Notes-Chapter 1-3

Notes-Chapter 1-3 - INTRODUCTION Chapter1...

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    INTRODUCTION Chapter 1 Alpha Chiang, Fundamental Methods  of Mathematical Economics, Third  Edition
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Nature of Mathematical  Economics Mathematical economics is not a distinct  branch  of economics in the sense that public  finance or international trade is.   it is an approach  to economic analysis  the economist makes use of mathematical  symbols in the statement of the problem and  also draws upon known mathematical theorems to  aid in reasoning.  Specific subject matter of analysis: can be  micro- or macroeconomic theory, public  finance, urban economics, etc.
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Nature of Mathematical Economics Mathematical economics is reserved to  describe cases employing mathematical  techniques beyond  simple geometry, such  as matrix algebra, differential and integral  calculus, differential equations, difference  equations, etc.   Purpose of the course: to introduce the  student to the most fundamental aspects of  these mathematical methods—those  encountered daily in the current economic  literature 
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Mathematical vs. Non-mathematical  Economics Mathematical economics is merely an approach to economic analysis Purpose of any theoretical analysis: to derive a set of conclusions or  theorems from a given set of assumptions or postulates via a process  of reasoning.  The major difference between "mathematical economics" and "literary  economics" is twofold:  First, in the former, the assumptions and conclusions are stated in  mathematical symbols rather than words and in equations rather than  sentences.  Second, in place of literary logic, use is made of mathematical theorems—of  which there exists an abundance to draw upon—in the reasoning process.  Advantage: symbols are more convenient to use in deductive  reasoning, and certainly are more conducive to conciseness and  preciseness of statement.
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Advantages of Mathematical Approach 1. The "language" used is more concise and  precise;  2.  there exists a wealth of mathematical 
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This note was uploaded on 11/09/2011 for the course ECON 101 taught by Professor Richards during the Spring '11 term at Cambrian College.

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Notes-Chapter 1-3 - INTRODUCTION Chapter1...

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