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Math2_1 2

The document outlines the syllabus for a Mathematics course tailored for Economics and Finance at ESSEC BBA Program for Fall 2024, taught by Dragoslav Ljubic. It details attendance and grading policies, teaching materials, and covers topics such as differentiation, rules of differentiation, and applications in economics. Additionally, it includes exercises and examples to reinforce understanding of mathematical concepts relevant to the field.

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manmac2006
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2 views

Math2_1 2

The document outlines the syllabus for a Mathematics course tailored for Economics and Finance at ESSEC BBA Program for Fall 2024, taught by Dragoslav Ljubic. It details attendance and grading policies, teaching materials, and covers topics such as differentiation, rules of differentiation, and applications in economics. Additionally, it includes exercises and examples to reinforce understanding of mathematical concepts relevant to the field.

Uploaded by

manmac2006
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Mathematics2

For Economics And Finance

ESSEC BBA Program


Fall 2024
Dragoslav Ljubic
[email protected]

1
Attendance and Grading

Attendance is obligatory:
Only two absences without excuse are allowed

Grading:
• Class Attendance and Quizzes (based on HW): 20% of the final grade,
• Midterm Exam: 30% of the final grade,
• Final Exam: 50% of the final grade.

2
Teaching material
• Slides, Exercises, other material
• [1] J. Curwin and R. Slater : “Quantitative Methods for Business Decisions”
• [2] N. Hayek, J.P. Leca «Mathématiques pour l’économie, Analyse - Algèbre »
• [3] T. Bradley, “Essential mathematics for economics and business”
• [4] C.P. Simon and L. Blume, “Mathematics for economists”
• [5] A. Chiang and K. Wainwright, “Fundamental Methods of Mathematical
Economics”
• [6] E. Haeussler, R. Paul, R. Wood, “Introductory mathematical analysis for
business, economics and the life and social sciences” 3
Session 1 Univariate functions
(recap)
• Differentiation for a function of one variable
• Rules of differentiation
• Derivatives of logirithmic and exponential functions
• Higher order derivatives
• Increasing/Decreasing functions; Relative Extrema
• Convexity and Concavity

4
Concept of differentiation
• Rate of change of : how does change when changes?
• For linear functions this is the slope

y 2  y1  vertical change 
m   
x 2  x1  horizontal change 

• What about nonlinear functions?

5
Slope of a curve and differentiation
The slope of approximates the slope at :

When ,
the slope of the slope of the tangent at :

y f ( x  x)  f ( x) dy
lim  lim   f ' ( x)
x  0 x x  0 x dx

Tangent line at B:
6
Rules of differentiation
RULE 1 Derivative of a Constant:

RULE 2 Derivative of : ,,

RULE 3 Constant Factor Rule:

RULE 4 Sum or Difference Rule:

RULE 5 Product Rule:

RULE 6 Quotient Rule: 7


Rules of differentiation
RULE 7 Chain Rule: 𝒖=𝒖 ( 𝒙 )

Why “chain”?
(functions chained in input->output relationship)
results in
(derivatives wrt input written in opposite order)

8
Exercises
Differentiate the following functions:
1.
2.
3.
4.
5.
6.
7. Find an equation of the tangent line to the curve , at .

9
Exercises (continued)
8.
9. Find when
10.
11.
12. . Find
13.
Apply Chain Rule to differentiate the following functions:
14. If and , find .
15. If and , find .
16. If , find .
10
Rules of differentiation

RULE 8 Derivative of Rule

RULE 9 Derivatives of exponential functions Rule

11
Exercises (Derivative of , )
1. . Find .
2. . Find .
3. . Find .
4. . Find .
5. . Find .
6. . Find
7. Find .
Exercises (Derivative of , )
1. Find .
2. If , find .
3*. . Find

Find when
4. .
5. . ( ln 𝑦 ) ′ =( 𝑔 ∙ ln 𝑓 ) ′
6*. 1 ′ ′
7*. 𝑦 =( 𝑔 ∙ ln 𝑓 )
𝑦
Hint*:Use
’
13
Derivatives of implicit functions
Example. Let the relation of and be given as

Assuming this relation implicitly defines as a function of in a


neighborhood of the point , calculate .
Solution.
1st step: check
2nd step:
Higher order derivatives

15
Example

16
Exercises (Higher order Derivatives )

1. If , find when .

2*. Find at , if .

17
Increasing and decreasing functions

is increasing: is decreasing
if if

18
Turning points or Local (also Relative) Extrema

 f ' a  0
relative extremum  implies
Necessary Condition:    or
at a   f ' a does not exist

19
Relative extrema and global extrema
on
Global extrema (maximum or minimum) may happen in three occasions:
1. At , where and the sign of changes.
Relative Extrema

2. At , where does not exist, but its sign changes.


3. At the borders and of the given interval .

First derivative test for Relative and Global Extrema


1. Determine all critical values of (, or not defined), as well as the sign of .
2. Check if the sign of changes at critical points -> Relative Extrema.
3. Compare the values of at critical points to and for Global Extrema.
20
Example - First-Derivative
4
Test
If y  f x  x 
x 1
for x -1 , use the first-derivative test to find
where relative extrema occur. Find the intervals over which the
2
4 𝑥 +2𝑥− 3
function is increasing/decreasing ′
𝑓 ( 𝑥 )=1 − 2
= 2
( 𝑥+1 ) ( 𝑥 +1 )

Solution:
Setting gives .

Relative maximum at . (Why?)


Relative minimum at (Why?)

21
Convexity and concavity
is convex is concave

𝑡2
𝑩 𝑡3

𝑡3
𝑡2
𝑨 Slopes of tangent lines
are increasing
𝑡1 Slopes of tangent lines
are decreasing
𝑡1
𝑥1 𝑥 2𝑥 3
22
Convexity and concavity
2nd Derivative Test

Inflection point
is an inflection point if at this point changes
from convex/concave to concave/convex

23
Exercises
1. Let .
a) Determine local maximum(s) and local minimum(s) of .
b) Determine global maximum and global minimum of for .
c) Determine the intervals where is increasing/decreasing respectively.
d) Find inflection point(s) of .
e) Determine the intervals where is convex/concave respectively.

2. The Demand Function for a good is given as . Total revenue :


f) Write down expressions for the and functions. Marginal revenue :
g) Calculate the output at which is a maximal and confirm that marginal revenue is zero at this point.
h) Sketch the graph of and functions.

Total cost :
3. Find the range of for which the Average Cost Function
,, Average cost :
is increasing/decreasing. Find the minimum average cost.
24
4. Find the quantity that maximizes the total revenue
,.

5. A firm's demand function is given by the equation


,.
a) Write down the equations for and .
b) Determine the output for at which is a maximum.

,.
6. Find the optimal level of production for a firm with the following average cost function:

Total profit :
7. A firm has the following total cost and demand functions:
,,.
a) Write the total revenue function in terms of .
b) Find the quantity that maximizes profit. What is the maximum profit? 25

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