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001 - Lecture - 2 - Equilibrium - Matrix Algebra

The document outlines a plan to review concepts related to systems of linear equations and matrices. It will cover reviewing basic concepts, representing systems of linear equations in matrix form, and operations on vectors and matrices including summation, inner products, and matrix multiplication. It provides examples of several types of functions and discusses using matrix algebra to represent and solve systems of linear equations.

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Sahana Nayaka
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99 views36 pages

001 - Lecture - 2 - Equilibrium - Matrix Algebra

The document outlines a plan to review concepts related to systems of linear equations and matrices. It will cover reviewing basic concepts, representing systems of linear equations in matrix form, and operations on vectors and matrices including summation, inner products, and matrix multiplication. It provides examples of several types of functions and discusses using matrix algebra to represent and solve systems of linear equations.

Uploaded by

Sahana Nayaka
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Plan for Today

 Finish review of basic concepts

 Systems of linear equations in matrix form

 Operations on vectors and matrices


 Summation
 Inner product of vectors
 Matrix multiplication
A quick review of basic concepts

 Sets

 The Real Number System

 Functions, Ordered Tuples, Product Sets


Functions
 Def: A function from a set X into a set Y is a rule f
which assigns to every xX a single member yY

 We write y = f(x)

 Also: We say f is a mapping from X into Y


and write
Terminology
If y = f(x) is a function from X to Y, then

 x is the argument of the function


 y is the value of the function (or the image of x)

 X is the domain of f
 Y is the co-domain

 The set of all images is the range of f :


f [X]  {f(x) | x  X}

 Note that f [X]  Y


Some frequently used functions

 Polynomial functions:

y = a 0 + a 1x + a 2x 2 + … + anx n

 Constant functions

 Linear

 Quadratic

 Cubic
Some frequently used functions 2
 Rational functions: a ratio of two polynomials

 Ex: A rectangular hyperbola y = a/x

 Exponential functions:

 Ex: y = bx , b > 0
Functions of several variables
 Functions of 2 independent variables
z = g(x,y)
y = h(x1,x2)

 Function is now a mapping from a 2-dimensional


space into a 1-dimensional space

 The domain is a set of ordered pairs, e.g. (x,y) or


(x1,x2)

 Functions of n variables: y = f(x1,x2,…,xn)


Functions of several variables

Ex: Graph of a function of 2 variables


Chapter 3: Systems
of linear equations
Systems of equations

 Many economic models require finding a solution to


a system of equations

Examples:

A partial market equilibrium model

A general equilibrium model

 An optimization problem
Partial Market Equilibrium – A Linear Model

 Often the equations are linear

Ex: A partial market equilibrium model


Qd = Qs
Qd = a – bP a,b>0
Qs = – c + dP c,d>0

3 linear equations
 3 variables
 4 parameters
General Market Equilibrium
 Most commodities have substitutes and
complementary goods
General Market Equilibrium
 A more complete model includes these other
goods as well

 A model with n commodities requires


n demand equations: Qdi , i = 1, 2, ..., n
n supply equations: Qsi , i = 1, 2, ..., n
n equilibrium conditions: Qdi = Qsi , i = 1, 2, ..., n

 With many equations, substitution of variables is


cumbersome
Finding a solution to a system of
equations
 Is there a better method for finding a solution?

 And: How can we be sure there is a solution?


 Count equations and variables?
 Not enough

 Answer: Use matrix algebra


Matrix Algebra
Matrices

 A matrix is a rectangular array of objects or elements


Matrices

 We will take the elements to be real numbers,


parameters, or variables

 Ex:

 Note: Matrix A is different from matrix B


Matrices 2
 An element is indicated by its row and column position

 Let aik (xik , etc.) denote an element in the i-th row and
k-th column

 Then we can write, for example


Matrix dimensions
 Dimension of a matrix = (# of rows) x (# of columns)
m rows
 n columns ==> dimension is m x n

Ex:

 Alternative notation:
Square matrices

 A matrix is
 square
if # rows = # columns
 symmetric if square and aik = aki for all i,k

Examples:
2 5 7
 
B  5  1 3
( 3  3)  
7 3 2
Vectors as Special Matrices
 One row ==> row vector Ex: b’ = [3 2 24]

 Often indicated by a primed symbol

 One column ==> column vector Ex:

 Note:
1) A vector is merely an ordered n-tuple
a point in an n-dimensional space
2) Matrix rows can be viewed as vectors
 same goes for columns
How does matrix algebra help us?

 First, it simplifies notation

 We can arrange
 the coefficients aik in a matrix A
 the variables xk in a matrix x
 the constant terms di in a matrix d
How does matrix algebra help us?

 First, it simplifies notation

A= x= d=
How does this help us? 2

 We can then write


Ax = d

Ex:
How does this help us? 3

 Ex 2:  Can be written as

 and in matrix form as


Algebraic operations
on matrices
Algebraic Operations on Matrices

 But how do we multiply matrices?


 Add/subtract?
 And what do we mean when we say that A = B?

 Equality: A = B <==> aik = bik for all i and k

 Addition and Subtraction:

A + B = [aik + bik ]
A – B = [aik – bik ]

 A and B must be of the same dimension!


Addition and Subtraction of Matrices

 Ex 1:
Addition and Subtraction of Matrices

 Ex 2:
Multiplication of a Matrix by a Scalar
 Scalar multiplication: Let kR. Then kA = [kaij ].
Inner Product of Vectors

 Suppose 2 vectors (n-tuples): x,yRn

 Inner product of x and y is defined by

x  y  x1 y1  x2 y2  ...  xn yn
n
  xi yi
i 1

 Note: x and y must have the same dimension!

 Also called the dot product


Inner Product: Example

 Ex: ’

x’ ∙ y =

 Note: The inner product is a scalar


Matrix multiplication
 Suppose A and B can be multiplied to form a matrix C
n
 Then AB  C , where cik  a
m 1
b
im mk

 cik is the inner product of


 the i-th row from A and
 the k-th column from B
Matrix multiplication: Example

 Ex:  a11 a12   b11 b12   c11 c12 


a  b   
 21 a 22   21 22   21 22 
b c c
Matrix multiplication 2
 cik is defined only if the 2 vectors have the same
dimension
==>
 Conformability: A and B can be multiplied to form AB
only if
column dimension of A = row dimension of B

 Ex: b11 b12 


a11 a12 a13 
b21 b22 
a a  
 21 22 a23 
b31 b32 
Matrix multiplication 3

 If
A is of dimension m x n
B is of dimension n x p

==> C = AB is an m x p matrix

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