Introductory Mathematics and Statistics for Islamic Finance, + Website

Chapter 7Differential Equations

Differential equations play an important role in Islamic finance. The rate of change of one variable with respect to another is called a derivative. A differential equation describes the relationship between a variable and its derivative. In economics and finance, many problems give rise to differential equations. Economic and financial variables are indexed on time . For instance, the real gross domestic product at time is denoted and real GDP at time is denoted ; the rate of change of real GDP per unit of time is . A differential equation may be used to describe the dynamics of real GDP by relating to . A company may change the price of its product based ...