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Relationship between economics and mathematics

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Mikaella Phili

on 11 May 2016

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Transcript of Relationship between economics and mathematics

Relationship between economics and mathematics
Introduction
In this presentation we will be exploring the relationship between economics and mathematics, and how much of economic theories are expressed in terms of statistics and mathematical models. today we will be focusing more on how market sales, prices, supply, and demand can be used in statics and linear relationships.
Yes it is evident that non--linear relationships do exist in relation to economics whether it is macro-economics or international economics although it is not completely "Developed". An example of a non-linear relationship would be the Keynes theory. John Maynard Keynes came up with a theory that if demand went down, the economy, production of goods, employment wages and prices would decline as well. This is also as an example of Behavioral economics.
Another example of a linear relationship
(Market)
References
What is a linear relationship?
A linear relationship is a statistical term used to describe the relationship between an independent and dependent variable. A linear relationship can be expressed graphically with a mathematical equation where the variable is multiplied by the slope coefficient, added by the constant to give us the dependent variable. For example y= ax+b where x and y are the variables that are related by the parameters a and b. The slope a is calculated from 2 individual points a=(y_1)(y_1)/(x_2)(x_2). Graphically a linear relationship can be expressed as .
How can this be used in economics
A linear relationship can be used to determine the marketing price of goods, and resources. For example a house. As the size of a house increases the marketing value (price) increases as well. The term used to express the relationship between two objects is constant of proportionality. How one would go about using a linear relationship to determine the price of a house as the size increases is by using the mathematical equation Y=RX where R is the constant and X and Y are the proportional quantities. For example the market price of a home (dependent variable) is multiplied by the slope coefficient of 384.95 then is added by the constant term $13,875 then the square footage of the house is 2,348 the market price of the house would follow the equation Y=RX which would be $917,737.6.

Market price= square foot*384.95+ $13,875
Market price= 2,348*384.95+ $13,875
Market price= $971,737.6
Is there such thing as non-linear relationships in economics?
http://www.investopedia.com/terms/k/keynesianeconomics.asp

http://www.investopedia.com/terms/l/linearrelationship.asp
As the weight of an apple increases the price increases. The more quantity of product a consumer receives the higher the sales will be. This can be shown as a linear relationship/mathematically presented.
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