PARTIAL DERIVATIVES

In managerial economics, usually a function of several independent variables is encountered instead of a single variable case in previous post. For example, a consumer’s demand for a product depends on the price of the product, price of other related goods, income, tastes, etc. When price changes, the effect on quantity demanded of the goods can be analysed only when all other variables are kept constant. The functional relationship that is obtained between the quantity demanded of a product and its own price is called a Partial Function (a function of one variable when all other variables are kept constant). The derivative of the partial functions are known as partial derivatives of the original function and is shown as df/dx1 or f1(x) or f’(x). The conventional symbol used in maths for the partial derivative is delta, δ. Partial derivatives are functions of all variables entering into the original function f (x).

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