2.3 Mathematical tools

Economics is rife with functions± production functions, utility functions, social welfare functions, and others.

Function = a relationship between two sets of number s such that for each number in one set, there corresponds exactly one number in the other set.

y= f(x) --> y is dependent variable and x is independent variable.

Positive slope = reveals that the relationship between x and y is a direct one.

Opposite of a direct relationship is an inverse relationship --> in this case, the dependent and independent variables move in opposite directions.

Implications of linearity= changes in the independent variable cause a constant rate of change in the dependent variable.