Chapter V

Limits and Derivatives

The Difference Quotient:

Suppose y = f (x)
When the variable x changes from the value x0 to
a new value x1, the change is measured by the
difference x1 – x0. Hence, using the symbol Δ to
denote the change, we write
Δx = x1 – x0
For the function f (x) = 5 + x2, we have f (0) = 5
+ 02 = 5; and similarly, f (2) = 5+ 22 = 9, etc.

1
• When x changes from an initial value x0 to a
new value (x0 + Δx), the value of the function
y = f (x) changes from f(x0) to f(x0 + Δx).
• The change in y per unit of change in x can be
represented by the difference quotient

Δy f(x0 + Δx) – f(x0)

— = ------------------------ …………..(1)
Δx Δx

• The above quotient measures the average rate

of change of y, which can be calculated if we
know the initial value of x, or x0, and the
magnitude of change in x or Δx . That is,
Δy/Δx is a function of x0 and Δx.
Example: Given y = f (x) = 3x2 - 4, we can write:
f (x0) = 3 (x0)2 – 4
f(x0 + Δx) = 3(x0 + Δx)2 – 4

2
The difference quotient is

Δy 3 (x0 + Δx)2 – 4 – (3x02 - 4) 6x0 Δx + 3 (Δx )2

— = ----------------------------------- = ----------------------
Δx Δx Δx

= 6x0 +3 Δx ………….(2)

• Let x0 = 3 and Δx = 4; then the average rate of

change of y will be 6(3) + 3(4) = 30.

• This means that, on the average, as x changes from

3 to 7, the change in y is 30 units per unit change in
x.
5

The Derivative:
• Frequently, we are interested in the rate of
change of y when Δx is very small. In such a
case, it is possible to obtain an approximation
of Δy/Δx by dropping all the terms in the
difference quotient involving the expression
Δx.
• In (2), for instance, if Δx is very small, we
simply take the term 6x0 on the right as an
approximation of Δy/Δx. The smaller the value
of Δx, of course, the closer is the
approximation to the true value of Δy/Δx.
6

3
• As Δx approaches zero, (6x0 + 3Δx) will
approach the value 6x0, and by the same
token, Δy/Δx will approach 6x0 also.
Symbolically, this fact is expressed either by
the statement Δy/Δx  6x0 as Δx 0 or by the
equation

Δy
lim — = lim (6x0 + 3Δx) = 6x0
Δx0 Δx Δx0
……………(3)
• If, as Δx0, the limit of the difference quotient
Δy/Δx exists, that limit is identified as the
derivative of the function y = f (x). 7

• First, a derivative is a function; in fact, in this

usage the word derivative really means a
derived function. The original function y = f (x)
is a primitive function, and the derivative is
another function derived from it. Whereas the
difference quotient is a function of x0 and Δx.

• Secondly, since the derivative is merely a limit

of the difference quotient, which measures a
rate of change of y, the derivative must of
necessity also be a measure of some rate of
change.
8

4
• Thirdly, derivative functions are commonly
denoted in two ways. Given a primitive
function y = f (x), one way of denoting its
derivative (if it exists) is to use the symbol
f1(x), or simply f1. The other common
notation is dy/dx.
• Using these notations, we may define the
derivative of a given function y = f (x) as
follows:
dy Δy
— ≡ f1(x) ≡ lim —
dx Δx0 Δx
9

Problems:
1.Given the function y = 4x2 + 9:
(a) Find the difference quotient as a function of
x and Δx (Use x in lieu of x0).
(b) Find the derivative dy/dx.
(c) Find f1(3) and f1(4).

10

5
2. Given the function y = 5x2 – 4x:

(a) Find the difference quotient as a

function of x and Δx.

(b) Find the derivative dy/dx.

(c) Find f1(2) and f1(3).

11

The Derivative and the Slope of a Curve:

• Given a total cost function C = f (Q), where C
denotes total cost and Q the output, the
marginal cost (MC) is defined as the change in
total cost resulting from a unit increase in
output; that is MC = ΔC/ΔQ.
• It is understood that ΔQ is an extremely small
change. For the case of a product that has
discrete units ( integers only), a change of one
unit is the smallest change possible; but for
the case of a product whose quantity is
continuous variable, ΔQ will refer to an
infinitesimal change. 12

6
• In the second case, it is well known that the
marginal cost can be measured by the slope of
the total cost curve. But the slope of the total
cost curve is nothing but the limit of the ratio
ΔC/ΔQ, when ΔQ approaches zero.
• In the figure given below, we have drawn a
total cost curve C, which is the graph of the
(primitive) function C = f (Q).
• Suppose that we consider Q0 as the initial
output level from which an increase in output
is measured, then the relevant point on the
cost curve will be A.
13

• If output is to be raised to Q0 + ΔQ = Q2, the

total cost will be increased from C0 to C0 + ΔC
= C2; thus ΔC/ΔQ = (C2 – C0) / (Q2 – Q0).
• Geometrically, this is the ratio of two line
segments, EB/AE, or the slope of the line AB.
• This particular ratio measures an average rate
of change – the average marginal cost for the
particular ΔQ pictured – represents a
difference quotient. As such, it is a function of
the initial value Q0 and the amount of change
ΔQ.
14

7
 C C= f ( Q)

C2 B

C1 D G
´C

A F E
CO R

H
K
´Q

O Q0 Q1 Q2 Q
15

• If a smaller output increment is contemplated (say,

from Q0 to Q1 only), then the average marginal cost
will be measured by the slope of the line AD instead.
• As we reduce the output increment further and
further, flatter and flatter lines will result until, in the
limit (as ΔQ 0), we obtain the line KG (which is the
tangent line to the cost curve at point A) as the
relevant line.
• The slope of KG (= HG/KH) measures the slope of
the total cost curve at point A and represents the
limit of ΔC/ΔQ, as ΔQ 0, when initial output is at Q
= Q0.
• Therefore, in terms of the derivative, the slope of the
C = f (Q) curve at point A corresponds to the
particular derivative value f1(Q0). 16

8
The Concept of Limit:
• The derivative dy/dx has been defined as the
limit of the difference quotient Δy/Δx as Δx 0.
• If we adopt the shorthand symbols q ≡ Δy/Δx
(q for quotient) and v ≡ Δx (v for variation),
we have

dy Δy
— = lim — = lim q
dx Δx0 Δx v 0

17

Left-Side Limit and Right-Side Limit:

• Suppose q = g(v). Our immediate interest is in
finding the limit of q as v 0, but we may just
as easily explore the more general case of v
N, where N is any finite real number.
• Then lim q will be merely a special case of lim q
v 0 v N

where N = 0.
• When we say that v N, the variable v can
approach the number N either from values
greater than N, or from values less than N.

18

9
• If, as v N from the left side ( from values less
than N), q approaches a finite number L, we call L
the left side limit of q.
• If L is the number that q tends to as v N from
the right side (from values greater than N), we
call L the right side limit of q.
• The left- and right-side limits may or may not be
equal.
• The left-side limit of q is symbolized by lim q
vN-
(the minus sign signifies from values less than N)
and the right-side limit is written as lim q.
v N+ 19

• When – and only when – the limits have a common

finite value (say, L), we consider the limit of q to exist
and write it as
lim q = L.
v N
• If we have the situation of lim q = ∞ (or - ∞), we
shall
v N
consider q to possess no limit, because lim q = ∞ means
v N
that q ∞ as v N, and q will assume ever-increasing
values as v tends to N, it would be contradictory to
say that q has a limit.
20

10
• As a convenient way of expressing the fact that q ∞
as v N.
• However, people do indeed write lim q = ∞
v N
and speak of q as having an “infinite limit”.
• In certain cases, only the limit of one side needs to be
considered. In taking the limit of q as v  +∞, for
instance, only the left-side limit of q is relevant,
because v can approach +∞ only from the left.
• For the case of v  ∞, only the right-side limit is
relevant.
21

v
O
N

O N 22
v

11
 q

L1

L2

O v
N

O v 23
(d) N

• Whether the limit of q exists in these cases will

depend only on whether q approaches a finite
value as v  +∞, or as v  ∞.
Graphical Illustrations:
• Figure 1 shows a smooth curve. As the
variable v tends to the value N from either side
on the horizontal axis, the variable q tends to
the value L. In this case, the left-side limit is
identical with the right-side limit; therefore, we
can write lim q = L.
v N
• The curve drawn in Figure 2 is not smooth; it
has a sharp turning point directly above the
point N.
24

12
• As v tends N from either side, q again tends to
an identical value L. The limit of q again exists
and is equal to L.
• In Figure 3 as v tends to N, the left-side limit
of q is L1, but the right-limit is L2, a different
number. Hence, q does not have a limit as v
N.
• In Figure 4, as v tends to N, the left-side limit
of q is - ∞, whereas, the right side limit is +
∞, because the two parts of the (hyperbolic)
curve will fall and rise indefinitely while
approaching the broken vertical line as an
asymptote. Again, lim q does not exist.
v N 25

• On the other hand, if we are considering a different

sort of limit in diagram d, namely, lim q, then only the
v +∞
left-side limit has relevance, we do find the limit to exist:
lim q = M. Similarly, lim q = M.
v +∞ v  ∞
Problem 1:
Given q = 2 + v2, find lim q.
v 0
Problem 2:
Given q = (1 – v2) / (1 – v), find lim q.
v 1
26

13
Example 3:
Given q = (2v + 5) / (v + 1), find lim q.
v +∞

27

Limit Theorems
When a single function q = g (v) is involved, the following
theorems are applicable:
Theorem I:
If q = av + b, then lim q = aN +b (a and b are constants).
v N
Example: Given q = 5v + 7, we have lim q = 5(2) + 17
v 2
Similarly, lim q = 5(0) + 7 = 7.
v 0
Theorem II: If q = g (v) = b, then lim q = b.
v N
This theorem, which says that the limit of a constant function is
the constant in that function, is merely a special case of Theorem
28
I, with a = 0.

14
Theorem III: If q = v, then lim q = N
vN
k
If q = v , then lim q = N k

v N
Example: Given q = v3, we have lim q = (2)3 = 8
v 2
Theorems Involving Two Functions:
If we have two functions of the same independent
variable v, q1 = g (v) and q2 = h (v), and if both
functions possess limits as follows:
lim q1 = L1 lim q2 = L2
v N v N
where L1 and L2 are two finite numbers, the following
theorems are applicable. 29

Theorem IV (sum-difference limit theorem):

lim (q1 ± q2) = L1 ± L2
v N
The limit of a sum (difference) of two functions is the sum
(difference) of their respective limits.
Theorem V (product limit theorem):
lim (q1q2) = L1L2
V N
The limit of a product of two functions is the product of their
limits.

30

15
Theorem VI (quotient limit theorem):
q1 L1
lim — = — (L2 g 0)
vN q2 L2
The limit of a quotient of two functions is the quotient of their
limits. Naturally, the limit L2 is restricted to be nonzero;
otherwise the quotient is undefined.
Example:
Find lim (1 + v) / (2 + v). Since we have here lim (1 + v) = 1
v 0 v 0
and lim (2 + v) = 2, the desired limit is 1 / 2.
v 0
31

Limit of a Polynomial Function:

Suppose q = g (v) = a0 + a1v + a2 v2+ …+anvn is a polynomial
function.
Since the limits of the separate terms are respectively,

lim a0 = a0 lim a1v = a1N lim a2v2 = a2N2 (etc.)

V N V N V N

The limit of the polynomial function is (by the sum limit

theorem)
lim q = a0 + a1N + a2N2 +…+ anNn
v N

32

16
Continuity and Differentiability of a Function
Continuity of a Function:
• When a function q = g (v) possesses a limit as v tends to the
point N in the domain, and when this limit is equal to g (N) –
that is, equal to the value of the function at v = N – the function
is said to be continuous at N.
• As stated above, the term continuity involves no less than three
requirements:
(1) The point N must be in the domain of the function; i. e.,
g(N) is defined.
(2) The function must have a limit as v N; i.e., lim g(v) exists;
v N
(3) That limit must be equal in value to g(N); i.e., lim g(v) = g(N)
33
v N

Example: The rational function

q = g(v) = 4v2 / (v2 + 1)
is defined for all finite real numbers; thus its domain consists of
the interval (- ∞ ∞). For any number N in the domain, the limit
of q is (by the quotient limit theorem)
lim (4v2)
v N 4N2
lim q = =
v N lim (v2 + 1) N2 + 1
v N
which is equal to g (N).
Thus the three requirements of continuity are all met at N. N
can represent any point in the domain of this function;
consequently, this function is continuous in its domain. 34

17
Example: The rational function

v3 + v2 – 4v – 4
q=
v2 – 4

is not defined at v = 2 and at v = -2. Since those two

values of v are not in the domain, the function is
discontinuous at v = -2 and v = 2, despite the fact that a
limit of q exists as v  -2 or 2. Graphically, this function
will display a gap at each of these two values of v. But
for other values of v (those which are in the domain), this
function is continuous.

35

Differentiability of a Function:
Taking the limit of the function y = f(x), we can
examine the whether the function f is continuous at x =
x0. The conditions of continuity are:
(1) x = x0 must be in the domain of the function f,
(2) y must have a limit as x x0, and
(3) the said limit must be equal to f(x0).
When these are satisfied, we can write
lim f(x) = f(x0) [continuity condition] …….(1)
x x0
36

18
• When the limit concept is applied to the difference
quotient Δy / Δx as Δx 0, on the other hand, we deal
instead with the question of whether the function f is
differentiable at x = x0, i.e., whether the derivative dy/dx
exists at x = x0, or whether f1(x) exists.
• The term ‘differentiable’ is used because the process of
obtaining the derivative dy/dx is known as
differentiation (also called derivation).
• Since f1(x0) exists if and only if the limit of Δy/Δx
exists at x = x0 as Δx 0, the symbolic expression of the
differentiability of f is

37

Δy f(x +Δx) – f(x0)

f1(x0) = lim ≡ lim 0
Δx 0 Δx Δx 0 Δx
[differentiability condition] …….(2)
• The properties, continuity and differentiability, are
intimately related to each other – the continuity of f is a
necessary condition for its differentiability. To be
differentiable at x = x0, the function must first pass the
test of being continuous at x = x0.
• We can write (1) and (2) in a more simplified form by
replacing x0 with the symbol N and (2) replacing
(x0+Δx) with the symbol x.
38

19
 • With the notational change, Δx now becomes
(x - N), so that the expression “Δx 0” becomes
“x N” , which is analogous to the expression v N
used before in connection with the function q = g(v).
Accordingly, (1) and (2) can now be rewritten
respectively, as
lim f(x) = f(N) ………….(3)
x N
f(x) – f(N)
f1(N) = lim …………..(4)
x N x - N 39

y = f(x)
y

f(x)

f(x0+Δx)
Δy

f(N)

f(x0)
Δx

o x

N x
[xo] [x0+Δx]
40

20
• Differentiability implies continuity but the
converse is not true.
• Continuity is a necessary, but not a sufficient,
condition for differentiability.
• Let us consider the function
y = f(x) = |x – 2| + 1 (see the graph given
in the next slide)
• The above function is not differentiable,
though continuous, when x = 2.
• First, x = 2 is in the domain of the function.
41

• Second, the limit of y exists as tends to 2; to

be specific
lim y = lim y = 1
x 2+ x 2-
• Third, f(2) is found to be 1.
• Thus, all the three requirements of continuity
are met. But the function f is not differentiable
at x = 2, because, the limit of the difference
quotient
lim {f(x) – f(2)}/(x – 2) = lim (|x – 2| + 1 – 1)/ (x – 2) = lim |x – 2|/(x – 2)
x2 x2 x2

does not exist. 42

21
• In considering the right-side limit, x must
exceed 2, according to the definition of
absolute value, we have |x – 2| = x – 2.
• Thus the right-side limit is
lim |x – 2|/(x – 2) = lim (x – 2)/(x – 2) = lim 1 = 1
x2+ x2+ x2+

• In considering the left-side limit, x must be

less than 2, according to the definition of
absolute value, we have |x – 2| = - (x – 2).
• The left-side limit is
43

lim |x – 2|/(x – 2) = lim {– (x – 2)}/(x – 2) = lim (- 1) = - 1

which is different from the right-side limit.

• This shows that continuity does not guarantee
differentiability.
• All differentiable functions are continuous, but
not all continuous functions are differentiable.
• The nondifferentiability of the function at x = 2
is manifest in the fact that the point (2, 1) has
no tangent line defined, and hence no definite
slope can be assigned to the point.

44

22
• To the left of that point, the curve has a slope
of – 1, but to the right it has a slope of + 1,
and the slopes on the two sides display no
tendency to approach a common magnitude at
x = 2.
• The point (2, 1) is a special point; it is the only
sharp point on the curve.
• At other points of the curve, the derivative is
defined and the function is differentiable.
• The function can be divided into two linear
functions as follows:
45

Left part: y = - (x – 2) + 1 = 3 – x (x≤2)

Right part: y = (x – 2) + 1 = x – 1 (x>2)
• The left part is differentiable in the interval
(-∞, 2), and the right part is differentiable in
the interval (2, ∞) in the domain.
• Continuity at a point rules out the presence of
a gap, whereas differentiability rules out
“sharpness”.
• Differentiability calls for “smoothness” of the
function (curve) as well as its continuity.
46

23
 y

y = |x - 2| + 1

(2, 1)

x
o 47

Rules of Differentiation for a

function of one Variable
Constant-Function Rule:
The derivative of a constant function y = f(x) = k is
identically zero, i.e., is zero for all values of x.
Symbolically, dy / dx = 0 or dk / dx = 0
or f1(x) = 0
Power-Function Rule:
dxn / dx = nxn-1 or f1(x) = nxn-1
48

24
Problem 1: y = x3, find dy / dx.
Problem 2: y = x9, find dy / dx.
Problem 3: Find the derivative of y = x0.
Problem 4: Find the derivative of y = 1 / x3.
Problem 5: Find the derivative of y = x .
Power-Function Rule Generalized:
(d/dx) cxn = cnxn-1 or f1(x) = cnxn-1
Problem 6: Given y = 2x, find dy / dx.
Problem 7: Given f(x) = 4x3, find f1(x). 49

Problem 8: Given f(x) = 3x-2, find f1(x).

Sum-Difference Rule:
(d/dx) [f(x) ± g(x)] = (d/dx) f(x) ± (d/dx) g(x).
Problem 9: Given y = ax2 + bx + c, find dy / dx.
Problem 10: Given y = 7x4 + 2x3 – 3x +37,
Find dy / dx.
Problem 11: Given the short-run total-cost function
C = Q3 – 4Q2 + 10Q +75, find marginal-cost function.
50

25
Product Rule:
(d/dx) [f(x) g(x)] = f(x) (d/dx) g(x) + g(x) (d/dx) f(x).
Problem 12: Find the derivative of
y = (2x + 3)(3x2).
Quotient Rule: The derivative of the quotient of two
functions, f(x) / g(x), is
d f(x) f1(x)g(x) – f(x)g1(x)
=
dx g(x) g2(x)

51

Problem 13: Find (d/dx) (2x – 3/x+1)

Problem 14: Find (d/dx) (5x/x2+1)
Problem 15: Find (d/dx) (ax2 + b/ cx)
Chain Rule:
• If we have a function z = f(y), where y in turn a
function of another variable x, y = g(x), then the
derivative of z with respect to x is equal to the
derivative of z with respect to y, times the derivative
of y with respect to x. Expressed symbolically:
dz/dx = (dz/dy) x (dy/dx) = f1(y)g1(x)
52

26
• If we have z = f(y), y = g(x), and x = h(w), then
dz/dw = dz/dy x dy/dx x dx/dw = f1(y)g1(x)h1(w)
Problem 16: If z = 3y2, where y = 2x + 5. Find dz/dx.
Problem 17: If z = y – 3, where y = x3. Find dz/dx.
Problem 18: z = (x2 + 3x – 2)17. Find dz/dx.
Inverse-Function Rule:
For inverse functions, the rule of differentiation is
dx/dy = 1 / (dy/dx)
Problem 19: Given y = x5 + x. Find dx/dy.
53

Implicit Differentiation:
• The function y = f(x) is said to be an explicit function,
because y is expressed in terms x.
• But if the function is written as g(x, y) = 0, then the
function is said to be an implicit function. And the
differentiation of such a function is called implicit
differentiation.
• Here, we treat dy/dx as unknown and differentiate the
function with respect to x.
Problem 1:
Differentiate xy = 9 implicitly with respect to x. 54

27
Problem 2:
Differentiate x2 + y2 – 20=0 implicitly with respect to x.
Problem 3:
Differentiate xy – y + 4x = 0 implicitly with respect to x.

55

Partial Derivatives:
If y = f(x1, x2,…..,xn), then f1 = ∂y/ ∂ x1, f2 =
∂ y/∂ x2,…., fn = ∂ y/ ∂ xn.
Problem 20: y = f(x1, x2) = 3x12 + x1x2 + 4x22, find the
partial derivatives.
Problem 21: Given y = f(u, v) = (u+4)(3u+2v). Find the
partial derivatives fu and fv.
Problem 22: Given y = (3u – 2v) / (u2 +3v). Find the
partial derivatives fu and fv.

56

28
Differentials:
dy  (dy/dx) dx or dy  f1(x)dx
The symbols dy and dx are called differentials of y and x
respectively.
Problem: 23:
Given y = 3x2 + 7x – 5, find dy.
The derivative of the function is dy/dx = 6x+7; thus the
desired differential is dy = (6x+7)dx.
Problem 24:
Find єd if the demand function is Q = 100 – 2p. 57

The marginal function and the average function of the

given demand curve are
dQ/dP = -2 and Q/P = (100 – 2P)/P
Єd = -2 ÷ (100 – 2P)/P = -P/(50-P).
Problem 25:
Find the differential dy, given:
(a)y = -x(x2+3) (b) y = (x-8)(7x+5) (c) y = x/x2+1
Total Differentials:
The concept of differentials can be extended to a
function of two or more independent variables. 58

29
• Consider a saving function S = S(Y, i) where S is
savings, Y is national income and i interest rate.
The total change in S will then be equal to
dS = (∂S/∂Y) x dy + (∂S/∂i) x di
• The expression dS, being the sum of the changes from
both sources, is called the total differential of the
saving function.
• The process of finding such a differential is called
total differentiation.
• The more general case of a function of n independent
variables can be exemplified by, say, a utility function
59

in the general form

U = U(x1, x2,…..,xn)
The total differential of this function can be written as
dU = (∂U/∂x1)dx1 + (∂U/∂x2 )dx2 + …+ (∂U/∂xn)dxn
Or dU = U1dx1 + U2 dx2 + …+ Undxn = Uidxi
Rules of Differentials:
A straightforward way of finding the total differential dy,
given a function y = f(x1, x2)
is to find the partial derivatives f1 and f2 substitute these
into the equation dy = f1dx1 + f2dx2 60

30
Let k be a constant and u and v be two functions of the
variables x1 and x2. Then the following rules are valid.
Rule I. dk = 0 (constant-function rule)
Rule II. d(cun) = cnun-1du (power-function rule)
Rule III. d(u ± v) = du ± dv (sum-difference rule)
Rule IV. d(uv) = vdu + udv (product rule)
Rule V. d(u/v) = (vdu – udv)/v2 (quotient rule)
Rule VI. d(u ± v ± w) = du ± dv ± dw
Rule VII. d(uvw) = vwdu + uwdv + uvdw
61

Problem 1.
Find the total differential dy of the function
y = 5x12 + 3x2
Problem 2.
Find the total differential of the function
y = 3x12 + x1x22
Problem 3.
Find the total differential of the function
y = x1 + x2/2x12
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Total Derivatives:
• Given a function of the form Z = f(x, y), we are
interested in finding the rate of change of the function
with respect to x when x and y are related.
• In this kind of differentiation, the independent
variables are actually dependent on other variables. In
connection with this, three cases are available.
Case I: Given the function Z = f(x, y), where y = g(x),
the total derivative of Z with respect to x is
dZ/dx = fx(dx/dx) + fy(dy/dx)
but dx/dx is equal to one, hence dZ/dx= fx + fy(dy/dx), 63

where fx and fy are the partial derivatives of the function

with respect to x and y respectively.
• fx is the direct effect of the change in x on Z, and fy(dy/dx)
measures the indirect effect of the change in y on Z –
change runs from y to x, then to Z.
Problem 1.
Find the total derivative for Z = 3xy where y = 3x2.
Solution:
Zx = fx = 3y, Zy = fy = 3x, and dy/dx = 6x.
Hence, dZ/dx = 3y + 3x(6x) = 3y + 18x2.
(The answer means that the total differential of the function
64
is divided by dx).

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Example:
For a general function of the form
Z = f(x, y1, y2,…yn)
Where y1 = g(x), y2 = s(x), and yn = i(x), the
total derivative would be, dZ/dx =
fx + fy1dy1/dx + fy2dy2/dx + …+ fyndyn/dx

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Problem 3.
Find the total derivative for Z = 3xy1y2, where y1 = 2x2
and y2 = x.
Solution: Zx = fx = 3y1y2, dy1/dx = 4x, dy2/dx = 1,
Zy1 = fy1 = 3xy2, and Zy2 = fy2 = 3xy1
Hence, dZ/dx = 3y1y2 + 12x2y2 + 3xy1
Case 2: The situation is only slightly more complicated
when we have y = f(x1, x2, w) where x1=g(w), x2=h(w).
Now dy/dw = f1(dx1/dw) + f2(dx2/dw) + fw(dw/dw)
= (∂y/∂x1)(dx1/dw) + (∂y/∂x2)(dx2/dw) + ∂y/∂w 66

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Example: Let the production function be
Q = Q (K, L, t) where, aside from the two inputs K and
L, there is a third argument t, denoting time.
• The presence of the t argument indicates that the
production function can shift over time in reflection of
technological changes.
• Thus, this is a dynamic rather than a static production
function. Since capital and labor, too, can change over
time, we may write
K = K(t) and L = L(t)
• Then the rate of change of output with respect to time67

can be expressed, in line with the total-derivative formula

as
dQ/dt = (∂Q/∂k)(dk/dt )+ (∂Q/∂L)(dL/dt) + ∂Q/∂t
or, in an alternative symbolism,
dQ/dt = QkK1(t) + QLL1(t) + Qt

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Problems:
1. Find the total derivative dz/dy, given:
(a) z = f(x, y) = 2x + xy – y2, where x = g(y) = 3y2
(b) z = 6x2 – 3xy + 2y2, where x = 1/y
(c) z = (x + y)(x – 2y), where x = 2 – 7y
2. Find the total derivative dz/dt, given:
(a) z = x2 – 8xy – y3, where x = 3t and y = 1- t
(b) z = 3u + vt, where u = 2t2 and v = t+1
(c) z = f(x, y, t), where x = a + bt and y = c + dt
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