Calculus In Economics

Application of Calculus in Economics

Introduction

Every society is, by definition, formed by a group of individuals. But every group of individuals does not form a society. This is usually stratified and governed by rules, customs or conventions. Two attitudes are thus possible when one wishes to study social phenomena: either to take as a starting point the individual and his choices, in an ad hoc context, as simple as possible, or to first specify this context in time and Space, and then study how individual choices fit into it. The first attitude is that adopted by the dominant economic theory, called "neoclassical", within the framework of what is commonly called "microeconomics" (Henry 2004).The second attitude is that of Smith, Ricardo

However, the subjects do not operate in isolation and in collaboration with other disciplines. This paper therefore seeks to give an in depth understanding of the connection between calculus and economics and the underlying significance of the model to the study of economics.

Application of Differentiation in Economics

Economics as a social science is not entirely dependent on explaining what happens within economies. In a bid to give an understanding of economic dynamics and makes projections which gives specification of economic variables such as effect of prolonged droughts on crop and food prices and the impact of that increased sales tax may have on the prices of finish commodities.

It further seeks to explain the unemployment impacts in relation to increased government spending. Consequently, through mathematics applications, it gives guidelines that firm and other government agencies are required to follow while allocating resources (Rosser, 2013). As such, mathematics is vital to any serious application of economics to these key areas. This section seeks to look at the practical applications of differentiation in

This is easily explained: the economist is interested in the production and distribution of the resources available to society. Hence multiple quantitative operations, with quantities of goods, prices and values. The economist's activity ranges from relatively simple calculations, such as those made in accounting and actuarial calculus, to the more complicated ones relating to the search for an efficient allocation of resources. Mathematics then provides tools that can help to achieve a defined goal - the profit of some or the well-being of the community, for example - or to extract information from available data, mobilizing techniques such as Factor analysis or discriminant