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Economics 240

Economics 240. Lecture 21 Univariate Calculus. Chain Rule. Many economic situations involve a chain of relationships that relate an ultimate outcome to its original cause. Money supply impact on output in Keynesian model.

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Economics 240

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  1. Economics 240 Lecture 21 Univariate Calculus

  2. Chain Rule • Many economic situations involve a chain of relationships that relate an ultimate outcome to its original cause. • Money supply impact on output in Keynesian model. • Chain rule shows how to evaluate a derivate when variable’s effect works through one function embedded in another.

  3. Composite Functions • The chain rule shows how to differentiate composite functions, that is, functions in which the arguments are themselves functions. • Let y=g(u) and u=h(x), then the composite function f(x) is y=g(h(x))=f(x). • h(x) is the inside function and g(u) is the outside function. • In general g(h(x))h(g(x)).

  4. Chain Rule

  5. Proof of Derivate of Exponential function

  6. Example Chain Rule

  7. 2nd Example of Chain Rule

  8. General Power Rule

  9. Example General Power Rule

  10. Quotient Rule

  11. Example of Quotient Rule

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