Differentiation Application

DIFFERENTIATION APPLICATION

Maximum, Minimum and Point of Inflection Using Second Order

Differentiation

The function f is said to have a relative maximum at the point c if f(c)  f(x) for all x in an
open interval containing c. Also, f is said to have a relative minimum at d if f(d)  f(x) for
all x in an open interval containing d. Collectively, relative maximum and relative minimum
are called relative maximum.

The First Derivative Test for Relative Extreme

 Step 1: Find all critical numbers of f. That is, find all numbers c such that f(c) is
defined and either f (c)  0 or f (c ) does not exist.

 Step 2: Classify each critical point (c, f(c)) as follows:

a) The point (c, f(c)) is a relative maximum if f (x ) > 0 (rising) for all x
in an open interval (a, c) to the left of c, and f (x) < 0 (falling) for all
x in an open interval (c, b) to the right of c.

b) The point (c, f(c)) is a relative minimum if f (x) < 0 (falling) for all x
in an open interval (a, c) to the left of c, and f (x) > 0 (rising) for all
x in an open interval (c, b) to the right of c.

c) The point (c, f(c)) is a point of inflection if the derivative f (x) has
the same sign in an open intervals (a, c) and (c, b) on both sides of c.

or

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Differentiation Application

Critical Numbers and Critical Points

Suppose f is defined at c and either f (c)  0 or f (c ) does not exist. Then the number c is
called a critical number of f, and the point P(c, f(c)) on the graph of f is called a critical
point.

Example: 1. Find the critical numbers for the given functions.

f ( x )  4 x 3  5 x 2  8 x  20

2. Then, based on the above critical points determine either they are relative
maximum, minimum or point of inflection using first derivative test.

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Differentiation Application

The Second Derivative Test for Relative Extreme

Let f be a function such that f (c)  0 and the second derivative exists on an open interval
containing c.

If f (c)  0 , there is a relative minimum at c.

If f (c)  0 , there is a relative maximum at c.
If f (c)  0 , then the second derivative test fails and gives no information, so the
first derivative test (or some other test) must be used.

Example: 3. Use the same question from no. 2 to determine the critical point relative
extreme but using second derivative test.

4. Use the first derivative and second derivative test to determine whether
each critical number of the function f ( x)  3x 5  5 x 3  2 corresponds to a
relative maximum, a relative minimum or neither.

Principle of Marginal Analysis

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Differentiation Application

The important function to an economist or a manufacturer are

C(x) = total cost of producing x units of a product during some time period
R(x) = total revenue from selling x units of a product during the time period
P(x) = total profit obtained by selling x units of the product during the time period
C (x) = marginal cost
R (x ) = marginal revenue
P (x ) = marginal profit

P(x) = R(x) – C(x)

C(x) = a + M(x) , ‘a’ is a constant = overhead

M(x) = manufacturing cost
M(x) = bx + cx2 ‘b’ and ‘c’ are constants Quadratic function

R(x) = px p = dollar/ringgit
x = no. of items Linear function

Therefore, P(x) = px – (a + bx + cx2 ) , or

P(x) = px – (a + M(x)) 0  x  limit, l

We have, P(x) = R(x) – C(x) and we differentiate with respect to x and find that
P ( x)  R ( x)  C ( x) . Thus, P (x ) = 0 when R (x ) = C (x) and by using economic
arguments we can show that a maximum occurs at the corresponding critical point.

C(x)

Production is too low Loss

because R(x) < C(x)
P(x) = R(x) – C(x)
R(x)

profit
Loss Production is too high –
marginal costs are greater
than marginal revenue

A B

Cost, revenue and profit functions

Example:

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Differentiation Application

Given the function of R(x) = 13x and C(x) = 8x + 1000. Find marginal revenue and marginal
cost.

R(x) = 13x
R’(x) = 13

C(x) = 8x +1000
C’(x) = 8

Maximum Profit

Profit is maximized when marginal revenue equals marginal cost.

Example:

A manufacturer estimates that when x units of a particular commodity are produced each
month, the total cost (in dollars) will be
1 2
C ( x)  x  4 x  200
8
and all units can be sold at a price of p( x)  49  x dollars per unit. Determine the price
that corresponds to the maximum profit.

Exercise:

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Differentiation Application

1. Determine the nature of the critical points either maximum, minimum or point of
inflection for the following function:
a) f ( x)  3 x 2  5
b) f ( x)  x  9 x 2
c) f ( x)  x 2  x  5
d) f ( x)  2 x 3
e) f ( x)  x 5
f) f ( x)  x 3  5 x 2  8
x3 1
g) f ( x)  x
3 3
1 3 5 2
h) f ( x)  x  x  6 x
3 2
i) f ( x)  x  3 x 2  6
3

j) f ( x)  3 x 3  3 x 2  3x  1

2. The total cost of a product in ringgit, C(x) is given as C ( x)  100  8 x  x 2 where x

is the level of output. Find
a) the marginal cost function,
b) the marginal cost when x = 2 and interpret the answer.

3. The daily total revenue of a product in ringgit, R(x) is given as R ( x)  120 x  x 2

where x is the daily level of output. Find
a) the marginal revenue function,
b) the marginal revenue when x = 2 and interpret the answer.

4. The weekly total profit in ringgit of a product, P(x) is given as P ( x)  150 x  x 2

where x is the level of output per week. Find
a) the marginal profit function,
b) the marginal profit when x = 10, and interpret the answer.

5. A firm finds that the number of radios that can be sold per month at a price p ringgit
is given by the monthly demand function x = 600 – 2p where x is the number of
radios demanded. Find
a) p as a function of x,
b) the monthly revenue function,
c) the level of production at which marginal revenue is zero.

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