Notes-Chapter 6-7

Notes-Chapter 6-7 - COMPARATIVE STATICS AND THE CONCEPT OF...

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COMPARATIVE STATICS AND THE CONCEPT OF DERIVATIVE Chapter 6 Alpha Chiang, Fundamental Methods of Mathematical Economics 3 rd edition
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Nature of Comparative Statics concerned with the comparison of different equilibrium states that are associated with different sets of values of parameters and exogenous variables. we always start by assuming a given initial equilibrium state. Then ask how would the new equilibrium compare with old. can either be qualitative (direction) or quantitative (magnitude) problem under consideration is essentially one of finding rate of change concept of derivative takes significance – differential calculus
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Rate of Change and the Derivative 0 0 ( ) ( ) ( ) y f x f x x f x y x x = + ∆ - = 0 0 0 0 lim lim(6 3 ) 6 x x y x x x x ∆ → ∆ → = + ∆ = Difference quotient: Derivative: y = f(x) = 3x 2 -4 Notation: f’(x), f’
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Skipped Topics The Derivative and Slope of the Curve The Concept of Limit Digression on Inequalities and Absolute Values Limit Theorems Continuity and Differentiability of a function
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RULES OF DIFFERENTIATION AND THEIR USE IN COMPARATIVE STATICS Chapter 7 Alpha Chiang, Fundamental Methods of Mathematical Economics 3 rd edition
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Notes-Chapter 6-7 - COMPARATIVE STATICS AND THE CONCEPT OF...

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