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Mathematical Economics Chapter 1 Mathematical Economics –Basic Concepts 1- Definition of Mathematical Economics Mathematical economics is the application of mathematical methods to represent theories and analysis problems in economics , such as differential and integral calculus, difference and differential equations, matrix algebra, mathematical programming, and other computational methods. 2-Why study Mathematical Economics? a- It attempts to explain how the economy operates and to make predictions about what may happen to specified economic variables b- Mathematical Economics is fundamental to any serious application of economics to these areas. 3- Mathematical Tools a- equations b- Differentiateds<br>
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c-Inqualities d-Matrixs 4- Mathematical Economics Model a-The Concept of Mathematical Economics Model A mathematical model is a description of a system using mathematical concepts and language. The process of developing a mathematical model is termed mathematical modeling.Economists use mathematical models most extensively .A model may help to explain a system and to study the effects of different elements, and to make predictions about behaviour. b- Mathematical Model Elements The mathematical model consists of many equations , it's called Structural Equations Structural Equations consists of :- 1- Definitional Equations such as Y=C+S 2- Behavioral Equations such as Qd=a- bp 3- Technical Equations such as (Cobb-Douglas Production ) Y= 4- Equilibrium Equations such us Qd=Qs c- Mathematical Model Variables 1-Endogenous Variables , it's called Dependent Variables 2-Exogenous Variables ,it's called Independent 3- The lagged Variables such as Yt=a+b1Xt +b2Xt-1 +b3Xt-2 The questions 1- What is the Mathematical Economics? 2-What is the Mathematcal Model? 3-What is the Mathematical Model Elements ? 4-What is the Mathematical Model Variables ? 5- Why study Mathematical Economics? 6-What is the Mathematical Tools ? 7-Why Economists use mathematical models ? 8-What is the mathematical modeling ?<br>
