<p>I am preparing myself for a MSc in Economics and don't understand why, according to the Envelope Theorem, when deriving a utility function <span class="math-container">$ u(θ, q(θ), r(θ)) = B(q-r) - C(\frac{q}{θ})$</span>, its derivative with respect to <span class="math-container">$θ$</span> is <span class="math-container">$(\frac{q(θ)}{θ^2})C'(\frac{q(θ)}{θ})$</span>.</p>

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2020-07-21T08:26:24.573Z
Would be helpful to explain what $B$ and $C$ functions are.
Art
<microeconomics><utility><taxation>
How do I solve the Envelope Theorem condition in Microeconomics?
Katia Rebinskaya
# How do I solve the Envelope Theorem condition in Microeconomics?

(Asked by: username_0 on 2020-07-08)

I am preparing myself for a MSc in Economics and don't understand why, according to the Envelope Theorem, when deriving a utility function $ u(θ, q(θ), r(θ)) = B(q-r) - C(\frac{q}{θ})$, its derivative with respect to $θ$ is $(\frac{q(θ)}{θ^2})C'(\frac{q(θ)}{θ})$.

**Tags:** microeconomics, utility, taxation

> **Comments:**
> **username_1**: Would be helpful to explain what $B$ and $C$ functions are.  

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## 0 answers

