Differential Calculus and its Application in Economics- A Study with Reference to Consumer Demand Theory

Abstract

Calculus is one of the important components of mathematical tools used in economics. This enables understanding, improving and problem-solving tools for economic variables. The mathematical analysis contains differential calculus and integral calculus. Calculus is mostly expressed in functions and derivatives. The two-consumer demand theories are cardinal and ordinal. The former is the marginal utility approach and the latter is indifference curve analysis popularised by authors like Gossen (1854), William Jevons (1871), Leon Walras (1874), Carl Marshall (1890), Menger (1950), Hicks (1956), Pareto (1909), P.A. Samuelson (1949), and Robbins (1984) etc. These models analysed the relationship between the price of a commodity and the quantity demanded of the same commodity for deriving individual and market demand curves. The coefficient of price, income and cross elasticities and price, income and substitution effects are also part of these theories.