ch06-differential-calculus (1)

ch06-differential-calculus (1) - Basics of Differential...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Basics of Differential Calculus Professor Erkut Ozbay Economics 300
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Why differential calculus? Models explain economic behavior with system of equations What happens if a variable changes? Comparative statics determines marginal change in economic behavior How does change in tax rate alter consumption? How does change in NBA collective bargaining agreement impact share of NBA revenues going to players? parity of teams across league?
Background image of page 2
Why differential calculus? Economic models assume rational optimizers Consumers maximize utility Producers maximize profits NBA owners maximize combination of wins and profits Optimization uses calculus to evaluate tradeoffs How much to consume? Consume until marginal utility = price How much to produce? Produce until marginal revenue = marginal cost Which free agents to go for?
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Average rate of change over [x 0 ,x 1 ] 1 0 1 0 1 0 1 0 ( ) ( ) , where and f x f x y x x x x x x y y y - - - -
Background image of page 4
Average rate of change examples 1 0 1 0 ( ) ( ) f x f x y x x x - - 1 0 1 0 : bx bx y y a bx b x x x - = + = = - 2 2 2 1 0 1 0 1 0 1 0 1 0 1 0 ( )( ) : x x x x x x y y x x x x x x x x - - + = = = = + - -
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6 y x = 3 y x = 2 y x =
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/03/2012 for the course ECON 300 taught by Professor Cramton during the Fall '08 term at Maryland.

Page1 / 27

ch06-differential-calculus (1) - Basics of Differential...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online