List of mathematical tools used in economics: 1. Concept 2. Function 3. Equation of a Straight Line 4. Slope of a Line. 1. Concept: Theories in economic analysis explain various economic problems by establishing relationships between economic variables. In other words, they model the relationships between two or more economic variables. In establishing such relationships, they apply numerous mathematical tools [...]
An important principle of economic theory is that marginal rate of substitution of X for Y diminishes as more and more of good X is substituted for good Y. In other words, as the consumer has more and more of good X, he is prepared to forego less and less of good Y. The principle of diminishing marginal rate of [...]
The following points highlight the three major tools used by government to influence private economic activity. The tools are: 1. Taxes 2. Government Expenditures 3. Regulation and Control. Government Policy: Tool # 1. Taxes: Taxes reduce income of individuals and companies and thus reduce private expenditures (on motor cars, television sets, or liquor). However, the basic object of taxes is [...]