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Calculus Notes For Business

Calculus is a branch of mathematics that deals with rates of change. It has two main sections: differentiation and integration. Differentiation deals with finding derivatives or rates of change of functions, while integration deals with finding the total or summation of quantities over an interval. Some key concepts include: - The derivative of a function is the slope of its graph and shows how quickly that function is changing. - Rules of differentiation include the power rule, constant multiple rule, sum and difference rules, product rule, and quotient rule. - The chain rule is used to take derivatives of composite functions. - Maxima and minima points occur when the derivative of a function is zero and its second derivative is negative, indicating a relative

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0% found this document useful (0 votes)
180 views

Calculus Notes For Business

Calculus is a branch of mathematics that deals with rates of change. It has two main sections: differentiation and integration. Differentiation deals with finding derivatives or rates of change of functions, while integration deals with finding the total or summation of quantities over an interval. Some key concepts include: - The derivative of a function is the slope of its graph and shows how quickly that function is changing. - Rules of differentiation include the power rule, constant multiple rule, sum and difference rules, product rule, and quotient rule. - The chain rule is used to take derivatives of composite functions. - Maxima and minima points occur when the derivative of a function is zero and its second derivative is negative, indicating a relative

Uploaded by

francis Magoba
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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INTRODUCTION TO DIFFERENTIAL AND INTEGRAL CALCULUS

Calculus is a branch of mathematics which explains how one variable changes in relationship to another
variable. It enables us to find the rate of change of one variable with respect to another variable.

Example
The rate at which business revenue is increasing at a particular stage when volume of sales is increasing.
The rate at which costs are changing at a particular stage when volume of sales is given
The evaluation of ‘rate of change’ can help us to identify when the change in one variable reaches a
maximum or minimum.
Calculus may be used in production management when the production manager wants to know how much
is to be manufactured in order to maximize the profits, revenues e.t.c or how much is to be produced in
order to minimize the production costs

Calculus is divided into two sections namely:

Differentiation and integration


Differentiation deals with the determination of the rates of change of business activities or simply the
process of finding the derivative of a function.
Integration deals with the summation or totality of items produced over a given period of time or simply
the reverse of differentiation

The derivative and differentiation


The process of obtaining the derivative of a function or slope or gradient is referred to as derivation or
differentiation.
dy
The derivative is denoted by dx or f΄(x) and is given by dividing the change in y variable by the change
in x variable.
The derivative or slope or gradient of a line AB connecting points (x,y) and (x+dx, y + dy) is given by
Δy Change in y ( y+dy ) − y dy
= = =
Δx Change in x ( x+dx ) −x dx
Where dy is a small change in y and dx is a small change in x variables.

Illustration

Line AB
(y + B = (x + dx, y
dy) +dy)

dy
y (x,y) = A
dx

x (x + dx)
Rules of Differentiation
The constant function rule

If given a function y = k where k is a constant then = 0


Example
Find the derivative of (i) y = 5
Solution
i. y = 5 dy = 0
dx
Illustration
y

5 y=5
dy 5  0
slope   0
dx 0

dy

derivative of a constant function x


Power function rule

Given a function

Example
Find dy for;
dx
y = x7
y = x2ˠ
y = x-3
y=x
Solution
y = x7
dy = 7x 7-1 = 7x6
dx
y = x2ˠ
dy = 2ˠ x(2ˠ - 1)
dx
y = x-3
dy = -3x –3-1 = -3x-4
dx
y=x
dy = 1x 1-1 = 1.x0= 1 (since x0=1)
dx
Power function multiplied by a constant
If given y = Axr, then dy = rAxr-1
dx
The sum rule
The derivative of the sum of two or more functions equals the sum of the derivatives of the functions.
For instance
If H(x) = h(x) + g(x)
Then dy or H´(x) = h´(x) + g´(x)
dx
The difference rule
The derivative of the difference of two or more functions equals the difference of the derivatives of the
functions
If H (£) = h(x) – g(x)
Then H´(£) = h´(x) – g´(x)
Examples.
Find the derivatives of
y = 3x2 + 5x + 7
y = 4x2 – 2xb
Solution
y = 3x2 + 5x + 7

y = 4x2 – 2xb
The product rule – both factors are functions
The derivative of the product of two functions equals the derivative of the first function multiplied by the
second function PLUS the derivative of the second function multiplied by the first function.

given that

Then
Example
Find dy for
dx
i. y = x2(x)
ii. y = (x2+ 3) (2x3+ x2- 3)
Solution
i. y = x2(x)

Note that y = x2(x) = x3. Directly differentiating this we get 3x2.

ii. y = (x2+ 3) (2x3+ x2- 3)

Quotient Rule
The derivative of the quotient of two functions equals the derivative of the numerator times the
denominator MINUS the derivative of the denominator times the numerator, all which are divided by the
square of the denominator
If given H (x) =

then

For example
Find dy for
dx
x
2
i. 3+ x
x
ii. 3 x +7
Solutions
x
i. 3+ x 2

( 3+ x 2 ) −( 2 x ) . x
= ( 3+ x 2 )
3+ x 2−2 x 2 3−x 2
=
= ( 3+ x 2
) ( 3+ x 2 )
x3
y=
ii. ( 3x+7 )
dy ( 3x ) ( 3x +7 )− ( 3 ) ( x ) 6x3 +21x 2
2 3
= =
dx ( 3x +7 )2 ( 3x+7 )2
Example
A farmer of a large farm of poultry announced that egg production per month follows the equation;
w= 3m3 – m2
m2 + 10
Where w – Total no of eggs produced per month
m – amount in kilograms of layers mash feed.
Required
Determine the rate of change of w with respect to m (i.e. the rate at which the number of eggs per month
increase or decrease depending on the rate at which the kilos of layers marsh are increased).

Solution
Let u = 3m3 – m2
∴ du = 9m2 – 2m
dm
Let v = m2 + 10
∴ dv = 2m
dm

Chain Rule
This rule is generally applied in the determination of the derivatives of composite functions, which can be
defined as a function in which another function can be considered to have taken the place of the
independent variable. The composite function is also referred to as a function of a function.
It is normally of the form y = (2x2 + 3)3. If we let u = (2x2 + 3), then y = u3.
In order to differentiate such an equation we use the formula
dy dy du
= ×
dx du dx
Solution
y = (2x2 + 3)3
Let u = 2x2 + 3
∴ du = 2x
dx
Let y = u3
dy
∴ du = 3u2
dy = dy . du = 3u2 x 4x = 12xu2
dx du dx
= 12x(2x2 + 3)2
Example
Consider the function
y = (x2 + 16x + 5)2
which can be decomposed into
y = u2 and u = x2 + 16x + 5. in this case y is a function of (x2 + 16x + 5)
Hence y = f(u) and u = g(x)
dy = dy . du
dx du dx
= (2u) (2x +16)

= 2 (x2 + 16x + 5) (2x + 16)

The derivative of a function raised to power r; the composite function rule.


The derivative of a function raised to power r equals to the power r times the function which is raised by
power (r-1), all of which is multiplied by the derivative of the function

If y = [g(x)]r

Then dy = r[g(x)]r-1 . g´(x)


dx
For example

Find
Solution

Differentiation of an implicit function


An Implicit function is one of the y = x 2 y + 3x2 + 50. it is a function in which the dependent variable (y)
appears also on the right hand side.
To differentiate the above equation we use the differentiation method for a product, quotient or function
of a function.
Solution
y = x2 y + 3x2 + 50
Partial derivatives
These derivatives are used when we want to investigate the effect of one independent variable on the
dependent variable.
For example, the revenues of a farmer may depend on two variables namely; the amount of fertilizer
applied and also the type of the natural soil.
Let ㄫ = 30x2y + y2 + 50x + 60y
Where ㄫ = annual revenue in £ ‘000’
x = type of soil
y = amount of fertilizer applied
Required
Determine the rate of change of the ㄫ with respect to x and y
Solution
ㄫ = 30x2y + y2 + 50x + 60y
Differentiating ㄫ with respect to x keeping y constant we have
d ㄫ = 60xy + 50
dx
Differentiating ㄫ with respect to y keeping x constant we have
d ㄫ = 30x2 + 2y + 60
dy
Maxima, minima and points of inflexion
a) Test for relative maximum
Consider the following function of x whose graph is represented by the figure below
y = f(x)
dy = f´(x)
dx

dy
0
C dx

dy
0 B D
dx
Relative maximum point
The graph of the function slopes upwards to the right between points A and C and hence has a positive
slope between these two points. The function has a negative slope between points C and E. At point C,
the slope of the function is Zero.

Between points X1 and X2 Where X1 ≤ X < X2

and between X2 and X3 Where X2 < X ≤ X3.


Thus the first test of the maximum points require that the first derivative of a function equals zero or

The second text of a maximum point requires that the second derivative of a function is negative or

Example
Determine the critical value for the following functions and find out the critical value that constitutes a
maximum
y = x3 – 12x2 + 36x + 8
Solution
y = x3 – 12x2 + 36x + 8
then dy = 3x2 – 24x + 36 +0
dx
iii. The critical values for the function are obtained by equating the first derivative of the
function to zero, that is:
dy = 0 or 3x2 – 24x + 36 = 0
dx
Hence (x-2) (x-6) = 0
And x = 2 or 6
The critical values for x are x = 2 or 6 and critical values for the function are y = 40 or 8
ii. To ascertain whether these critical values of x will give rise to a maximum, we apply the second text,
that is
d2y <0
d2x
dy = 3x2 – 24x + 36 and
dx
d2y = 6x - 24
d2x
When x = 2
Then d2y = -12 <0
d2x
When x = 6
Then d2y = +2 > 0
d2x
Hence a maximum occurs when x = 2, since this value of x satisfies the second condition. X = 6 does not
give rise to a local maximum

b) Tests for relative minimum


There are two tests for a relative minimum point
The first derivative, that is
dy = f´(x) = 0
dx
The second derivative, that is
d2y = f´(x) > 0
dx2
Example:
For the function
h(x) = 1/3 x3 + x2 – 35x + 10
Determine the critical values and find out whether these critical values are maxima or minima. Determine
the extreme values of the function
Solution
Critical values
h(x) = 1/3 x3 + x2 – 35x + 10 and
h´(x) = x2 + 2x – 35
by first text,
then h´(x) = x2 + 2x – 35 = 0
or (x-5) (x+7) = 0
Hence x = 5 or x = -7
The determinant of the maximum and the minimum points requires that we test the value x = 5 and –7 by
the second text
H´´(x) = 2x + 2
When x = -7 h´´(x) = -12 <0
When x = 5 h´´(x) = 12>0
There x = -7 gives a maximum point and x = 5 gives a minimum point.
Extreme values of the function
h(x) = 1/3 x3 + x2 – 35x + 10
when x = -7, h(x) = 189 2/3
when x = 5, h(x) = -98 1/3
The extreme values of the function are h(x) = 189 2/3 which is a relative maximum and h(x)
= -98 1/3 , a relative minimum

Points of inflexion
Given the following two graphs, points of inflexion can be determined at points P and Q as follows:

y y=g(x)
P

k1 x
Diagram (i)
y
y =f(x)
Q

k2 x
The points of inflexion will occur at point P when
g´´(x) = 0 at x = k1
´´
g (x) < 0 at x < k1
´´
g (x) > 0 at x > k1
and at point Q when
f´´(x) = 0 at x = k1
f´´(x) > 0 at x < k1
´´
f (x) < 0 at x > k1
Example
Find the points of inflexion on the curve of the function
y = x3
Solution
The only possible inflexion points will occur where

From the function given

Equating the second derivative to zero, we have


6x = 0 or x = 0
We test whether the point at which x = 0 is an inflexion point as follows

When x is slightly less than 0, which means a downward concavity

When x is slightly larger than 0, which means an upward concavity


Therefore we have a point of inflexion at point x = 0 because the concavity of the curve changes as we
pass from the left to the right of x = 0

Illustration
y

y=x3
point of
inflexion

0 x

Example
1. The weekly revenue Sh. R of a small company is given by

Where x is the number of units produced.


Required
Determine the number of units that maximize the revenue
Determine the maximum revenue
Determine the price per unit that will maximize revenue
Solution
To find maximum or minimum value we use differential calculus as follows
Therefore at x = 18, the value of R is a maximum. Similarly at x = -18, the value of R is a minimum.
Therefore, the number of units that maximize the revenue = 18 units
ii. The maximum revenue is given by
R = 14 + 81 + 18 – (18)3
12
= Shs. 986
The price per unit to maximize the revenue is
986 = 54.78 or Shs.54.78
18

INTEGRATION
It is the reversal of differentiation
An integral can either be indefinite (when it has no numerical value) or definite (have specific numerical
values)
It is represented by the sign ʃf(x)dx.
Rules of integration
i. The integral of a constant
ʃadx = ax +c where a = constant

Example
Find the following
ʃ23dx
ʃɤ2dx. (where ɤ is a variable independent of x, thus it is treated as a constant).
Solution
ʃ23dx = 23x + c
ʃɤ2dx. = ɤ2 x + c
ii. The integral of x raised to the power n

Example
Find the following integrals
ʃx2dx

ʃx-5/2 dx

Solution

iii). Integral of a constant times a function

Example
Determine the following integrals
ʃax3dx
ʃ20x5dx
Solution

iv). Integral of sum of two or more functions


ʃ{f(x) + g(x)} dx = ʃf(x)dx + ʃg(x) dx
ʃ{f(x) + g(x) + h(x)}dx = ʃf(x)dx + ʃg(x)dx + ʃh(x)dx
Example
Find the following
ʃ(4x2 + ½ x-3) dx
ʃ(x3/4 + 3/7 x- ½ + x5)
Solution

5. Integral of a difference
ʃ{f(x) - g(x)} dx = ʃf(x)dx - ʃg(x) dx

Definite integration
Definite integrals involve integration between specified limits, say a and b

The integral Is a definite integral in which the limits of integration are a and b
The integrals is evaluated as follows
Compute the indefinite integral ʃf(x)dx. Supposing it is F(x) + c
Attach the limits of integration
Substitute b(the upper limit) and then substitute a (the lower limit) for x.
Take the difference and the result is the numerical value for the definite integral.

Applying these steps to the definite integral

Example
Evaluate
∫3
1 (3x 2 + 3)dx
∫ 5

0 (x + 15)dx
Solution

∫3
1 (3x 2 + 3)dx = [(x 3 + 3x + c)]
= (27 + 9 + c) – (1 + 3 + c)
= 32

∫5 5
b. 0 (x + 15)dx = [( ½ x2 + 15x + c)]0
= (12 ½ + 75 + c) – (0 + 0 + c)
= 87 ½

∫b
The numerical value of the definite integral a f(x)dx can be interpreted as the area bounded by the
function f(x), the horizontal axis, and x=a and x=b see figure below
y = f(x)

0
f(x)

0 a b x
area under curve

∫b
Therefore a f(x)dx = A or area under the curve
Example
1. You are given the following marginal revenue function

Find the corresponding total revenue function


Solution

Total revenue

Example 2
A firm has the following marginal cost function

Find its total cost function.

Solution
The total cost C is given by
C = ʃMC.dq
= ʃ(a + a1q + a2q2).dq
Note: Exams focus: Note the difference between marginal function and total function. You differentiate
total function to attain marginal function, this is common in exams,
total profit = total revenue – total cost.

Example 3.
Your company manufacturers large scale units. It has been shown that the marginal (or variable) cost,
which is the gradient of the total cost curve, is (92 – 2x) Shs. thousands, where x is the number of units of
output per annum. The fixed costs are Shs. 800,000 per annum. It has also been shown that the marginal
revenue which is the gradient of the total revenue is (112 – 2x) Shs. thousands.

Required
Establish by integration the equation of the total cost curve
Establish by integration the equation of the total revenue curve
Establish the break even situation for your company
Determine the number of units of output that would
Maximize the total revenue and
Maximize the total costs, together with the maximum total revenue and total costs

Solution
First find the indefinite integral limit points of the marginal cost as the first step to obtaining the
total cost curve
Thus ʃ(92 – 2x) dx = 92x – x2 + c
Where c is constant

Since the total costs are the sum of variable costs and fixed costs, the constant term in the integral
represents the fixed costs, thus if Tc are the total costs then,
Tc = 92x – x2 + 800
or Tc = 800 + 92x - x2

As in the above case, the first step in determining the total revenue is to form the indefinite
integral of the marginal revenue
Thus ʃ(112 - 2x) dx = 112x – x2 + c
Where c is a constant

The total revenue is zero if no items are sold, thus the constant is zero and if Tr represents the total
revenue, then
Tr = 112x – x2
At break even the total revenue is equal to the total costs
Thus 112x – x2 = 800 + 92x - x2
20x = 800
x = 40 units per annum
iv.
a) Tr = 112x – x2
at the maximum point

x = 56 units per annum

Since this confirms the maximum


The maximum total revenue is Shs. (112 x 56 – 56 x 56) x 1000
= Shs. 3,136,000
ii. Tc = 800 + 92 x – x2

At this maximum point

92 – 2x = 0
92 = 2x
x = 46 units per annum
since

this confirms the maximum


the maximum costs are Shs. (800 + 92 x 46 - 46 x 46) x 1000
= Shs. 2,916,000

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