Reading Notes

Economics Dr. Sauer

Chapter 6: Differentiation This chapter is kind of intense. I dont recommend trying to read through the whole thing in one sitting. 6.1 Slopes of a Curve and Differentiation 6.1.1 The Slope of a Curve is Variable The slope of a curve varies at ___________________________ on the curve. 6.1.2 The Slope of a Curve and Turning Points Skip this section unless you are familiar with limits. 6.1.3 The Derivative is called _____________________________________________________________. is the equation for the ______________ of a curve at any point on the curve. 6.1.4 The Power Rule If

, then

Some notes: - Differentiation is with respect to the variable on ____________ of each equation. - Always __________________ the expression before differentiating. - Try to write all terms in the numerator. - Write any root signs as ______________. Other notations that also mean take the derivative of y with respect to x:

6.1.5 Some working rules The derivative of a constant term is ______________. The derivative of where K is a constant is _______________________________.

To differentiate the sum or difference of several terms, differentiate each term __________________. 6.1.6 Higher Derivatives The second derivative is written as: ( )

6.2 Applications of Differentiation: Marginal Functions and Average Functions 6.2.1 Intro to Marginal Functions The derivative is the ___________ of change in y per unit increase in x.

The derivative of many economic variables is referred to as the marginal of that variable. Ex: Marginal Revenue is: Marginal Cost is:

6.2.2 Intro to Average Functions The average function gives an expression for the _________________ value of an economic variable throughout an interval. Ex: Average Revenue is:

Average Revenue and Price have a specific relationship. Explain.

Ex:

Average Cost is:

6.2.3 Production Functions and the MPL and APL A production function illustrates the relationship between _______________ and _______________. General expression:

The marginal product of labor is: The average product of labor is: 6.2.4 online supplemental material you may skip this 6.2.5 Marginal and Average Propensity to Consume and Save Income can be defined as _______________ plus _______________. Notational form: The marginal propensity to consume is defined as: The marginal propensity to save is defined as: Notationally, MPC = MPS = 2

6.3 Optimization for Functions of One Variable 6.3.1 The Slope of a Curve and Turning Points Optimization is concerned with finding the _________________ and ________________ points on a curve. At a turning point on a curve, the slope is _________________. To find the x-coordinates of the turning points of a curve: 1. Find for the given equation. 2. Set equal to _______ and solve for x. Notes: If there is no solution, then there is __________________________________. (In the future, the x you solve for might not be a turning point, it might be an inflection point.) 6.3.2 Determining Maximum and Minimum Turning Points The value of x that makes = 0 is called x0.

Method: Change of Sign in Slope 1. Evaluate the slope of immediately before and after x0. 2. If the slope changes from positive before x0 to negative after x0, then the point is a _________. If the slope changes from negative before x0 to positive after x0, then the point is a _________. Method: Second Derivative Sign Test 1. Take the second derivative of the original function. 2. Evaluate the second derivative at x0 . If the value is negative, the point is a ____________. If the value is positive, the point is a ____________. If the value is zero, the test fails. 6.3.3 Intervals Along Which a Function is Increasing or Decreasing

6.3.4 Graphs of y, y, y: Derived Curves

6.3.5. Curve Sketching and Applications To Sketch a Curve 1. Is the curve similar to any _________________________? 2. Is there any value that causes division by zero? Then there is a ____________ asymptote. 3. Does the curve exist in every region of the plane? 4. Find the intercepts. 5. Find the turning points and inflection points. 6. Define the Curvature 6.4 Economic Applications Read through this section to familiarize yourself with the concepts. 6.5 Curvature and Other Applications 6.5.1 Second Derivative and Curvature Concave up means: Concave down means: When the second derivative equals zero at x0 then that point is an inflection point. Convex to the origin means: Concave to the origin means: 6.5.2 Inflection Points At inflection points, y = 0 and y changes in sign when evaluated before and after the ________________________. Economic applications:

6.6 Further Differentiation and Applications 6.6.1 Derivatives of Other Standard Functions The exponential rule (power x):

The exponential rule (power ax):

The natural log rule: 4

6.6.2 The Chain Rule

6.6.3 The Product Rule

6.6.4 The Quotient Rule

6.7 Elasticity and the Derivative 6.7.1 Point Elasticity of Demand

6.7.2 Price Elasticity of Demand, MR, TR, and Price Changes

6.8 Summary After we work through this chapter in class, review this section and write any notes here.