DERIVATIVES

Business Mathematics
 CONTENTS

Tangents to and slopes of curves

Derivatives
Basic cases of derivatives
Rules for derivatives
Higher-order derivatives
More on derivatives
Relevance in the business literature (example)
Further study

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 TANGENTS TO AND SLOPES OF CURVES

Let 𝑓 𝑥 be a smooth function. At any point 𝑥 = 𝑎, 𝑓 𝑥 has a tangent.

Its slope can be approximated as

𝑓 𝑎+ℎ −𝑓 𝑎 𝑓 𝑎+ℎ −𝑓 𝑎
𝑠𝑙𝑜𝑝𝑒 ≈ =
𝑎+ℎ −𝑎 ℎ

↑
𝑓 𝑥 ∆𝑥
𝑓

tangent

𝑓 𝑎+ℎ
𝑓 𝑎 ∆𝑓 𝑥

3 𝑎 𝑎+ℎ 𝑥→
 TANGENTS TO AND SLOPES OF CURVES

The slope is found by letting ℎ approach zero

𝑑𝑓 𝑥 𝑓 𝑎+ℎ −𝑓 𝑎
቉ = lim
𝑑𝑥 𝑥=𝑎 ℎ→0 ℎ

Or more general (not only in 𝑥 = 𝑎, but in any 𝑥): The derivative of 𝑓 is

𝑑𝑓 𝑥 ′
𝑓 𝑥+ℎ −𝑓 𝑥
= 𝑓 𝑥 = lim
𝑑𝑥 ℎ→0 ℎ

the derivative of a function

𝑓 𝑥 depends on 𝑥; it is also
a function

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 TANGENTS TO AND SLOPES OF CURVES

Different notations for derivative of 𝑓 𝑥 at any point 𝑥:

𝑑𝑓 𝑥 𝑑𝑓
▪ =
𝑑𝑥 𝑑𝑥
▪ 𝑓 𝑥 = 𝑓′
′
𝑑 𝑑
▪ 𝑓 𝑥 = 𝑓 And if we write 𝑦 = 𝑓 𝑥 ,
𝑑𝑥 𝑑𝑥
▪ 𝑓 1
𝑥 , 𝑓ሶ 𝑥 , ... we can even write 𝑦′ or
𝑑𝑦
𝑑𝑥
𝑑𝑓
instead of 𝑓′ and
Or at a specific point 𝑥 = 𝑎: 𝑑𝑥
𝑑𝑓 𝑎
▪
𝑑𝑥
▪ 𝑓′ 𝑎 Note that there is a small
𝑑𝑓 𝑑𝑓 inconsistency in notation
▪ ቃ = ቃ
𝑑𝑥 𝑎 𝑑𝑥 x=𝑎 here. 𝑓 is a function of 𝑥,
𝑑 not of 𝑎.
▪ 𝑓 𝑎
𝑑𝑥
▪ 𝑓 1
𝑎 , 𝑓ሶ 𝑎 , ...

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 TANGENTS TO AND SLOPES OF CURVES

𝑑𝑓
We prefer to 𝑓 ′ because we will later discuss functions of more than 1 variable
𝑑𝑥
(𝑓 𝑥, 𝑦 , etc.). In such cases 𝑓 ′ is meaningless.

𝑑
is an operator (the differential operator) that is applied to the expression that
𝑑𝑥
follows after it.

𝑑 𝑑 𝑑
Example: 2𝑥 3 + 4𝑥 = 2𝑥 3 + 4𝑥 = 6𝑥 2 + 4
𝑑𝑥 𝑑𝑥 𝑑𝑥

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 DERIVATIVES

𝑑𝑓(𝑎)
The derivative of a function 𝑓 𝑥 at a specified point 𝑎 is a number.
𝑑𝑥

𝑑𝑓(2)
Example: Let 𝑓 𝑥 = 4𝑥 3 , then or 𝑓 ′ 2 = 48
𝑑𝑥
𝑑𝑓 𝑥
▪ Also written as = 48
𝑑𝑥 𝑥=2

𝑑
The derivative 𝑓 of a function 𝑓 𝑥 over a range of values 𝑥 is a function of 𝑥
𝑑𝑥
𝑑
▪ if 𝑓 𝑥 = 4𝑥 3 , then 𝑓 ′ 𝑥 = 𝑓 = 12𝑥 2
𝑑𝑥

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 BASIC CASES FOR DERIVATIVES

Constant function: if 𝑓 𝑥 = 𝐶, then 𝑓 ′ 𝑥 = 0

Linear function: if 𝑓 𝑥 = 𝑎𝑥, then 𝑓 ′ 𝑥 = 𝑎

Power function: if 𝑓 𝑥 = 𝑥 𝑛 , then 𝑓 ′ 𝑥 = 𝑛𝑥 𝑛−1 (for arbitrary 𝑛)

Exponential function: if 𝑓 𝑥 = 𝑒 𝑥 , then 𝑓 ′ 𝑥 = 𝑒 𝑥

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Logarithmic function: if 𝑓 𝑥 = ln 𝑥, then 𝑓 ′ 𝑥 = (for 𝑥 > 0)
𝑥

And of course also:

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if 𝑓 𝑥 = ln 𝑥 , then 𝑓 ′ 𝑥 = (for 𝑥 ≠ 0)
𝑥

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 BASIC CASES FOR DERIVATIVES

Each of these can be proven (or seen for a special case)

Example: 𝑓 𝑥 = 𝑥 3 :
𝑥 + ℎ 3 − 𝑥3
𝑓 ′ 𝑥 = lim
ℎ→0 ℎ
𝑥 + 3𝑥 2 ℎ + 3𝑥ℎ2 + ℎ3 − 𝑥 3
3
= lim
ℎ→0 ℎ
3𝑥 ℎ + 3𝑥ℎ + ℎ3
2 2
= lim
ℎ→0 ℎ
= lim 3𝑥 + 3𝑥ℎ + ℎ2 = 3𝑥 2
2
ℎ→0

And similarly for the other cases

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 EXERCISE 1

Given is 𝑓 𝑥 = 2 𝑥

Find 𝑓 ′ 9

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 EXERCISE 1

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 RULES FOR DERIVATIVES

Let 𝑓 and 𝑔 be functions of 𝑥 and 𝑎 be a constant (with regard to x).

Sum rule: 𝑓+𝑔 ′ = 𝑓 ′ + 𝑔′ [special case: 𝑓 + 𝑎 ′ = 𝑓 ′]

Product rule: 𝑓𝑔 ′ = 𝑓 ′ 𝑔 + 𝑓𝑔′ [special case: 𝑎𝑓 ′ = 𝑎𝑓 ′ ]

𝑓 ′ 𝑓′ 𝑔−𝑓𝑔′ 𝑎 ′ 𝑎𝑓′
Quotient rule: = [special case: = − 2]
𝑔 𝑔2 𝑓 𝑓

′
Chain rule: 𝑔 𝑓 𝑥 = 𝑔′ 𝑓 𝑥 𝑓 ′ 𝑥

These rules are not restricted to functions denoted by 𝑓 with argument 𝑥!

𝑑𝑞
Example: If 𝑞 𝜆 = 4𝜆3 , then 𝑞′ 𝜆 = = 12𝜆2
𝑑𝜆

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 RULES FOR DERIVATIVES

Example 1
𝑓 𝑥 = 𝑥 3 − 10𝑥 2 + 6𝑥 + 55 ⇒ 𝑓 ′ 𝑥 = 3𝑥 2 − 20𝑥 + 6

Example 2
′ ′
1+𝑥 2 1+𝑥 2 1+𝑥 2 𝑥− 1+𝑥 2 𝑥 ′ 0+2𝑥 𝑥− 1+𝑥 2 1
𝑓 𝑥 = ⇒ 𝑓′ 𝑥 = = = =
𝑥 𝑥 𝑥2 𝑥2
𝑥 2 −1 1
=1−
𝑥2 𝑥2

Example 3
𝑑
𝑓 𝑥 = 𝑎 𝑥 = 𝑒 𝑥 ln 𝑎 ⇒ 𝑓 ′ 𝑥 = 𝑒 𝑥 ln 𝑎 = ln 𝑎 𝑒 𝑥 ln 𝑎 = ln 𝑎 𝑎 𝑥
𝑑𝑥
𝑑
so, 𝑎 𝑥 = ln 𝑎 𝑎 𝑥
𝑑𝑥

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 EXERCISE 2

Given is 𝑓 𝑥 = ln 𝑥 2

Find 𝑓 ′ 𝑥

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 EXERCISE 2

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 EXERCISE 3

Given is 𝑔 𝑦 = 2 𝑦2+ 𝑦

Find 𝑔′ 𝑦

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 EXERCISE 3

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 HIGHER-ORDER DERIVATIVES

The derivative 𝑓 ′ 𝑥 is a function of 𝑥.

We can therefore differentiate it again

𝑑
𝑓 ′ 𝑥 = 𝑓 ′′ 𝑥
𝑑𝑥
𝑑 𝑑𝑓 𝑥 𝑑2 𝑓 𝑥 𝑑2
= 2
= 2 𝑓 𝑥
𝑑𝑥 𝑑𝑥 𝑑𝑥 𝑑𝑥

This is the second derivative or second-order derivative

Example:
𝑓 𝑥 = 3𝑥 5 + 𝑥 ⇒ 𝑓 ′ 𝑥 = 15𝑥 4 + 1 ⇒ 𝑓 ′′ 𝑥 = 60𝑥 3

𝑑3𝑓 𝑑𝑛𝑓
And similar: third-order 𝑓 ′′′
= , 𝒏th-order 𝑓 𝑛
=
𝑑𝑥 3 𝑑𝑥 𝑛

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 HIGHER-ORDER DERIVATIVES

To find the second derivative, first find the first derivative as a function of 𝑥

Example

Let 𝑓 𝑥 = 3𝑥 5 + 𝑥, find 𝑓 ′′ 2
▪ first calculate 𝑓 ′ 𝑥 = 15𝑥 4 + 1
▪ then do not calculate𝑓 ′ 2 !!!
▪ but rather calculate𝑓 ′′ 𝑥 = 60𝑥 3
▪ finally calculate𝑓 ′′ 2 = 60 × 8 = 480

Again, the second derivative

is a function of 𝑥, but
evaluated at a point 𝑥 = 𝑎,
it is a number

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 EXERCISE 4

Given is 𝑓 𝑥 = ln 𝑥

Find 𝑓 ′′ −3

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 EXERCISE 4

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 MORE ON DERIVATIVES

Some terminology

A function for which the derivative exists is differentiable

A function for which the derivative exists in a certain point is differentiable in that
point

Examples:
𝑓 𝑥 = 𝑥 2 is differentiable everywhere on 𝑥 ∈ ℝ
𝑓 𝑥 = 𝑥 is not differentiable in 𝑥 = 0

The act of finding the derivative is differentiating

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 MORE ON DERIVATIVES

Extensions:
▪ functions of more variables (partial derivatives)
▪ implicit functions (implicit differentiation)

Applications:
▪ extreme values (minimum costs, maximum profits, etc.)
▪ elasticities (price elasticity of demand, etc.)
▪ approximations (Taylor series)

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 RELEVANCE IN THE BUSINESS LITERATURE (EXAMPLE)

R.E. Lucas, On the size distribution of business firms. The Bell Journal of Economics
9:2 (1978), 508-523

“This paper ... postulates an underlying distribution of persons by managerial

"talent" and then studies the division of persons into managers and employees
and the allocation of productive factors across managers.”

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 FURTHER STUDY

Sydsæter et al. 6/E 6.1-6.4, 6.6-6.11

Tutorial exercises week 2

slopes1
slopes2
derivatives1
derivatives2
derivatives3
product rule
chain rule
higher order derivatives

Canvas quizzes 3A

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