Mathematics for 
             Economics
             Analyses 
             by Nachrowi D. Nachrowi
       9/27/2011             Prepared by Nachrowi
             Why do we need 
             Mathematics in 
             Economic 
             Analyses ?
       9/27/2011             Prepared by Nachrowi
                   † Mathematical economics is an economic analysis 
                      approach which uses mathematical symbols to 
                      illustrate an economic problem and uses mathematical 
                      theories to solve the problem.
                   † Mathematical economics expresses all economic 
                      assumptions and conclusions in mathematical symbols 
                      so they may all be demonstrated more accurately, 
                      concisely, and comfortably.
                   † Therefore, the ability to use mathematical economics 
                      as an analysis tool is greatly needed by 
                                                                economics 
                      students in order to analyze economic problems which 
                      are becoming much more complex.
                   † Those analysis tools which are needed include: matrix 
                      algebra, differential and integral calculus, differential 
                      and difference equations.
         9/27/2011                   Prepared by Nachrowi
                    Simple Illustrations:
                    1.   Calculus of a one or many variables function.
                                                                  a b
                         Cobb-Douglas Production Function: Q=AK L . Suppose 
                         there is a change in K or L, how does it affect Q?
                    2.    Optimization Principles.
                         How do you determine the optimal production level 
                         which yields the highest profit?
                    3.   Matrix Algebra and Differential Equations.
                         How do you find either the partial or general market 
                         equilibrium?  To analyze the dynamic process in the 
                         changes of price, you can use differential equations.  In 
                         order to analyze the movements in stock prices, i.e. 
                         Indosat, you can also use matrix algebra through 
                         econometric techniques.
         9/27/2011                    Prepared by Nachrowi