MINISTRY OF EDUCATION AND TRAINING

NATIONAL ECONOMICS UNIVERSITY

MATHEMATICS FOR ECONOMICS AND BUSINESS

CALCULUS AND ITS APPLICATIONS

LECTURER : [Link] THANH TRUNG

HA NOI 03/2025
CALCULUS AND ITS APPLICATIONS

LECTURER : Dr. TONG THANH TRUNG

HA NOI 03/2025

Copyright © 2019 - Trường Đại học Kinh tế Quốc dân

v1.0014105206
 Differentiation
1
Applications of Differentiation
2

3 Exponential and Logarithmic Functions

PROGRAM
STRUCTURE

4 Integration and It’s applications

5 Functions of several variables

6 Review
 CHAPTER V
FUNCTIONS OF SEVERAL VARIABLES
LECTURE 13 SOME CONCEPTS AND PARTIAL DERIVATIVES

THIS LESSON’S GOALS: YOU WILL BE ABLE TO UNDERSTAND

Some basic concepts of multivariate

5.1.1
2 functions

2
5.1.2 Partial derivativesí

5.1.3
2 Hessian matrix/ concavity

2
5.1.4 Total differentials
 5.1.1 SOME BASIC CONCEPTS OF
MULTIVARIATE FUNCTIONS

Definition 5.1: A function of two variables is a rule

assigns to each ordered pair in a given set
(the domain of ) exactly one real number, denoted
by .
EXAMPLE 1: Let a profit function .
Find .
Solution: .
This result means that by selling units of the
first product and of the second, the two-product
firm will make a profit of .
 FUNCTION OF SEVERAL VARIABLES

EXAMPLE 2:



Function of several variables (or multivariate function):
=> is a function of variables.
 : independent variables/ arguments
 : dependent variable
NOTE Domain Convention: Unless otherwise
stated, we assume that the domain of is the set
of all for which the expression is
defined.
 5.1.2 PARTIAL DERIVATIVES
Finding partial derivatives:
Consider the function f is given by

Suppose for the moment that we fix at . Then

Note that, now we have a function of only one

variable. Taking the first derivative with respect
to , we have .
In general, without replacing with a specific
number, we can consider is fixed.
 5.1.2 PARTIAL DERIVATIVES

Then becomes a function of alone, and we

can calculate its derivative with respect to .
This derivative is called the partial derivative of
with respect to . Notation for this partial
derivative is:
or or
When we fix and treat it as a constant. The
expressions and are then also treated
as constants. We have:
 5.1.2 PARTIAL DERIVATIVES

Similarly, we find or or by fixing (treating

as a constant) and calculating the derivative with
respect to .

We obtain: f z
'
z =
y = = 3x 2 y 2  x  8 y
y y
 5.1.2 PARTIAL DERIVATIVES

Definition 5.2: For , the partial derivatives

with respect to and are:
f f ( x  x, y )  f ( x, y ) '
= lim or f x
x x0 x
f f ( x, y  y )  f ( x, y ) '
and = lim or f y
y y 0 y
EXAMPLE 3:
For
Find ; and (another notations: , and )
 5.1.2 PARTIAL DERIVATIVES
Solution: In order to find , is considered as the
variable and all remain variables and are treated
as constants. From

We get
Similarly, we have
f
 6 xy  10 yz 4

y
f
 2 x  20 y z  5
2 3

z
 PRACTICE

EXAMPLE 4: Find the partial derivatives of the

following functions:

a) f ( x, y, z )  x 3 yz  3 xy 2 z 3  2 xz  5 z 4  2 yx  5 z  4
3 xy 2  2 y
b) w  e
 3x  2 y 
c) w  ln  
 4 y  5x 
d ) w  e3 x 5 y  (2 x 2  3 xy )
 CHAIN RULE
Theorem 5.1: If is a
function on a ball about and the function
is a function on a ball about
, then is
a function at and its derivative is defined by
the formula:

dy y dx1 (t0 ) y dx2 (t0 ) y dxn (t0 )

(t0 )  ( x (t0 ))   ( x(t0 ))     ( x(t0 )) 
dt x1 dt x2 dt xn dt
EXAMPLE 5:
dTR TR dp TR dQ
   
dp p dp Q dp

This result can be extended for the function

where .
We have:
f f x1 f x2 f xn
        i  1, n.
ti x1 ti x2 ti xn ti
 CHAIN RULE

EXAMPLE 6:
Consider the Cobb-Douglas production function
. Suppose that the inputs and
vary with time and the interest rate , via the
expressions:
and
Evaluate the rate of change of output with
respect to when and .
Solution: First, note that
Q Q K Q L
   
t K t L t
  3K 0.25 L0.25    20t  r 1    K 0.75 L0.75   12t  .

Since and , at
and , the above expression equals

 310,000 0.25
6250.25    20 10  0.11   10,0000.756250.75   12  10   3,960.
5.1.3. HIGHER-ORDER PARTIAL DERIVATIVES

Remark: Consider the function , as you

known and are functions of two variables.

We continue find the first partial derivatives of

and with respect to and . Then will be
second-order partial derivatives of the original
function . Its notations are as follows:
2 f 2 f 2 f 2 f
, , and
x xy yx
2
y 2
 SECOND-ORDER PARTIAL DERIVATIVES
Definition 5.3: Second-order partial derivatives
2 f   f 
1)     f ''
xx , Take the partial with respect to x,
x 2
x  x 
and then with respect to x again.
2 f   f 
2)     f ''
xy Take the partial with respect to x,
yx y  x 
and then with respect to y.
2 f   f 
3)     f ''
yx T ake the partial with respect to y,
xy  x  y 
and then with respect to x.
2 f   f 
4)     f ''
yy Take the partial with respect to y,
y 2 y  y 
and then with respect to y again.
5.1.4 HESSIAN MATRIX AND CONCATIVITY

Second order partial derivatives:


 f (x, y)
2
 2f (x, y) 
 xx yx 
 
  2f (x, y)  2f (x, y) 
 xy yy  


=> Hessian matrix

 HESSIAN MATRIX AND CONCATIVITY

Theorem 5.2:

 A function is concave down in if its

Hessian matrix is negative definite

 A function is concave up in if its

Hessian matrix is positive definite.
 5.1.5 TOTAL DIFFERENTIAL
Assume that the function has partial
derivatives and all its partial derivatives are
continuous. Then

Definition 5.4: The first-order total differential for the

function is defined by .
 5.1.5 TOTAL DIFFERENTIAL
Assume that the function has
partial derivatives and all its partial derivatives are
continuous. Then
Definition 5.5: The first-order total differential for the
function is defined by
dy  f  dx1  f  dx2  ...  f  dxn .
'
x1
'
x2
'
xn
EXAMPLE 7: Let a production function
y  f ( x1 , x2 , x3 )  Ax1 x2 x3 ,  ,  ,   0
Total differential of the production function is given by
dy  A    x1 1 x2 x3  dx1  A    x1 x2 1 x3  dx2  A    x1 x2 x3 1  dx3 .
 TOTAL DIFFERENTIAL CONTINUE
Definition 5.6: The second-order total differential for
function is

Theorem 5.3: If the function defined on

is twice continuously differentiable and
whenever at least one of or is nonzero, then
is strictly convex function.
Theorem 5.4: If the function defined on is
twice continuously differentiable and whenever
at least one of or is nonzero, then
is strictly concave function.
 Basic Terminologies
Functions of several variables

(Multivariate functions)

Domain and Range

Partial derivatives

Higher-order partial derivatives

Hessian matrix

Total differential
LECTURE 14 MAXIMUM-MINIMUM PROBLEMS

5.2.1 Def 1: Let a function of two variables:

1) The given function has a relative maximum at if

for all points in a certain rectangular
region containing ;

2) The function has a relative minimum at if

for all points in a certain rectangular
region containing .
Critical Points
The points in the domain of for which
both and are said to be
critical points of .
Like the critical numbers for functions one
variable, these critical points play an important role
in the study of relative maxima and minima.
5.2.2 Problems
Problem: Find the relative maximum and
minimum values of the function .
To find the relative maximum and minimum value of
f:
1. Find
2. Solve the system of equations , . Let
(a, b) represents a solution.
 D-TEST

3. Evaluate D, where

4. Then:
a) f has a maximum at if and
b) f has a minimum at if and
c) f has neither a maximum nor a minimum at if
. The function has a saddle point at .
d) This test is not application if .
 MAXIMUM-MINIMUM PROBLEMS

EXAMPLE 1: Find the relative maximum and

minimum values of the following functions:

a.

b.
 MAXIMUM-MINIMUM PROBLEMS

EXAMPLE 2: A company produces units of

commodity and units of commodity . All the
units can be sold for dollars per unit
of and dollars per unit of . The
cost (in dollars) of producing these units is given
by the joint-cost function .
What should and be to maximize profit?
 MAXIMUM-MINIMUM PROBLEMS

EXAMPLE 3: McKinley Martin is the business

manager of an electronics store. He determines that
when he charges dollars per unit for the standard
Kindle eBook reader and dollars per unit for the
enhanced model, he will sell standard
units and enhanced units. He further
determines that the total cost of marketing and
maintaining inventory for the Kindle readers will be
dollars, where:
 MAXIMUM-MINIMUM PROBLEMS
a. Note that and must be nonnegative and must
also satisfy and .
Describe the closed, bounded region in the
plane that meets these requirements.

b. What prices and should McKinley charge to

minimize cost?
 Basic Terminologies

Relative maximum

Relative minimum

Critical points

Saddle points
LECTURE 15 CONSTRAINED OPTIMIZATION PROBLEMS

We begin by discussing some important economics

examples of constrained optimization problems.
EXAMPLE 1: (Utility Maximization Problem)
The consumer wants to

represents the amount of commodity .

: measures the individual’s level of
utility or satisfaction.
denote the prices of commodities and
denote the individual’s income.
LECTURE 15 CONSTRAINED OPTIMIZATION PROBLEMS
EXAMPLE 2: (Profit Maximization of a Competitive Firm)
Suppose that a firm in a competitive industry uses inputs to
manufacture its product.
Let y denote the amount of its output,
x1 , x2 ,..., xn denote the amount of its input
y  f ( x1 , x2 ,..., xn ) denote the firm's production function
p : the unit price of output
w i : denote the cost of input i
The firm’s goals is to choose to maximize its profit:
n
  x1 , x2 ,..., xn   pf  x1 , x2 ,..., xn    w i xi
i 1
LECTURE 15 CONSTRAINED OPTIMIZATION PROBLEMS

Under the constraints

n
pf ( x1 , x2 ,..., xn )   w i xi  0,
i 1

g1 ( x)  b1 ,..., g k ( x)  bk
x1  0,..., xn  0 where x  ( x1 , x2 ,..., xn ).
LECTURE 15 CONSTRAINED OPTIMIZATION PROBLEMS
LECTURE 15 CONSTRAINED OPTIMIZATION PROBLEMS

Now we discuss the simplest constrained maximization

problem, that of maximizing a function of two
variables subject to a single equality constraint .
The Method of Lagrange Multipliers
To find a maximum or minimum values of a function
subject to the constraint .
1. Form a new function (Lagrange function)
,
the variable is called a Lagrange multiplier.
2. The necessary condition:
+ Find the first partial derivatives
LECTURE 15 CONSTRAINED OPTIMIZATION PROBLEMS

+ Solve the system

 L'x  f x'   g x'  0 (1)
 '
L
 y  f y
'
  g '
y =0 (2)
 L'  b  g  x, y   0 (3)
 
Let represent a solution of this system. Then we
normally must determine whether yields a maximum or
minimum of the .
3. The sufficient condition of problem:
+ Find second partial derivatives of the Lagrange function:

L''  0; L'' x  L''x   g x' ; L'' y  L''y   g 'y ; L''xx ; L''xy ; L''yx ; L''yy ;
LECTURE 15 CONSTRAINED OPTIMIZATION PROBLEMS
+ Form Hessian matrix
 0  g x'  g 'y 
 
H    g x' L''xx L''xy 
  g 'y L''yx L''yy 


And evaluate determinant of Hessian matrix .

+ Substitute into we obtained .
4. Conclusion:
+ If , then the given function subject to the constraint
has maximum at .
+ If , then the given function subject to the constraint
has minimum at .
LECTURE 15 CONSTRAINED OPTIMIZATION PROBLEMS

EXAMPLE 1: Find the maximum and minimum values

of the following function:
Subject to the constraint
LECTURE 15 CONSTRAINED OPTIMIZATION PROBLEMS

EXAMPLE 2: Find the maximum and minimum

values of the following function:

Subject to the constraint

LECTURE 15 CONSTRAINED OPTIMIZATION PROBLEMS
EXAMPLE 3:
A manufacturer has to spend on the
production of a certain product and determines
that if units of capital and units of labor are
allocated to production, then units will be
produced, where is given by the Cobb-Douglas
production function . Suppose
each unit of labor costs and each unit of
capital costs . How many units of labor and
capital should be allocated to maximize
production?
EXAMPLE 4:
A manufacturer of television sets makes two models,
the Deluxe and the Standard. The manager estimates
that when hundred Deluxe sets and hundred
Standard sets are produced each year, the annual
profit will be thousand dollars, where

The company can produce exactly sets each

year. How many Deluxe and how many Standard sets
should be produced each year to maximize annual
profit?
EXAMPLE 5:
A manager has been allotted to spend on
the development and promotion of a new product.
It is estimated that if thousand dollars are spent
on development and thousand dollars on
promotion, approximately units
of the product will be sold.
a. How much money should the manager allocate
to development and how much to promotion to
maximize sales?
b. Suppose the manager is allotted an extra
for development and promotion. Use the Lagrange
multiplier to estimate the change in the maximum
sales level.
 Basic Terminologies

Constrained optimization
Constraint
Lagrange Multiplier
Lagrange Function
 I wish all our class
members will receive
high results in the
final exam!