ECO201_ Lec 1_ 17 May 2009

# ECO201_ Lec 1_ 17 May 2009 - Mathematical Economics- is an...

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ECO201 Lecture 1 Mathematical Economics- is an approach in economics, where economists use mathematical tools for stating problems and use existing theorems to aid reasoning. Mathematical economics-uses mathematical symbols, tools and equations to state problems instead of words and sentences draws on mathematical theorems to aid reasoning. Geometry is widely used: visual advantage is there but is limited to two dimensional analyses. Three dimensional analyses are difficult and four dimensions is impossible. Mathematical analysis helps to overcome this and we can develop an n-variable case.

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ECO201 Lecture 1 Variable, Constants and Parameters A variable’s magnitude can change, it can assume different values. Consumption of chocolates, consumption expenditure of different families etc. Two types of variable- endogenous and exogenous. Endogenous variables - originating from within, from solutions of properly constructed economic model. E.g. market clearing price (P). Exogenous variables- originating out side the model. Remember a variable is endogenous or exogenous depends on the model. Price in the Demand-Supply Constant do not change in magnitude- an antithesis to a variable.
ECO201 Lecture 1 Coefficient- is a constant attached to a variable in the model. For further generalization we often use symbols instead of a numeric values. It seems a constant with properties of a variable- these are Parameters Equations and Identities A definitional equation sets up an identity between two alternate expressions having same meaning. A

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## This note was uploaded on 04/24/2011 for the course ECON 201 taught by Professor Takrimasyeda during the Fall '08 term at BRAC University.

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ECO201_ Lec 1_ 17 May 2009 - Mathematical Economics- is an...

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