Application of Integration in Economics and Commerce

Application of Integration in Economics and Commerce.

Integration helps us to find out the total cost function and total revenue function from the marginal cost. It is possible to find out consumer’s surplus and producer’s surplus from the demand and supply function. Cost and revenue functions are calculated through indefinite integral.

We learnt already that the marginal function is obtained by differentiating the total cost function. Now we shall obtain the total cost function when marginal cost function is given, by integration.

1. Cost functions from marginal cost functions

2. Revenue functions from Marginal revenue functions

To find the Maximum Profit if Marginal Revenue and Marginal cost function are given:

Inventory

Amount of an Annuity

Consumption of a Natural Resource

3. The demand functions from elasticity of demand 

4. Consumer’s surplus

5. Producer surplus