The Nature of Mathematical Economics

Mathematical economics is not a distinct branch of economics in the sense that public finance or international trade is. Rather, it is an approach to economic analysis, in which the economist makes use of mathematical symbols in the statement of the problem and also draws upon known mathematical theorems to aid in reasoning. As far as the specific subject matter of analysis goes, it can be micro- or macroeconomic theory, public finance, urban economics, or what not Using the term mathematical...

Equations and identities

Variables may exist independently, but they do not really become interesting until they are related to one another by equations or by inequalities. At this moment we shall discuss equations only. In economic applications we may distinguish between three types of equation definitional equations, behavioral equations, and conditional equations. A definitional equation sets up an identity between two alternate expressions that have exactly the same meaning. For such an equation, the...