Mathematical economics is the application of
mathematical methods to represent economic theories and analyze problems posed in
economics. It allows formulation and derivation of key relationships in a theory with clarity, generality, rigor, and
simplicity. By convention, the
applied methods refer to those beyond simple geometry, such as differential and integral
calculus,
difference and
differential equations,
matrix algebra, and
mathematical programming and other
computational methods.
Mathematics allows economists to form meaningful, testable propositions about many wide-ranging and complex subjects which could
not be adequately expressed informally. Further, the language of mathematics
allows economists to make clear, specific,
positive claims about controversial or contentious subjects that would be impossible without mathematics. Much of
economic theory is currently presented in terms of mathematical
economic models, a set of stylized and simplified mathematical relationships that clarify assumptions and
implications.
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