Derivatives on n variables A quantum leap Introduction The Calculus block s devoted to the study of functions on m variables. We know how to plot (and interpret) level curves for functions on IR? (note: could you draw level surfaces of functions on RE like, for example, f(x,y,2) = x? — 3xyz — 2z* + y?) and today we'llearn how to calculate derivatives of functions of several variables, and the first applications in Economics and Business To help you get in the mood for this exciting Workshop, you can take a look at the following Videos: ‘¢ Multivariable functions (as kind of introduction to functions with more than one variable): https://www youtube.com/watch?v=TreCbdWwCBc8li \Qa2vhaHCSteHa6RcScOwb RIxS6nF7&index: © Partial derivatives, introduction: hutps://www youtube.com/watch?v=AXghWeUELQUBlist=PLSQI0a2vh4HCSteHa6ReScOw, bRTS6NE7&index=15 Partial Derivative ‘© Given a continuous function f:IR" — R, its partial derivative with respect to x; ata given point p = (Py, Pq) is the derivative of f, considering it asa function ofa single variable, xj the remaining variables are treated as constants. + We'ttwrite eC afte, A ro Pe-weX Pie oR; a An example Let's take f (x,y,z) = a? + yz + 3yx — 25. Its partial derivatives with respect to x, y and zat point (x,y,z) = (1,0, —2) are as follows: way = 0-2) d(x?+0+0-25) . Hann = Be = SI = Deh . artes, 809-2) G22 ga) = LO «28g. = My Question 1. (3 points) Calculate the partial derivatives of the previous function with respect to x,y and z at point (x,y,z) = (2,12) General procedure If we need to calculate the partial derivatives of the same function, but at diferent points, we can use a more general procedure to calculate partial derivatives: if we want to calculate the partial derivative ofa given function f with respect to a given variable, let's say, x, wwe consider the other variables, 4, .. 4-4, Xies+o= qs 88 numbers, but without actually substituting them by numbers. Following the previous example, the partial derivatives of f with respect to x, y and z would beyx) , a(=25) = 2x +043y40=2x43y Gye) | AO) gs ey art 0 az 43x dy: dy 16%) £29) 4 coeony Now, we only need to substitute the values of x, y and 2 to get the values of the partial derivatives at any given point; for example, at p = (1,0,—2) 2=2e14300=2 of By 0-2 = of 3g loo») = 0 Question 2. (3 points) Given the function f(x,y) a) Find, if they exist, the points p scat ay b) Find, if they exist, the points p = (p,,pz) € R? so that 222)),.-0 mre) ©) Find, if they exist, the points ee ary) ay The gradient vector For convenience, we'll use vector notation when referring to the set of all partial derivatives of a given function; we'll call this vector the gradient vector of function f, and use the symbol Vf.This symbols called abla, which is the ancient Greek word for harp. Following the above example, we can say that the gradient vector of function fis, VfCy,2) = Ox + 3y,2+3xy) And, of course, Vf(1,0,—2) = (2,1,0) Question 3. (3 points) Calculate the gradient vector of f(x,y,2) = xyz +e”, g(%,y) = Bxiyi and ACK, L) = CKAL? Question 4. (3 points) Calculate the gradient vector of f(x,y) = 2x? + y? at points p = (1,2), q= (71,3) and r= (0,0). Plot the function as a surface on R? (maybe www. acaclemo ong or www. wolframalpha.com can help) Question 5. (5 points) Plot the map of level curves of the previous function, including at least levels 0, 1, 2 and 3; on that map, plot the previous points p, q and r and the corresponding gradient vectors (each gradient vector starting at the corresponding point). What can you observe? The directional derivative Given a point p € R™ and a vector # € R", the directional derivative of f at point p in the direction given by # is defined as Def) = TV pAnother example Let's calculate Dgf(p) where f(x,y,2) =xy2 +e — es done in 3 steps: (22,3) and 8 = -1.¥%6,3) # fly = (LL) fy = zt ye — Qu x2 + xe ay)Ip = (44 20,3 +e?,2) eo 183) i a) 2 + Df) 1,58,3)- 4+ 202,34 02,2) = $4 98 Question 6. (4 points) Calculate Dyf(p), where a) f(y) = 3x2y— x, p = (3,2) and 5 = (2,5) b) fay) (1-1) and # = (3,4) ) fy) (2,1) and 8 4) fy) = 3e”, p = (0,0) and (2,3) Marginality Asin functions on one variable, partial derivatives with respect to x, express the marginal effect of an increase of one unit in the évariable, all the rest remaining equal. This is the reason why the partial dervative is also caled Marginly Yet another example The profit ofa store which sells 2 goods, @ and bis given by the function profit(a,b) = 2a? ~ Bab — 14(b + a) The profit after selling 20 units of a and 5 units of bis equal to profit(20,5) = 150€. what are the marginalities of products a and b at these levels of sales? aro Marginality of a is 2°22 |-.55) = 51€. Therefore, the profit increases by about S1€ when the store sells the 2ist unit of a, keeping b aprofit Marginalty of product bis 2722 jag. store sells the 6th unit of b, keeping 746, so profit will decrease by about 74€ when the 0 Note: The actual profit increase when the 2st unit of product a is sold is profit(21,5) — profit(20,5) = 536; itis quite close to the marginalty of a, S1€; on the other hand, the actual profit increase when the 6th unit of product b is sold is profit(20,6) — profit(20,5) = -74€, which is equal to the marginality of b, because in this case profét(a,b) is linear on b Elasticity Whenever we need to calculate relative changes instead of absolute changes (provided by marginality, we can use the definition of Elasticity which, as inthe case of functions on real numbers is 2 follows: x of Ef =F Fel When the absolute value of elasticity is equal to 1, we will say that the function is unitary at point p for the i” coordinate + When the absolute value of elasticity is greater than 1, we will say thatthe function is clastic at point p for the i** coordinate + When the absolute value of elasticity is less than 1, we will say thatthe function i inelastic (or rigid) at point p for the i®* coordinateOne more example Given the function f(x,y) interpretation of the results, We need to calculate Eyf (p) and Ey (p). I's a 3-step process: 1. Partial derivatives: xy? — e%, determine its two elasticities at p = (2,1). Give an = xy 3 = 202 = Oxy — x07 = Ip = 20-26 2. Calculate f(p) = 10 - e* 3. Apply the formulas of elasticity: Exf(p) = Eyf@) (Se?) = -1.83 ioe = a (20-20% 2 io- We observe that, at point p, f Is elastic for both variables x and y. Economic meaning: an increase of 1% in x will result in a 1.83% decrease in f; an increase of 1% in y will result in a 2% increase in f Question 7. (3 points) The daily profit of selling a given product is given by PO.) = 3ue + 2p —4pu where pis the price at which the product sale, andi is the numberof unt oe IF50 une ofthe product have been sld today, at a price of 20€ each a) What isthe total profit? 8) Use marginalty © approximate the profit we will have tomorrow, if we ell unis ofthe product maintaining the same pce c) Use marginality to approximate the profit we will have tomorrow, if we sell SO unite at lower price, 19.5¢ Question 8. (3 points) The weekly production cost of cone in euros, is equal to Cy =o2— 2 where x and y are the number of items produced for two given products. The company s producing 100 unts of and units y, each week, so the level of weekly production is l = (100,50) 2) Use marginal analysis to estimate the effect on weekly production costs of producing one more unit oFy per week, keeping x unchangee b) Calculate the partial elasticities of C(x,y) for I. Comment the results €) What wil be the effect of 2% increase inthe production of? Question 9. (3 points) After selling 10MT of rice and S2MT of sugar, the profits of a company have been equa t0 24 2006 f we know thatthe elstcies ofthe profits with respect to both products are, respectively, 2 and 093, 2) What would be the expected benef of increasing rice sales to 10.22MT? b) What would be the expected benef of increasing sugar sales to S2.2MT? ¢) What about seing 10SMT of ice and SOMT of sugar?Last but not least If you want to see more videos, here you are the link to the whole subject of multivariate derivatives: hnttps:/Avww.khanacadern Finally, for those of you interested in level surfaces, here you area set of level surfaces of function f(G,y,2) = x? — 3xyz— 22? +y Isn't itbeautiful?