Session Goals

At the end of the session, you should be able to understand:

 Relative Extrema
 Necessary condition for a relative extrema
 Sufficiency condition for a relative extrema
 Extreme Value Theorem

A. Afful-Dadzie 1
 Differentiation

RELATIVE EXTREMA

 A function 𝑓 is said to be increasing on an interval 𝐼 when, for any two numbers 𝑥1 , 𝑥2 in 𝐼, if 𝑥1 < 𝑥2 , then
𝑓(𝑥1 ) < 𝑓(𝑥2 )

 A function 𝑓 is said to be ↓ on an interval 𝐼 when, for any two numbers 𝑥1 , 𝑥2 in 𝐼, if 𝑥1 < 𝑥2 , then 𝑓(𝑥1 ) >
𝑓(𝑥2 )

A. Afful-Dadzie 2
 Differentiation: Relative Extrema
Another approach to determine whether a curve is increasing or decreasing within an
interval is to apply differentiation which is quite simple and is based on the following rule.

Rule 1:

Let 𝑓 be differentiable on the interval (𝑎, 𝑏) if, 𝑓 ′ 𝑥 > 0 for all 𝑥 in (𝑎, 𝑏), then 𝑓 is
increasing on (𝑎, 𝑏).

If, however, 𝑓′(𝑥) < 0 for all 𝑥 in 𝑎, 𝑏 , then 𝑓 is decreasing on (𝑎, 𝑏)

A. Afful-Dadzie 3
 Differentiation: Relative Extrema
Example:
2 3
Given the function 𝑦 = 18𝑥 − 𝑥 . Determine whether the function is
3
increasing or decreasing within the intervals (−2,1) and (4,7) on the 𝑥 axis.

Soln:
The graph of the function is as shown below:
In practice:
For this example, think of 𝑦 as revenue
and 𝑥 as quantity. Then, we are looking
at the range of quantities at which
revenue is increasing or decreasing

A. Afful-Dadzie 4
 Differentiation: Relative Extrema

𝑓 ′ 𝑥 = 18 − 2𝑥 2
When 𝑥 = −2 ⇒ 𝑓 ′ −2 = 18 − 2(−2)2 = 10 > 0
When 𝑥 = 1
𝑓 ′ 1 = 18 − 2 = 16 > 0.
Thus 𝑓 is ↑ on the interval 𝐼 = (−2,1)
When 𝑥 = 4
𝑓 ′ 4 = 18 − 2(4)2 = −14 < 0
When 𝑥 = 7
𝑓 ′ 4 = 18 − 2(7)2 = −80 < 0
Thus 𝑓 is ↓ on the interval 𝐼 = (4,7)

A. Afful-Dadzie 5
 Differentiation: Relative Extrema
Relative Maxima and Relative Minima

The highest and lowest points are called points of relative extremum (i.e. the curve is
locally maximum or minimum).
A. Afful-Dadzie 6
 Differentiation: Relative Extrema
Rule 2: Necessary condition for relative Extrema
At the local (relative) minima or maxima, also called relative extremum, 𝑓 ′ (𝑥) = 0.
Rule 2 however cannot tell exactly whether the point 𝑥 where 𝑓 ′ 𝑥 = 0 is indeed a
maximum or minimum. We need another rule to help us establish that.
Rule 3: Sufficiency (Second derivative) test for relative extrema
Suppose 𝑓 ′ 𝑎 = 0
 If 𝑓′′(𝑎) < 0, then 𝑓 has a relative maximum at 𝑎.
 If 𝑓′′(𝑎) > 0, then 𝑓 has a relative minimum at 𝑎.

Where 𝑓′′(𝑎) is the second derivative of 𝑦 at 𝑎.

A. Afful-Dadzie 7
 Differentiation: Relative Extrema
Example:
Given the function, 𝑦 = 2𝑥 2 − 𝑥 4 ,
a. find the points at which 𝑓(𝑥) is either minimum or maximum (i.e. points of the relative extrema).
b. Indicate whether a relative extremum from question is a relative maximum or minimum.
Solution.
a.
𝑓 ′ 𝑥 = 4𝑥 − 4𝑥 3 = 4 𝑥 − 𝑥 3 = 4𝑥 1 − 𝑥 (1 + 𝑥)
𝑥 = 0, 𝑥 = 1, 𝑥 = −1
Thus, points 𝑥 = 0, 𝑥 = 1, and 𝑥 = −1 are relative extrema.
b. To establish whether 𝑓(𝑥) attains minimum or maximum values at these extrema, we apply rule 3.
𝑓 ′′ 𝑥 = 4 − 12𝑥 2
At 𝑥 = 0, 𝑓 ′′ 0 = 4 − 0 = 4 > 0 → 𝑚𝑖𝑛𝑖𝑚𝑢𝑚
At 𝑥 = 1, 𝑓 ′′ 1 = 4 − 12 = −8 < 0 → 𝑚𝑎𝑥𝑖𝑚𝑢𝑚
At 𝑥 = −1, 𝑓 ′′ −1 = 4 − 12 = −8 < 0 → 𝑚𝑎𝑥𝑖𝑚𝑢𝑚
A. Afful-Dadzie 8
 Differentiation: Relative Extrema
Practical Example
80−𝑞
Suppose price is given as 𝑝 = , 0 ≤ 𝑞 ≤ 80, where 𝑞 is number of unit of products.
4
a. At what value of 𝑞 will maximum revenue be attained?
b. What is this maximum revenue?
Solution:
Revenue= Price × Quantity
(80 − 𝑞)
𝑟 𝑞 = 𝑞
4
80𝑞 − 𝑞 2
𝑟 𝑞 =
4
At the quantity where maximum revenue is attained, 𝑟 ′ 𝑞 = 0, and 𝑟′′(𝑞) < 0

A. Afful-Dadzie 9
 Differentiation: Relative Extrema

a. 𝑟 ′ 𝑞 = 80 − 2𝑞
80 − 2𝑞 = 0 ⇒ 𝑞 = 40
Given the nature of the revenue function, then at quantity 𝑞 = 40, revenue could be
minimum or maximum.
To establish whether revenue is maximum or minimum at 𝑞 = 40 we use the 2nd derivative
test.
𝑟 ′′ 𝑞 = −2 < 0
Thus 𝑞 = 40 is a quantity level which generate the maximum revenue possible.
80 40 −402
b. Revenue = = 400
4

Note: In essence, this is one of the reasons why you had to learn differentiation so as to solve
practical problems as the one above.
A. Afful-Dadzie 10
 Differentiation: Relative Extrema

Extreme-Value Theorem

Definition: If a function 𝑓 is continuous on a closed interval 𝑎, 𝑏 , then the function

has both a maximum value and a minimum value on that interval 𝑎, 𝑏 .
Note that one should guarantee that:
a. the function is continuous
b. the function is being analyzed in a closed interval
The symbol 𝑎, 𝑏 implies a closed interval and includes the endpoints 𝑎 and 𝑏
whereas (𝑎, 𝑏) implies an open interval and excludes the endpoints 𝑎 and 𝑏.
The implication of the above definition is that, the max or min points could occur at
the end points since the interval is closed.

A. Afful-Dadzie 11
 Differentiation: Relative Extrema

Procedure to find absolute extrema for a function 𝑓 that is

continuous on 𝑎, 𝑏
Steps:

1. Find the critical (relative extrema) values of 𝑓.

2. Evaluate the 𝑓(𝑥) at the end points 𝑎 and 𝑏 and the critical
values in (𝑎, 𝑏).
3. The maximum value of 𝑓 is the greatest of the values found in
the step 2 and the minimum value of 𝑓 is the least of the values
found in step 2

A. Afful-Dadzie 12
 Differentiation: Relative Extrema
Example:
80−𝑞
Given 𝑝 = 0 ≤ 𝑞 ≤ 80,
4
where 𝑞 = no. of units, 𝑝 = price per unit. At what value of 𝑞 will maximum revenue be
attained? What is this maximum revenue?
Solution:
Revenue = price * quantity
80 − 𝑞 1 2
( )𝑞 = 20𝑞 − 𝑞
4 4
At the quantity where maximum revenue is attained, marginal revenue = 0. That is,
𝑑𝑟
= 0.
𝑑𝑞
𝑑𝑟 ′ 1
= 𝑟 𝑞 = 20 − 𝑞 = 0 ⇒ 𝑞 = 40
𝑑𝑞 2
𝑟 ′′ 𝑞 < 0
Therefore 𝑞 = 40 is a relative maximum revenue value
A. Afful-Dadzie 13
 Differentiation: Relative Extrema

However, since the analysis is being carried over a closed interval, we need to verify
the endpoints to be sure that 𝑞 = 40 indeed yields the absolute maximum revenue.
At 𝑞 = 0, 𝑞 = 40 and at 𝑞 = 80
𝑟 0 =0
1
𝑟 40 = 20 40 − 40 2 = 400
4
1
𝑟 80 = 20 80 − 80 2 = 0
4
Thus, the maximum revenue is attained at 𝑞 = 40.

A. Afful-Dadzie 14
 Differentiation: Relative Extrema
APPLICATIONS OF RELATIVE MAXIMUM AND MINIMUM
Example 1: Minimizing Average Cost
𝑞2
Suppose 𝐶 is the total cost of producing 𝑞 units of a product where, 𝑐 𝑞 = + 3𝑞 + 400.
4
- At what level of output 𝑞 will average cost per unit be minimum?
- What is this minimum value?
Solution
Let 𝐴𝐶 and 𝐶 be the average cost and total cost resp.
𝑞2
𝐶 + 3𝑞 + 400 𝑞 400
𝐴𝐶 = ⇒ 4 = +3+
𝑞 𝑞 4 𝑞
- At the quantity where average cost is minimum, 𝐴𝐶 ′ 𝑄 = 0
1
𝐴𝐶 (𝑄) = − 400𝑞−2
′
4
A. Afful-Dadzie 15
 Differentiation: Relative Extrema
1
⇒ − 400𝑞−2 = 0
4
1 400
⇒ −
4 𝑞2
⇒ 𝑞 2 = 1600
⇒ 𝑞 = ±40
⇒ 𝑞 = 40 (since can’t have negative 𝑞)
To confirm whether 𝐴𝐶 is minimum at 𝑞 = 40, the 2nd derivative test is applied.
- 𝐴𝐶 ′′ 𝑄 = 800𝑞−3
⇒ 800𝑞−3 > 0
Therefore minimum average cost occurs at 𝑞 = 40
The value of the minimum average cost at 𝑞 = 40 is then:
40 400
𝐴𝐶 = +3+ = 23
4 40
A. Afful-Dadzie 16
 Differentiation: Relative Extrema
Example 2: Maximizing TV Cable Company Revenue
The Vista TV Cable Company currently has 100,000 subscribers who each are paying a
monthly rate at GH¢40.00. A survey conducted reveals that there will be 1000 more
subscribers for each GH¢0.25 decrease in rate. At what rate will maximum revenue be
achieved and how many subscribers will there be at this rate?
Solution:
Revenue = Price × Quantity or Revenue = Rate × Number of subscribers
Let 𝑥 be the number of times rate is decreased. As an example, if we decrease the rate
by 0.25, followed by 0.25, and followed by another 0.25 so that the rate is (40-3*0.2),
then 𝑥 = 3.
∴ Rate =40 − 0.25𝑥
Number of subscribers = 100000 + 1000𝑥
So at any 𝑥, revenue = 40 − 0.25𝑥 (100000 + 1000𝑥)
= 4000000 + 15000𝑥 − 250𝑥 2
A. Afful-Dadzie 17
 Differentiation: Relative Extrema
At the maximum revenue, marginal revenue = 0
𝑑𝑟
= 𝑟 ′ 𝑥 = 15000 − 500𝑥
𝑑𝑥
⇒ 15000 − 500𝑥 = 0
⇒ 15000 = 500𝑥 ⇒ 𝑥 = 30
From the 2nd derivative test, 𝑟 ′′ 𝑥 < 0.
Thus, at 𝑥 = 30, a ‘relative’ maximum revenue is attained.
However, note that 0 ≤ 𝑥 ≤ 160. That is, the TV company can choose to set 𝑥 = 0
(meaning, no reduction) or set 𝑥 = 160 (i.e. charge nothing). We thus have to test the
revenue particularly at 𝑥 = 0 since it is obvious revenue is zero at 𝑥 = 160
𝑟 0 = 4𝑀 and 𝑟 30 = 4𝑀 + 15000 30 − 250 30 2 = 4.225𝑀 > 4𝑀
Thus maximum revenue is attained when the current rate is reduced 30 times.
Therefore maximum revenue = 4000000 + 15000 30 − 250(30)2 = 𝐺ℎ₵ 4,225,000
A. Afful-Dadzie 18
 Differentiation: Relative Extrema

Example try
 Bani Hostels has available 170 rooms. When the rent is GH¢2,100, all rooms
will be rented out. However, there will be 4 unoccupied rooms for every
GH¢40.00 increase in the rent charged. If the cost of running the hostel is a
fixed cost of GH¢100,000 and a variable cost of GH¢880.00 per an occupied
room, what is the rent charge that will maximize Bani Hostel’s profit and
what will be the number of rooms that should be made available for rent?

A. Afful-Dadzie 19
 Differentiation: Relative Extrema
Example
 Suppose 𝑛 is the number of recipient of a healthcare benefit, after 𝑡 years, where 𝑛 is in
𝑡3
thousands of elderly people and given as 𝑛 = − 6𝑡 2 + 32𝑡, 0 ≤ 𝑡 ≤ 12. At what
3
values of 𝑡 will the number of elderly receiving benefits start to fall?
 Solution:
𝑑𝑛
= 𝑡 2 − 12𝑡 + 32
𝑑𝑡
𝑡 2 − 12𝑡 + 32 = 0
𝑡 2 − 4𝑡 − 8𝑡 + 32 = 0
𝑡 𝑡−4 −8 𝑡−4 =0
𝑡−8 𝑡−4 =0
𝑡 = 8, 𝑡 = 4
−𝑏± 𝑏2 −4𝑎𝑐
Note: You could also use the quadratic equation formula, say 𝑡 = to find 𝑡.
2𝑎
A. Afful-Dadzie 20