HO CHI MINH CITY UNIVERSITY OF

TECHNOLOGY
FACULTY OF APPLIED SCIENCE

CALCULUS 1 – BIG ASSIGNMENT

REPORT
Instructor: Lê Xuân Đại
Class: CC07 Group: 14
Content: Application of calculus in economic
study
Group’s members:
Name ID
[Link]ạm Ngọc Sơn 2453129
2.Lê Quốc Cường 2352147
[Link]ệu Tấn Khoa 2452564
[Link]ễn Nam Phong 2452961

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5.Võ Diệu Hồng Khánh 2452505

Contribution of members.................................................................................2
Report summary..............................................................................................3
Chapter 1: Introduction....................................................................................4
1. Definition..................................................................................................5
Differential Calculus:..................................................................................5
a) Marginal Analysis:...............................................................................5
b) Optimization:......................................................................................5
Integral Calculus:.......................................................................................5
a) Consumer and Producer Surplus:........................................................6
b) Revenue:.............................................................................................6
Growth Models:..........................................................................................6
Econometric Models:..................................................................................6
2. Requirements............................................................................................6
Chapter 2: Applications....................................................................................7
A. Applications of derivatives........................................................................8
Using derivatives to analyze the fluctuations of stock prices....................8
[Link]:...............................................................................................8
[Link]:...............................................................................................8
Application of derivative in enhancing the economic efficiency................9
[Link]..............................................................................................10
2. Solution.............................................................................................10
[Link]..........................................................................................10
B. Application of Integrals...........................................................................11
Using Integration to calculate total revenue............................................11
1. Problem:............................................................................................11
2. Solution:............................................................................................11

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 Producer Surplus Calculation...................................................................12
[Link]..............................................................................................12
2. Solution.............................................................................................12
[Link]..........................................................................................13
Chapter 3: MATLAB........................................................................................13
[Link].........................................................................................................14
[Link]......................................................................................................15
References.....................................................................................................16

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 Contribution of members

Assignments Member’s name

Nguyễn Nam Phong
Designing the PowerPoint file
Võ Diệu Hồng Khánh
Triệu Tấn Khoa
Writing the report
Phạm Ngọc Sơn
Writing the algorithms for the Lê Quốc Cường
Matlab Phạm Ngọc Sơn
Nguyễn Nam Phong
Searching for the application Võ Diệu Hồng Khánh
Lê Quốc Cường

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 Report summary
Calculus is a vital mathematical tool in economics, used to
analyze changes, optimize decision-making and the making of
models of economic systems. Economists use calculus for a
variety of purposes, such as maximizing profits, minimizing costs,
analyzing market dynamics, and understanding consumer
behavior. Key concepts like marginal analysis, elasticity, and
economic growth models rely heavily on derivatives and integrals
to offer precise insights. By applying calculus, economics bridges
theoretical understanding and practical problem-solving, making
it indispensable for analyzing and improving economic outcomes.

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 Chapter 1: Introduction
1. Definition
- Calculus is a branch of mathematics that studies change and
motion through two key concepts: Differentiation and integration.
 Differentiation focuses on rates of change, such as slopes of
curves or marginal values in economics. In general,
differentiation is the process of calculating the derivative,
which represents the rate of change of a function at a given
point.
 Integration deals with accumulation, such as total values or
areas under curves.
- In economics, differential and integral calculus are crucial tools
that help analyze and optimize various economic models and
processes. Here are some key applications:
Differential Calculus:
a) Marginal Analysis:
 Marginal Cost: Calculating the additional cost of producing one
more unit of a good.
 Marginal Revenue: Determining the additional revenue gained
from selling one more unit of a product.
b) Optimization:

 Profit Maximization: Finding the production level that

maximizes a firm’s profit by setting the marginal cost equal to
the marginal revenue.
 Cost Minimization: Determining the combination of inputs that
minimizes production costs for a given level of output.

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Integral Calculus:
a) Consumer and Producer Surplus:

 Consumer Surplus: Calculating the area between the demand

curve and the price level, representing the benefit consumers
receive from purchasing goods at a lower price than they are
willing to pay.
 Producer Surplus: Determining the area above the supply
curve and below the market price, indicating the benefit
producers receive from selling at a higher price than their
minimum acceptable price.

b) Revenue:
Total Revenue: Integrating the revenue function to find the total
revenue generated over a given period.
Growth Models:

 Solow Growth Model: Uses differential equations to describe

how capital accumulation, labor growth, and technological
progress affect economic growth over time.

Econometric Models:

 Regression Analysis: Involves differentiating and integrating

functions to estimate relationships between economic variables,
helping economists predict trends and make data-driven
decisions.

=> In essence, calculus provides a robust framework for analyzing

dynamic changes and making informed decisions in economics.

2. Requirements
- Finding the application of derivatives and integrals in real life relating
to economic study

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- Showing the problem of each application and solving them
- Using MATLAB to express an application of derivative or integral

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 Chapter 2: Applications
A. Applications of derivatives
Using derivatives to analyze the fluctuations of
stock prices
[Link]:
Suppose the stock price of a company over 5 days is described by the
following function P(t) = t3- 6t2 + 9t +10 represents the stock price at
time t (in days, starting from the observation day)
Tasks:
1. Calculate the rate of change of the stock price at any time t (find
the derivatives of P(t))
2. Determine the time t when the stock price changes the fastest or
slowest (find the extrema of the derivative)
3. Analyze the trend of the stock price over the observation period.

[Link]:

1. Calculate the rate of change of the stock price

The rate of change of the stock price is the derivative of P(t):

d 3
P’(t)= [ t −6 t2 +9 t +10 ]=3 t 2−12 t+9
dt

2. Find the extrema of P′(t):

To find when the stock price changes the fastest or slowest, solve for
the critical points of P′(t) by finding the second derivative:
d '
P” (t)=
dt
[ P ( t ) ]=6 t−12

P” (t)=0:

6t-12=> t=2

At t=2, the rate of change of the stock price reaches an extremum

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3. Analyze the stock price trend
· The stock price increases or decreases depending on the sign of P
′(t):

P′(t)>0: Stock price is increasing.

P′(t)<0: Stock price is decreasing.

Evaluate P′(t)= 3 t 2−12t +9

P’(t)= 3(t-1)(t-3)

Roots of P′(t)=0 are t=1 and t=3.

Determine the sign of P′(t) on intervals:

- t∈(0;1) :P′(t)>0 (price increases).
- t∈(1;3) :P′(t)<0 (price decreases).
- t∈(3;5) :P′(t)>0 (price increases).

4. Conclusion
· The stock price increases during t∈[0;1] and t∈[3;5].
· The price decreases during t∈[1;3].
· The fastest change occurs at t=2, where the rate of change is
' 2
P ( 2 )=3 ( 2 ) −12 ( 2 )+ 9=−3

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Application of derivative in enhancing the
economic efficiency
[Link]
A certain company is going to manufacture a product. They want to
minimize the production cost and maximize the production cost and
maximize the profit.
Let’s assume that the total production cost is C(x) depends on quantity
of product “x”. C(x) includes all the costs such as human resources,
materials and costs incurred. To optimize the profits, C(x) must be
minimum. So, we have to take the derivative of C(x) and find the value
of “x” that makes C(x) is minimum.

2. Solution
-For example, the C(x) be the function satisfying:
5000
C(x) = 100x +
𝑥

-Taking the derivative of C(x), we have:

5000
C’(x) = 100 - 2 (x > 0)
𝑥

=> x ≈ 7.07

-In this example, x = 7.07 is the most optimal value when it makes
C(x) reaches its absolute minimum (1414.2). Therefore, the quantity of
the product must be around 7.07 to restrict the amount of cost.

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[Link]
The application of derivative in this problem:
 Adjust the production scales to minimize the cost and maximize
the profit
 Given out the strategic decision for companies
 Sketching an appropriate plan for business in long term
=> Enhancing the economic efficiency

B. Application of Integrals
Using Integration to calculate total revenue
1. Problem:
Suppose the demand function for a product is given by:
D(p) = A – Bp = 500 –10p
Where:
A: highest possible demand or maximum quantity demanded when the
price p is zero
B: The rate at which the quantity demanded decreases
D(p): quantity demand (number of units) when the price is p (units:
products)
p: price per unit (in USD)
Tasks:
Calculate the total revenue earned when the price ranges from p = 10
USD to p = 20 USD

2. Solution:
Total revenue (R) is given by the integral of p.D(p) with respect to the
price p:

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 𝑝2

𝑅=∫ 𝑝 . 𝐷 ( 𝑝 ) 𝑑𝑝
𝑝1

Substitute D(p) = 500 – 10p:

20
𝑅=∫ 𝑝 . ( 500 −10 𝑝 ) 𝑑𝑝
10

[ ]
20
10
⟺ 𝑅= 250 𝑝 − 𝑝 3 2
≈ 51.667 ( 𝑈𝑆𝐷 )
3 10

The total revenue earned when the price ranges from p = 10p USD to
p = 20p USD is
51.667 USD

Producer Surplus Calculation

Producer Surplus is the difference between what producers are willing to
accept for a good or service and what they actually receive.

[Link]
-Assume the supply function for a product is given by:

P = X + Q = 20 + Q

X: reservation price or the price required to start production (USD)

P: the price (USD)

Q: the quantity supplied (units of the product)

-Suppose the market price is 𝑃 𝑚=50 (USD)

2. Solution
To find the quantity supplied at the market price, set 𝑃=𝑃 𝑚:

50 = 20 + Q

Q = 50 – 20

Q = 30

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Producer surplus is the area between the market price and the supply curve,
from Q=0 to Q=30
30
𝑃=( 𝑃 𝑚 . 𝑄 ) −∫ ( 20+𝑄 ) 𝑑𝑄
0

The total revenue at the market price:

𝑃 𝑚 .𝑄=50.30=1500

The integral of the supply function:

30

∫ ( 20+ 𝑄 ) 𝑑𝑄
0

[ ]
30
𝑄2
¿ 20 𝑄+
2 0

( )( )
2 2
30 0
¿ 20.30+ − 20.0+
2 2

¿ 600+ 450

¿ 1050

Thus, the producer surplus is:

1500 – 1050 = 450

[Link]
-The producer surplus in this example is 450, which represents the benefit
producers receive from selling the product at a higher price than their
minimum acceptable price. This example illustrates how integral calculus can
be used to calculate economic measures and analyze relationships between
variables.

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 Chapter 3: MATLAB
[Link]
Drawing Graph related to Producer Surplus:
 Intercept (reservation price or the price required to start production):
20 (USD)
 Slope of supply function: 1
 Market price: 50 (USD)

Code:

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[Link]
-Graph representing producer surplus:

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17
 References
1. “Calculus Early Transcendentals ” by James Stewart (8th
edition)
2. “Principles of Economics by N. Gregory Mankiw (8th edition –
2017 )
3. “Thomas' Calculus” by George B. Thomas Jr., Maurice D. Weir
3. MIT OpenCourseWare

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