Math for Economists ECON200

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Do you use facebook?

Photo of a smartphone with the Facebook application open
Economics is greatly impacted by how well information travels through society. Today, social media giants Twitter, Facebook, and Instagram are major forces on the information super highway. (Credit: Johan Larsson/Flickr)

Decisions ... decisions in the social media age

To post or not to post? Every day we are faced with a myriad of decisions, from what to have for breakfast, to which route to take to class, to the more complex—“Should I double major and add possibly another semester of study to my education?” Our response to these choices depends on the information we have available at any given moment; information economists call “imperfect” because we rarely have all the data we need to make perfect decisions. Despite the lack of perfect information, we still make hundreds of decisions a day.

And now, we have another avenue in which to gather information—social media. Outlets like Facebook and Twitter are altering the process by which we make choices, how we spend our time, which movies we see, which products we buy, and more. How many of you chose a university without checking out its Facebook page or Twitter stream first for information and feedback?

As you will see in this course, what happens in economics is affected by how well and how fast information is disseminated through a society, such as how quickly information travels through Facebook. “Economists love nothing better than when deep and liquid markets operate under conditions of perfect information,” says Jessica Irvine, National Economics Editor for News Corp Australia.

This leads us to the topic of this chapter, an introduction to the world of making decisions, processing information, and understanding behavior in markets —the world of economics. Each chapter in this book will start with a discussion about current (or sometimes past) events and revisit it at chapter’s end—to “bring home” the concepts in play.

Introduction

In this chapter, you will learn about:

  • What Is Economics, and Why Is It Important?
  • Microeconomics and Macroeconomics
  • How Economists Use Theories and Models to Understand Economic Issues
  • How Economies Can Be Organized: An Overview of Economic Systems

What is economics and why should you spend your time learning it? After all, there are other disciplines you could be studying, and other ways you could be spending your time. As the Bring it Home feature just mentioned, making choices is at the heart of what economists study, and your decision to take this course is as much as economic decision as anything else.

Economics is probably not what you think. It is not primarily about money or finance. It is not primarily about business. It is not mathematics. What is it then? It is both a subject area and a way of viewing the world.

Math for Economists will help you assemble a toolkit of skills and techniques to solve fundamental problems in both macroeconomics and microeconomics. The material covers both precalculus and calculus concepts and should help you identify the best approach to solving problems. For example, an economist may be called upon to determine the right mix allocation of capital to a production process. The tools in this course will help you evaluate the options and select from the best alternatives. Advanced courses in economics typically utilize mathematical techniques beyond basic calculus; so, gaining practice in fundamental skills can serve as a good basis for further study. Of note, this course applies precalculus and calculus; this is different from ?applied math,? which economists typically use to refer to probability and statistics.

This course begins with a survey of basic optimization tools and then applies them to solve problems over several periods in time. These optimization tools describe feasible choices and then direct you to the best possible solution. In essence, they will help you evaluate an economic environment and determine the best course of action. The role of risk in financial decisions is explored in relation to individual choices and macroeconomic processes. The equitable distribution of resources is then considered. In other words, this class will explore whether an optimal solution is indeed also fair to the participants and society. A specific application, game theory, is presented as one of the major recent advances in economic theory. The final topic returns to microeconomic problems such as taxes, elasticity, and specific types of supply and demand curves.

Quiz PDF eBook: 
Math for Economists ECON200
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60 Pages
2014
English US
Educational Materials



Source:  Tony Pizur. Math for Economists (The Saylor Academy 2014), http://www.saylor.org/courses/econ200/
Subramanian Divya
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