ECONOMICS LECTURE # 1 (18-10-11)

BASIC MATHEMATICAL CONCEPT:

VARIABLE: A Variable is a symbol which during a discussion may assume different values, as the speed of motorcycle is represented by S & such S can assume different values, the temperature is denoted by T can go for different values in 24 hours. Simply all those items which go on changing or which have tendency to change are known as variables. As the case of temperature, light, speed of some aircrafts. How many values a variable can assume is given the name of range of the variables, for example; if the speed of a motorcycle can adopt the values in between 0-120KM/H, such will be the range of speed of motorcycle, where 0 is the low end of the range & 120KM/h is the higher side of the range. ECONOMIC VARIABLES: In economics we have lot of variables like: Quantitiy demanded(Qd) Quantity Supplied (Qs) Utility(U) Cost (C) Revenue (R) Savings (s) Investment(I) Consumption (c) Export (x) Import (m).

TYPES OF VARIABLES: there are two types mainly Continuous Variable. Discontinuous Variable.

The variable which can assume each & every value in its range is called continuous variable (e.g.: speed of variable car, Temperature, Time) on the other hand the variable which does not assume each & every value in its range is regarded as discontinuous or discrete variable(e.g.: price of commodity, Revenue of fur, Cost of fur, National Income). INDEPENDENT / DEPENDENT VARIABLE: the variable which can assume any value which it likes is called independent variable & the variable which depend upon independent variable is known as dependent variable (e.g.: range depend upon temperature, accordingly range is dependent variable & temperature

is independent) moreover if variable Y depends upon variable X then Y is dependent variable & X is independent variable denoted as: Y=F(x) In economics quantity demanded (Qd) depends upon Price (P) where (Qd) is dependent variable & P is independent variable. It can be written as: Qd= FP

LECTURE # 2 (25-10-11)

ECONOMIC VARIABLES & FUNCTIONAL RELATIONSHIP: economic variables are divided into Micro & Macro economics variables. MICRO ECONOMIC VARIABLES & FUNCTIONAL RALATIONSHIP: Price (P), Quantity demanded (Qd), Quantity Supplied (Qs), Utility(U), Cost(C) , Revenue(R) etc, these are major micro economic variables, the following functional relationship exist between these variables:

1) DEMAND FUNCTION: Quantity Demanded (Qd), Depends upon Price (P), such functional relationship between demand & price is given name of demand function. it is Quantity of demand= no. of price Regarding demand function a law is presented, known as law of demand which states that, other things remaining the same the quantity demanded varies inversely with changes in price to represent such relationship & behavior between Q & P in the presence of certain assumption, a standard demand function in presented as : Q= a Bp Where P & Q are the variables, a & b are parameters, the standard demand function is linear, hence its graph is a straight line. The average demand function is: A.D.F= Q / P MARGINAL DEMAND FUNCTION: Slope of demand curve: DQ / Dp. 2) SUPPLY FUNCTION: The quantity supplied (Qs) depends on price. Such functional relationship between supply & price is given name of supply function. It is as : Qs = F(p) Regarding supply function, a law is presented and is known as law of supply, which states that other things remaining the same the quantity supplied varies directly with changes in price to present such relationship & behavior between Q & P in the presence of certain assumption a standard supplied function is presented as:

Q=a + bp. Where P & Q are variables, a & b are the parameters. The standard supplied function is linear; hence its graph is a straight line. The average supply function is equal to Q/P, which marginal supply function is slope of supply curve: Dx / Dp. 3) UTILITY FUNCTION: the utility function within (derived from any good depends upon the units (Q) of good consume, such functional relationship between U & Q is given name of utility function, it is as: U= F(Q) Regarding utility function a law is presented which is known as law of divinely marginal utility which states that other things remaining the same , along with increase in the units of the commodity consume the total ability (U increases at a decreasing rate, have marginal utility decreases) to represent such relationship between U & Q in the presence of certain assumption a standard utility function is represented as : U= aQ - bQ Where U, Q are variables & a,b are the parameters, the rate of change of slope of utility function is called marginal Utility: MU=du/dQ The standard utility function is quadratic; hence its graph is parabola. LECTURE # 3 (28/10/11) 4) PRODUCTION FUNCTION: according to classical economics the production of any good (Q) depends upon the unit of labor (L), such functional relationship between (Q & L) is known as production function, it is denoted as: Q= f(L) Regarding production function, a law is presented which is known as law of variable proportions Which states that other things remaining the same, along with increase in the unit of labor , the total production increases at different rates, it increases at a constant rate, at decreasing rate & at increasing rate. To represent a relationship & behavior between Q & L in the quadratic form: Q= a L + bL2 + cL3 Where Q & L are the variables, a , b & c are parameters. The average production function is called average product labor: A.P.L = Q / L Marginal product of labor is equal to: M.P.L = dQ / dL

Standard production function is cubic; hence its graph is cubic curve. 5) COST FUNCTION: the cost of production (C) of any fur is dependent upon the quantity produced by the fur. Such functional relationship between C & Q is known as Cost function it is denoted as: C=F(Q) Regarding cost function we have a behavior which states that along with increase in the units of wood produced the costs increases at different rate, the cost increase at decreasing rate, the cost increase at constant rate and cost increase at any increasing rate. To represent relationship between C& Q in the presence of certain assumptions a standard cost function is presented: C= aQ bQ2 + cQ3 Where C & Q are variables, whereas a,b,c are parameters: A.C =C/Q Marginal Cost: M.C= dc / dQ 6) REVENUE FUNCTION: the revenue (R) of any fur depends upon the quantity (Q) sold by the fur such functional relationship between R & Q is known as revenue function, it is denoted as: R = f(Q) Regarding revenue function, we have a behavior which states that revenue of monopolists increase at decreasing rate, to represent relationship & behavior between R & Q in the presence of certain assumptions a standard revenue function is presented: R=aQ bQ2 Where R & Q are variables & a,b are parameters, the average revenue function is called average revenue A.R = R/Q M.R = dR / dQ The standard revenue function is ax+bx2+c; hence its graph is parabola.