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How Does Math Relate to Economics?

Date: 02/20/2007 at 15:39:28
From: Taylor
Subject: How can math relate to Economics

I would like to know how math and economics relate to one another.  I
can't see how they relate besides the fact that economics uses money
and therefore numbers.

But economics has to do with the consumption and production of goods, 
and how else besides simply using numbers does it relate to math?




Date: 02/21/2007 at 11:50:59
From: Doctor Clint
Subject: Re: How can math relate to Economics

Dear Taylor,

As an economist I can tell you that math is an integral part of 
economics.  Yes, the concept of money and prices is important to 
economies, and therefore, economics.  But more importantly, economists 
use mathematical models to predict everything from demand for a good 
to the unemployment rate to whether or not an individual will get 
married.  The list goes on and on.  These models are typically 
designed as functions.  For example, demand for a good is a function 
of the price of the good, the price of substitute goods, and income.

Because of the extensive use of functions in economics, linear algebra 
and calculus are the primary mathematical tools used by economists.  
In addition, economists use statistics to test those models, so this 
branch of math is also used a lot.  In fact, there is an entire field 
within economics called "econometrics" which deals exclusively with 
the statistics related to economics.

If you are considering studying economics in college, my advice would 
be to take as much algebra and calculus as you can.  Most good 
economics programs at US universities will require several calculus 
courses and will use that math in the advanced economics courses.  In 
fact, many people I know from economics graduate school have their 
undergraduate degrees in mathematics.

I hope that gives you some idea of how we use math, but let me know 
if you need more examples.

- Doctor Clint, The Math Forum
  http://mathforum.org/dr.math/ 
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