MATHEMATICAL ECONOMICS & ECONOMETRICS
Mathematical Economics
Not a distinct branch of economics like international trade
Approach that uses mathematical symbols
Theoretical analysis – derive set of conclusions from assumptions via reasoning
Geometrical has only 2 commodities
If –then analysis
Why Mathematical Economics?
Concise and precise
We have many theorems
State assumptions directly
Treat n-variable cases
From set of postulates (point of departure) to set of conclusions (destination)
Mathematical Economics Versus Econometrics
Econometrics – measurement of economic data – empirical observation by statistical
techniques of estimation and hypothesis testing
Mathematical economics – application of mathematics to theoretical aspects of economic
analysis
