Calculus Notes For Business
Calculus Notes For Business
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
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
5 y=5
dy 5 0
slope 0
dx 0
dy
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)
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)
If y = [g(x)]r
Find
Solution
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.
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
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
Illustration
y
y=x3
point of
inflexion
0 x
Example
1. The weekly revenue Sh. R of a small company is given by
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
Example
Determine the following integrals
ʃax3dx
ʃ20x5dx
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.
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
Total revenue
Example 2
A firm has the following marginal 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
92 – 2x = 0
92 = 2x
x = 46 units per annum
since