Lecture 1(c) Marginal Analysis and Optimization. Why is it important to understand the mathematics of optimization in order to understand microeconomics?. The “economic way of thinking” assumes that individuals behave as if they are “rational”.
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Explicitly describe the three elements of the optimization problem
As you can see both from the table and the graph, if x=3, y is at its maximum value.
If Y=bXn, then dY/dX=nbXn-1
Y = 2/X
can be written as
and so the derivative is
dY/dX = f(x)[dg(x)/dx]+g(x)[df(x)/dx]