Question

Briefly discuss the following concepts that you have learned in class:

a) The Nature of Mathematical Economics

b) Economics Model

c) Equilibrium Analysis in Economics

d, Linear Models and Matrix Algebra

Answer 1

A). The Nature of Mathematical Economics:

Mathematical economics isn't a definite branch of economics within the sense that public finance or international trade is. Rather, it's associate degree approach to economic analysis, within which the economic expert makes use of mathematical symbols within the statement of the matter and conjointly attracts upon famed mathematical theorems to assist in reasoning. As way because the specific material of research goes, it are often micro- or economic science theory, public finance, urban social science, or what not.

Any economic theory is necessarily an abstraction from the real world. For one thing, the immense complexity of the real economy makes it impossible for us to understand all the interrelationships at once; nor, for that matter, are all these interrelationships of equal importance for the understanding of the particular economic phenomenon under study. The sensible procedure is, therefore, to pick out what appeals to our reason to be the primary factors and relationships relevant to our problem and to focus our attention on these alone. Such a deliberately simplified analytical framework is called an economic model since it is only a skeletal and rough representation of the actual economy.

B). Economics Model:

Any economic theory is essentially an abstraction from the real world. For one factor, the huge complexity of the real economy makes it not possible for us to know all the interrelationships at once; nor, for that matter, are of these interrelationships of equal importance for the below standing of the actual economic development under study. The wise procedure is, therefore, to choose out what appeals to our reason to be the first factors and relationships relevant to our drawback and to focus our attention on these alone. Such a deliberately simplified associate degree analytical framework is termed an economic model since it's solely a skeletal and rough illustration of the actual economy.

C).  Equilibrium Analysis in Economics:

In the marketplace for any specific good X, the selections of consumers act at the same time with the decisions of sellers. Once the demand for good X equals the supply of good X, the marketplace for good X is alleged to be in equilibrium. Related to any market equilibrium are going to be an equilibrium amount and an equilibrium worth. The equilibrium quantity of good X is that quantity that the number demanded of good X specifically equals the quantity supplied of good X. The equilibrium worth for good X is that price per unit of good X that permits the market to “clear”; that's, the worth that the quantity demanded of good X specifically equals the quantity supplied of good X. The determination of equilibrium amount and worth, referred to as equilibrium analysis, will be achieved in two completely different ways: by at the same time finding the algebraically equations for demand and provide or by combining the demand and supply curves during a single graph and deciding the equilibrium worth and amount diagrammatically.

D). Linear Models and Matrix Algebra:

Linear Models and Matrix Algebra Matrices are a compact and convenient way of writing down systems of linear equations. By using matrix algebra, the fundamental results in econometrics can be presented in an elegant and compact format. In general, a system of m linear equations in n variables (x1; x2; :::; xn) can be arranged into the following format:

a11x1 + a12x2 + ::: + a1nxn = d1;

a21x1 + a22x2 + ::: + a2nxn = d2;   

::::::::::::::::::::::::::::::::::::::::::::::::::::::

am1x1 + am2x2 + ::: + amnxn = dm:

The double-subscribted parameter symbol aij represents the coe¢ cient appearing in the ith equation and attached to the jth variable. There are three types of ingredients in the above equation system (1). The Örst is the set of coe¢ cients aij ; the second is the set of variables x1; x2; :::; xn; and the last is the set of constant terms d1; d2; :::; d3: