Mathematical economics presentation for ba.pdf

This covers subject matter of mathematical economics

1. “
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Mathematical economics
Presented by
Udit Narayan Pathak
Roll no. - 112
Session – 2023-27
Dept. Economics
Sec 2 assignment

2. MATHEMATICS AND ECONOMICS
•MATHEMATICS IS A VERY PRECISE LANGUAGE THAT IS USEFUL TO
EXPRESS THE RELATIONSHIPS BETWEEN TWO VARIABLES.
•ECONOMICS IS THE STUDY OF THE RELATIONSHIPS BETWEEN
RESOURCES AND THE ALTERNATIVE OUTPUTS.
•THEREFORE MATH IS USEFUL TOOL TO EXPRESS ECONOMICS
RELATIONSHIPS.

3. WHAT IS MATHEMATICAL ECONOMICS?
•A APPROACH TO ECONOMICS ANALYSIS IN WHICH THE ECONOMISTS MAKE
USE OF THE MATHEMATICAL SYMBOLS IN THE STATEMENT OF THE PROBLEM AND
ALSO DRAW UPON KNOWN MATHEMATICAL THEOREMS TO AID IN REASONING.
•REFERS TO ECONOMICS PRINCIPLES AND ANALYSES FORMULATED AND
DEVELOPED THROUGH MATHEMATICAL SYMBOLS AND METHODS.
•IT IS CONCERNED WITH THE EMPIRICAL DETERMINATION OF LAWS OF
ECONOMICS USING THE THEORY AND TECHNIQUE OF MATHEMATICS AND
STATISTICS.

4. MATHEMATICAL VERSUS NON-MATHEMATICAL
ECONOMICS
•SINCE MATHEMATICAL ECONOMICS IS MERELY AN APPROACH TO ECONOMIC
ANALYSIS, IT SHOULD NOT DIFFERENT THE NON-MATHEMATICAL APPROACH TO
ECONOMIC ANALYSIS IN ANY FUNDAMENTAL WAY. THE DIFFERENCE BETWEEN
THE TWO APPROACHES IS THAT IN THE FORMER, THE ASSUMPTIONS AND
CONCLUSIONS ARE STATED IN MATHEMATICAL SYMBOLS RATHER THAN
WORDS AND IN EQUATIONS RATHER IN SENTENCES.

5. WHAT IS ECONOMETRICS…?
•LITRALLY ECONOMETRICSS MEANS ECONOMICS MEASURENMENT.
•ECONOMETRICS, THE RESULT OF A CERTAIN OUTLOOK ON THE ROLE OF
ECONOMICS, CONSISTS OF THE APPLICATION OF MATHEMATICAL STATISTICS
TO ECONOMICS DATA TO LENT EMPIRICAL SUPPORT TO THE MODELS
CONSTRUCTED BY MATHEMATICAL ECONOMICS AND TO OBTAIN
NUMERICAL RESULTS.
•ECONOMETRICS IS AN AMALGAM OF ECONOMICS THEROY, MATHEMATICAL
ECONOMICS, ECONOMICS STATISTICS

6. METHODOLOGY OF ECONOMETRICS
STATEMENT OF ECONOMICS THEORY
SPECIFICATION OF THE MATHEMATICAL MODEL
SPECIFICATION F THE ECONOMETRICS MODEL
OBTAINING OF DATA
ESTIMATION OF ECONOMETRICS MODEL
HYPOTHESIS TESTING
FORECASTING OR PREDICTION
USE OF THE MODEL FOR POLICY PURPOSES

7. WHAT IS ECONOMICS MODEL?
•MODEL IS A SIMPLE ANALYTIC FRAME WHICH SHOWS THE RELATIONSHIP
BETWEEN THE MAIN FACTORSK AND EXPLAINS THE BEHAVIOR OF AN
ECONOMICS THEORY PHENOMENON.
•ECONOMISTS USE MODELS TO SIMPLIFY REALITY IN ORDER TO IMPROVE OUR
UNDERSTANDING OF THE WORLD.
•WHEN WE USE IT AS A MATHEMATICAL EQUATION IT IS CALLED A
MATHEMATICAL AND ECONOMIS MODEL.

8. WHAT MAKES A GOOD MODEL?
•EXPLAINS THE PRINCIPLES OF ECONOMIC VERY CLEARLY AND SIMPLY
WITHOUT EXTRANEOUS DETAIL.
•IN ECONOMICS, WE GENERALLY USE MATH (GRAPHS).
• MATHEMATICAL EQUATION SHOWS RELATIONSHIPS BETWEEN TWO COMPLEX
FACTOR, WHICH HELPS TO STUDY THE CHANGES, EFFECTS ETC.

9. TYPES OF ECONOMICS MODELS
•DESCRIPTIVE
- LIKE THE CIRCULAR FLOW
•ANALYTICAL
- ASSUMPTIONS
- GRAPHICAL ANALYSIS
- MATHEMATICAL MODELS (FUNCTIONS AND EQUATIONS).

10. WHAT WE GENERALLY NEED IN MATHEMATICAL
ECONOMICS
•FUNCTIONS AND ITS TYPES.
•SOME BASICS CONCEPTS OF CALCULAS
•KNOWLEDGE OF NUMBER SYSTEM
•READING GRAPHS AND ITS ANALSIS
•DETERMINANTS

11. FUNCTIONS
• THE RELATIONSHIP BETWEED THE VALUES OF TWO OR MORE VARIABLES CAN BE
DEFINED AS A FUNCTION, WHEN A UNIQUE VALUE OF ONE OF THE VARIABLE IS
DETERMINED BY THE VALUES OF THE OTHER VARIABLE OF VARIABLES.
EXAMPLES OF FUNCTION
R = F(X) - REVENUE FUNCTION
QD = F(P) - DEMAND FUNCTION
Q = F(K,L) - PRODUCTION FUNCTION
C = F(Y) - CONSUMPTION FUNCTION

12. VARIABLE AND CONSTANT
•VARIABLE - A QUANTITY THAT ASSUMES DIFFERENT VALUES IN A PARTICULAR PROBLEM. IT IS A
VALUE THAT MAY CHANGE WITHIN THE SCOPE OF A GIVEN PROBLEM OR SET OF
OPERATIONS.
•CONSTANT - A QUANTITY WHOSE VALUE REMAINS UNCHANGED THROUGHOUT A
PARTICULAR PROBLEM.
. NUMERICAL CONSTANT - HAS SAME VALUR IN ALL PROBLEMS
. PARAMETRIC CONSTANT (PARAMETER) - HAS SAME VALUE IN A PROBLEM BUT
MAY ASSUME DIFFERENT VALUE IN DIFFERENT PROBLEM.

13. DEPENDENT AND INDEPENDENT VARIABLES
•A FUNCTIONIS A RELATIONSIP BETWEEN TWO OR MORE VARIABLE SUCH THAT UNIQUE VALUE OF
ONE VARIABLE IS OBTAINED USING OTHER VARIABLE. THESE VARIABLE CAN BE:
1. INDEPENDENT VARIABLE – THE VARIABLE REPRESENTING THE VALUE BIENG
MANIPULATED.
2.DEPENDENT VARIABLE --- OBSERVED RESULTS OF THE INDEPENDENT VARIABLE BEING
MANIPULATED.
E.G. Y=F(X) , HERE X IS INDEPENDENT VARIABLE ANED Y IS DEPENDENT VARIABLE.

14. DIRECT OR POSITIVE RELATIONSHIP
•A POSITIVE RELATIONSHIP BERWEEN TWO VARIABLES IN WHICH CHANGE IN ONE
VARIABLE IS ASSOCIATED WITH A CHANGE IN OTHER VARIABLE IN THE SAME
DIRECTION.
•IN DIRECT RELATIONSHIP, AS ONE VARIABLE, SAY X, INCREASES, THE OTHER VARIABLE,
SAY Y, ALSO INCREASES, AND IF ONE VARIABLE DECREASES THE OTHER VARIABLE ALSO
DECREASES.
•FOR EXAMPLE – RELATIONSHIP BETWEEN SUPPLY AND PRICE OF THE GOOD.

15. INVERSE OR NEGATIVE RELATIONSHIP
•A INVERSE RELATIONSHIP BETWEEN TWO VARIABLE IN WHICH CHANGE IN ONE VARIABLE IS
ASSOCIATED WITH A CHANGE IN THE OTHER VARIABLES IN THE OPPOSITE DIRECTION.
•IN A INVERSE RELATIONSHIP, AS ONE VARIABLE, SAY X, INCREASES, THE OTHER VARIABLE, SAY Y,
DECREASES, IF ONE VARIABLE DECREASES THE OTHER VARIABLE INCREASES.
•FOR EXAMPLE – RELATIONSHIP BETWEEN DEMAND AND PRICE OF A GOOD.

16. THANK YOU