Chapter 5 · Test 1
Derivatives & Differentials
Derivative rules, differentials, curvature, and Taylor approximation.
What you will learn
- Differentiate a polynomial
- Calculate marginal revenue
- Compute point elasticity
Reasoning habits that help
- Apply the power rule term by term, then evaluate the derivative at the requested point.
- Marginal revenue is the derivative of total revenue, not simply the market price.
- For a constant-elasticity demand q = Apᵏ, the point elasticity equals the exponent k.
Where economists use these methods
- Polynomial derivatives measure marginal changes in cost, production, utility approximations, and other economic functions.
- Firms compare marginal revenue with marginal cost when selecting a profit-maximizing output level.
- Elasticity measures the percentage responsiveness of demand or supply and informs pricing and tax-incidence analysis.