-18(6)2+96(6)-80 = 64 (6,64) point of inflection
f(8) = (8)3-18(8)2+96(8)-80 =48 (8,48) relative minimum
 MARGINAL CONCEPT
 In economics, marginal concept is the change in the total cost when the quantity produced
changes by in unit.

 It is the cost of producing one more unit of good.

 Marginal concept (MC) function is expressed as the first derivative of the total cost.

MC= dTC/dQ

Example:

(1) TC =3Q^2+7Q+12

MC=dTC/dQ = 6Q+7

At Q=3 ML=6(3)+7 = 25

At Q=5 ML=6(5)+7 = 37
 TOTAL COST
 In economics, the total cost (TC) is the total economic cost of production. It consists
of variable costs and fixed costs.

 Total cost is the total opportunity cost of each factor of production as part of its fixed
or variable costs.

Example:

TC=75Q-4Q^2

MC=dTC/dQ

=75-8Q
 AVERAGE COST
 Average cost or unit cost is equal to total cost (TC) divided by the
number of units of a good produced (the output Q).
 AC=TC/Q
Example:
TC=3Q^2+7Q+12
AC= TC/Q
=3Q^2+7Q+12/Q
=3Q+7+12/Q
At. Q=3 ,AC=3(3)+7+12/3 =20
At Q=5 ,AC=3(5)+7+12/5 =24.4
 TOTAL REVENUE

 It is the total income of a business and is calculated by multiplying the quantity

of good sold by the price of the goods.

TR=Q×P

Example:

TR=12 Q-Q^2
MR=dTR/dQ

=12-2Q
At Q=3 ,MR=12-2(3) =6

At Q=5 ,MR=12-2(5) =2
 MARGINAL REVENUE
 Marginal revenue is the additional income generated from the sale of one more
unit of a good or service.

MR=dTR/dQ

1) TR=11Q-0.25Q^2

MR=dTR/dQ

=11-0.5Q

At Q=4 ,MR=11-0.5(4) =9

At Q=10 ,MR=11-0.5(10) =6

2) TR=30Q-2Q^2

MR=dTR/dQ

=30-4Q
OPTIMIZING ECONOMIC FUNCTION
Profit:

In economic terms profit is defined as a reward received by an

entrepreneur by combining all the factors of production to serve the
need of individuals in the economy faced with uncertainties. In a
layman language, profit refers to an income that flow to investor.
Every firm wants to maximize its profit.

Formulae:

Profit= Total Revenue – Total Cost

π = TR - TC
 SOLVED EXAMPLES
1. Maximize the total revenue TR and total profit function by
i. Finding critical values
ii. Testing second order conditions
iii. Calculating maximum TR.

a.

TR = 32Q-Q2

TR’ = 32-2Q = 0

Q= 16 (Critical value)

TR’’ = -2 < 0 ( Concave , Relative Maximum )

TR = 32(16) – (16) = 256

B.

π = -1/3Q3-5Q2+2000Q-326 …….(1)

π’=-Q2-10Q+2000 = 0 (Taking 1st derivative)

-1(Q2+10Q-2000) = 0

(Q+50)(Q-40) = 0
Q = -50 , Q = 40 Critical values

π’’=-2Q-10
π’’(40) = -2(40)-10 = -90 < 0 (Concave, Relative maximum)

π’’(50) = -2(-50)-10 = 90 > 0 (Convex, Relative minimum)

( Ignoring the negative value )

π = -1/3(40)3-5(40)2+2000(40)-326 (Put value in 1)

= 50,340.67

If negative value factored out after taking second derivative then it will reversed and function is
maximized at -50 and minimized at 40
2. GIVEN THE TOTAL REVENUE AND TOTAL COST FUNCTIONS, MAXIMIZE THE
PROFIT, SET UP THE PROFIT FUNCTION , FIND CRITICAL VALUES, TEST SECOND
ORDER DERIVATIVE, AND CALCULATE MAXIMUM PROFIT

a.

TR= 1400Q-6Q2 TC= 1500+80Q

π = TR-TC
π = 1400Q-6Q-(1500+80Q)
π = -6Q2+1320Q-1500 ………1

π’ = -12Q +1320 = 0 (Taking 1st derivative)

Q = 110 (critical value)

( Taking 2nd derivative )

π’’ = -12 < 0 (concave, relative maximum)

π = -6(110)2 + 1320(110) -1500 (Putting value in 1)

=71,100
B.

TR = 1400Q-7.5Q2 TC = Q3-6Q2+140Q+750

π = TR – TC
π = 1400Q – 7.5Q2-(Q3-6Q2 +140Q+750)

π = -Q3-1.5Q2+1260Q-750 ………1
π’ = -3Q2-3Q+1260 = 0 ( Taking 1st derivative)

-3(Q2-Q+420)=0

-3(Q+21)(Q-20) = 0

Q = 21 , Q = 20 (Critical values)
π’’ = -6Q-3 ( Taking second derivative )

π’’(20)= -6(20)-3 = -123 < 0 (Concave, Relative maximum)

π = -(20)3-1.5(20)2+1260(20)-750

= 15,850