Another Angle

Chapter 2 · Intuitive Math for Economics and Business

The Derivative Is a Nudge Ratio

The derivative of a function at an input point is the ratio of the output nudge to the input nudge. Set the input nudge dx to 1 and the output nudge df is the derivative — that is all df/dx means. "Marginal" in economics means the same thing, so marginal utility is just a derivative.

Not the slope of a graph

Most courses introduce the derivative as the slope of a tangent line, which puts a picture before the idea. The graph is a consequence, not the definition. Before any graph exists, a function is a machine: push the input a hair, and the output moves by some amount. Compare those two movements and you have the derivative.

That comparison is the ratio from chapter one, doing its one job. The input nudge is called 1; whatever the output nudge is next to it, that number is df/dx. Nothing is being divided in the arithmetic sense, and nothing is approaching anything yet.

Which dissolves the usual sticking point. A nudge is too small to see — so how can you compare two invisible things? The same way we compared two fruits without ever learning their gram counts. A comparison index doesn't need absolute sizes. We never find out how big the nudge is, and we never need to.

Then the economics falls out for free. Marginal utility, marginal cost, marginal revenue: each is "one more unit of input, how much more output?" That's a nudge ratio with a different word on it.

Chapters in the video

Read it instead

The written version, aimed at the economics side of it: "marginal" is just the economist's word for a derivative — including why MR = MC is the first-derivative test in disguise.

Walk inside it

Nudges are easier to believe when you can stand on the surface they live on. Drop a function into Open World Discover and the island becomes that graph.

← Chapter 1: a ratio is a tool for comparison
Next: trigonometry and the unit circle →