Economics Dr.

Sauer

Chapter 8 Lecture Handout Integration is the reverse of differentiation. - If you differentiate a function and then integrate it, you will have the original function back.

The power rule for integration: The exception to the power rule:

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Examples: (a) x4 (b) (c) (d)

(e)

(f)

(g) 5x 3x2

(h)

Integrating the natural exponential function:

(a) 3ex + 5

(b)

The definite integral is used to find the area under a curve. - Consumer Surplus - Producer Surplus For linear functions, we can use geometry to find the area of consumer surplus, producer surplus and total surplus. P = 60 2Q P=3+Q

Verify using integration:

For non-linear functions, we cannot use geometry to find surplus. We must use integration. Example: P = 300e-0.2Q P = 2e0.8Q

Calculate consumer surplus for

Q=30 0.5P

when

P=10

Calculate producer surplus for

P = Q2 + 4 when Q = 5

Calculate equilibrium price and quantity, consumer and producer surplus for P = Q2 +6Q + 9 P = Q2 10Q + 25