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Matrix & Its Application in Economics Proj1 Bo

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Matrix & Its Application in Economics Proj1 Bo

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tagay takele
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter One

Introduction
1.1 Background of the Study
The concept of a matrix dates back to ancient times, but was first referred to as a matrix in 1850
by James Joseph Sylvester. They were first used between 300 BC and AD 200 in a Chinese text
called Nine Chapters of Mathematical Art by Chiu Chang Suan Shu written during the Han
Dynasty, which had the idea of determinants and solving systems of equations with a matrix.
The Babylonians also studied matrices, but the Chinese did much more study into them. One of
the Chinese matrix methods is commonly known today as Gaussian Elimination. The theory of
matrices was developed by a mathematician named Gottfried Leibniz. He first took out
coefficients of linear equations and put them in a matrix. Then, Carl Gauss further developed the
matrix theory in the late 1700s. He added matrix multiplication, inverses, and Gaussian
Elimination. Gaussian Elimination is a method to solve system of equations with 3 or more
variables, and it involves getting most matrix numbers to zero, or an identity matrix. This is
done doing "elementary row operations." This method was also actually in the Chinese text, but
Gauss rediscovered it. Next, Sylvester gave the rectangular table the name of the
matrix, Latin for womb in 1850. He also reinforced the theory with the process of finding a
determinant. Finally, a man named Arthur Cayley, a good friend of Sylvester came up with
many matrix contributions, such as reinforcing matrix multiplication addition, subtraction, and
division. He also further added to the inverse theory, and gave it a precise definition, and
discovered scalar multiplication of matrices, which is multiplying a matrix by an integer.

The term matrix entered scientific discourse early 20th century when Werner Heisenberg
formulated his theory of matrix mechanics which postulated infinite matrices to represent the
position and momentum of electron inside an atom.
The concept of matrices has had its origin in various types of linear problems, the most
important of which concerns the nature of solutions of any given system of linear equations.
Matrices are also useful in organizing and manipulating large amounts of data. Today, the
subject of matrices is one of the most important and powerful tools in Mathematics which has
found applications to a very large number of disciplines such as Economics , Engineering,
Business and statistics etc.
1.2 Objective of the study
1.2.1 General Objective
The general objective of the project is to provide some theoretical evidence on the application of
matrix and determinants in Economics.

1
1.2.2 Specific Objectives
The specific objectives of this study are:
 Examining the application of matrix in Input output model.
 Identifying the ways in which different Companies apply matrix model
 To compare and contricts different ways of applying matrix in demand and supply model.
1.3 Significance of the study
This study specially :
 May benefits the existing and potential students who want to study mathematics,
Economics and other natural /social science discipline.
 Provide a base for further study and research on application of matrix in Economics.

2
Chapter Two
Preliminary Concepts
2.1 Definition of a matrix
Definition: A rectangular arrangement of mn numbers (real or complex) in to m horizontal rows
and n vertical columns enclosed by a pair of brackets [ ], such as

[ ]
a11 a12 . . . a1n
a21 a22 . . . a2 n
. . .
. . .
. . .
am 1 am 1 . . . amn

is called an m× n (read “m by n”) matrix or a matrix of order m× n .


Parentheses ( ) are also commonly used to enclose numbers constituting matrices.
Before we go any further, we need to familiarize ourselves with some terms that are associated
with matrices. The numbers in a matrix are called the entries or the elements of the matrix. For
a
the entry ij , the first subscript i specify the row and the second subscript j the column in which

the entry appears. That is,


a ij th
is an element of matrix A which is located in the i row and j th
column of the matrix A. Whenever we talk about a matrix, we need to know the order of the
matrix.

Definition :Two matrices A and B are said to be equal, written A = B, if they are of the same
order and if all corresponding entries are equal.

[
5 1 0
For example, 2 3 4
=
2+3 1 0
] [
2 3 2×2 but
[9 2 ] ≠ 9
2 . ] []
Example: Given the matrix equation
[ x+ y 6 = 1 6
x− y 8 3 8 ] [ ] . Find x and y.
x+ y=1
Solution: By the definition of equality of matrices, x− y = 3
solving gives x = 2 and y = -1.

3
2.2 Types of matrices
Certain types of matrices, which play important roles in matrix theory, are now considered.
Row Matrix: A matrix that has exactly one row is called a row matrix. For example, the matrix
A=[ 5 2 −1 4 ] is a row matrix of order1×4 .

Column Matrix: A matrix consisting of a single column is called a column matrix. For

[]
3
B= 1
example, the matrix
4 is a 3×1 column matrix.
Zero or Null Matrix: A matrix whose entries are all 0 is called a zero or null matrix. It is

usually denoted by
0 m×n or more simply by 0. For example,
0 =
[ 0 0 0 0
]
0 0 0 0 is a 2×4
zero matrix.
Square Matrix: An m× n matrix is said to be a square matrix of order n if m = n. That is, if it
has the same number of columns as rows.

[ ]
−3 4 6

For example,
2 1 3 2 −1
[ ]
5 2 −1 and 5 6 are square matrices of order 3 and 2 respectively.

A=( a ij ) a 11 , a22 , .. . , ann which lie on the diagonal


In a square matrix of order n, the entries
extending from the left upper corner to the lower right corner are called the main diagonal

[ ]
3 2 4
1 6 0
entries, or more simply the main diagonal. Thus, in the matrix C =
5 1 8 the
c =8 constitute the main diagonal.
entries c 11 =3 , c 22=6 and 33

Note: The sum of the entries on the main diagonal of a square matrix A of order n is called the
trace of A.

4
Triangular Matrix: A square matrix is said to be an upper (lower) triangular matrix if all entries
below (above) the main diagonal are zeros.

[ ]
5 0 0 0

[ ]
2 4 8 1 3 0 0
0 1 2 6 1 2 0
For example,
0 0 −3 and −2 −4 8 6 are upper and lower triangular matrices,
respectively.

Diagonal Matrix: A square matrix is said to be diagonal if each of the entries not falling on the

main diagonal is zero. Thus a square matrix


A=( a ij ) a =0 for i≠ j .
is diagonal if ij
Activity: What about for i = j?

[ ]
5 0 0
0 0 0
For example,
0 0 7 is a diagonal matrix.

Notation: A diagonal matrix A of order n with diagonal elements


a 11 , a22 , .. . , ann is denoted

by A=diag (a11 , a 22 , . .. , ann )


Scalar matrix: A diagonal matrix whose all the diagonal elements are equal is called
a scalar matrix.

[ ]
2 0 0
0 2 0
For example, 0 0 2 is a scalar matrix.

Note: Let
A=( a ij )
be a square matrix. A is a scalar matrix if and only if
a ij= {k0,,ifi= j
ifi≠ j .
Identity Matrix or Unit Matrix: A square matrix is said to be identity matrix or unit matrix if
all its main diagonal entries are 1’s and all other entries are 0’s. In other words, a diagonal matrix
whose all main diagonal elements are equal to 1 is called an identity or unit matrix. An identity
matrix of order n is denoted by In or more simply by I.

5
[ ]
1 0 0
I3 = 0 1 0
For example,
0 0 1 is identity matrix of order 3.
2.3 Algebra of matrices
Addition of matrices: Let A and B be two matrices of the same order. Then the addition of A
and B, denoted by A + B, is the matrix obtained by adding corresponding entries
of A and B. Thus, if
A = ( aij )m×n and B = (bij )m×n , then A + B = (aij + bij )m×n .
Remark: Notice that we can add two matrices if and only if they are of the same order. If they
are, we say they are conformable for addition. Also, the order of the sum of two matrices is same
as that of the two original matrices.
Properties of Addition of Matrices
1. Matrix addition is commutative. That is, if A and B are two matrices of the same order,
then A + B = B + A.
2. Matrix addition is associative. That is, if A, B and C are three matrices of the same order,
then (A + B) + C = A + (B + C).
3. Existence of additive identity. That is, if 0 is the zero matrix of the same order as that of
the matrix A, then A + 0 = A = 0 + A.
4. Existence of additive inverse. That is, if A is any matrix, then
A + (-A) = 0 = (-A) + A
Note: The zero matrix plays the same role in matrix addition as the number zero does in
addition of numbers.
Subtraction of Matrices: Let A and B be two matrices of the same order. Then by
A – B, we mean A + (-B). In other words, to find A – B we subtract each entry of
B from the corresponding entry of A.

[ ] [ ]
4 −1 0 2
A = 2 3 B = 5 −2
Example 3.3.1: Let 5 −7 and 6 1

6
[ ][ ]
4−0 −1−2 4 −3
A−B = 2−5 3−(−2) = −3 5
Then 5−6 −7−1 −1 −8

Multiplication of a Matrix by a Scalar


Let A be an m× n matrix and k be a real number (called a scalar). Then the multiplication of A
by k, denoted by k A, is the m× n matrix obtained by multiplying each entry of A by k. This
operation is called scalar multiplication.

Example: If
A=
[02 2 3
1 4 ]
and B =
7 6 3
[
1 4 5 . Find 2A + 3B. ]
Solution:
2 A =2
[ ] [
0 2 3
2 1 4
=
0 4
4 2 8]
6
and
3B =3
[ 7 6 3
1 4 5 ] [
=
21 18 9
3 12 15 ]
2 A +3 B=
[4 2 8 ] [ 3
0 4 6
+
21 18 9
12 15
=
] [
21 22
7 14 23 ]
15

Properties of scalar multiplications


1. If A and B are two matrices of the same order and if k is a scalar, then
k ( A +B )=kA+kB
2. If k1 and k2 are two scalars and if A is a matrix, then
( k 1 +k 2 ) A=k 1 A + k2 A

3. If k1 and k2 are two scalars and if A is a matrix, then


( k 1 k 2 ) A=k 1 (k 2 A ) = k 2 (k 1 A )
Multiplication of Matrices
While the operations of matrix addition and scalar multiplication are fairly straightforward, the
product AB of matrices A and B can be defined under the condition that the number of columns
of A must be equal to the number of rows of B. If the number of columns in the matrix A equals
the number of rows in the matrix B, we say that the matrices are conformable for the product
AB.

7
Because of wide use of matrix multiplication in application problems, it is important that we
learn it well. Therefore, we will try to learn the process in a step by step manner. We first begin
by finding a product of a row matrix and a column matrix.

Example: Given A = and B = , find the product AB.

Solution: The product is a 1 1 matrix whose entry is obtained by multiplying the


corresponding entries and then forming the sum.

AB = = [ (2a + 3b + 4c)]
Note that AB is a 1 1 matrix, and its only entry is 2a + 3b + 4c.

Example: Given A = and B = , find the product AB.

Solution: AB = = [ 10+18+28 ] =[ 56 ]
Note: In order for a product of a row matrix and a column matrix to exist, the number of entries
in the row matrix must be the same as the number of entries in the column matrix.
Example 3.3.5: Here is an application: Suppose you sell 3 T-shirts at $10 each, 4 hats at $15
each, and 1 pair of shorts at $20. Then your total revenue is

()
3
(⏟ ( (10×3 )+(15×4 )+(20×1 ))=( 110 )
10 15 20 ) 4 =⏟
Pr ice

1 Re venue
Quantity

We summarize matrix multiplication as follows:


In order for product AB to exist, the number of columns of A, must equal the number of rows of
B. If matrix A is of dimension m n and B of dimension n p, the product AB will have the

dimension m p. Let
A=(a ij ) be an m× n matrix and B=(b jk ) be an n× p matrix. Then the

product AB is the m× p matrix defined by AB=( cik ) , where


n
c ik =ai 1 b1 k + ai2 b2 k +. ..+a in bnk = ∑ aij b jk
j =1 , I = 1,2,…,m and k = 1,2,…,p

8
c
Thus, the product AB is the m× p matrix, where each entry ik of AB is obtained by
multiplying corresponding entries of the ith row of A by those of the kth column of B and then
finding the sum of the results.

[ ]
1 −4

Example: Find the product AB if


A= 5 3
0 2 and
B=
−2 4 1 6
2 7 3 8 [ ]
[ ]
−10 −24 −11 −26
AB = −4 41 14 54
Solution: 4 14 6 16

Observe that the product BA is not defined since the number of columns of B is not equal to the
number of rows of A. This shows that matrix multiplication is not commutative. That is, for any
two matrices A and B, it is usually the case that AB≠ BA (even if both products are defined).

[ ] [ ] [ ]
1 −1 1 1 2 3 0 0 0
A= −3 2 −1 B= 2 4 6 AB= 0 0 0
Example: 1) Let −2 1 0 , 1 2 3 , then 0 0 0 .

[ ] [ ] [ ]
1 4 1 0 3 1 −1 −2
1 −3 2 2 1 1 1 3 −2 −1 −1
A= 2 1 −3 B= 1 −2 1 2 C= 2 −5 −1 0
2) Let
4 −3 −1 , , then

[ ]
−3 −3 0 1
1 15 0 −5
AB= =AC
−3 15 0 −5
. But B≠C .

In this chapter, we will be using matrices to solve linear systems. Later, we will be asked to
express linear systems as the matrix equation AX = B, where A, X, and B are matrices. The
matrix A is called the coefficient matrix.
Remark: For real numbers, a multiplied by itself n times can be written as an.

9
Similarly, a square matrix A multiplied by itself n times can be written as
An. Therefore, A2 means AA, A3 means AAA and so on.
2.4 Transpose of a matrix

Definition: Let A be an m× n matrix. The transpose of A, denoted by A ' or At , is the n×m


matrix obtained from A by interchanging the rows and columns of A. Thus the first row of A is
the first column of At, the second row of A is the second column of At and so on.

( )
2 3
t
A = −4 1
Example: If
(
A= 2 −4 6 ,
3 1 4 then 6 4 )
t
Properties: a) If A and B have the same order, ( A±B ) = At ±Bt .

b) For a scalar k , ( kA )t =kA t .


t t t
c) If A is m× n and B is n×p , then ( AB) =B A .
t t
d) ( A ) =A
Definition: A square matrix A is said to be orthogonal if AA t = A t A=I
A=( a ij ) At =−A ,
Definition : A square matrix is said to be skew symmetric if
a =−a ji for each i and j
or equivalently, if ij

Remark: ii
a =−a ⇒ 2 aii =0 or a ii=0 . Hence elements of main diagonal of a skew-symmetric
ii
matrix are all zero.

2.5 Elementary row and column operations


Elementary row operations:

1. (Replacement) Replace one row (say


Ri ) by the sum of itself and a multiple of

another row (say


R j ). This is abbreviated as Ri → k R j + Ri .

2. (Interchange) Interchange two rows (say


Ri and R j ). This is abbreviated as Ri ↔ R j

3. (Scaling) Multiply all entries in a row (say


Ri ) by a nonzero constant (scalar) k. This

is abbreviated as
Ri → k R i

10
Example : Find the elementary row operation that transforms the first matrix in to the second,
and then find the reverse row operation that transforms the second matrix in to the first.

[ ][ ]
1 3 −1 1 3 −1
0 2 −4 , 0 1 −2
0 −3 4 0 −3 4

[ ] [ ]
1 3 −1 1 3 −1
0 2 −4 0 1 −2
Solution:
0 −3 4 R2 ½ R2
0 −3 4

[ ] [ ]
1 3 −1 1 3 −1
0 2 −4 0 1 −2
0 −3 4 2R2 R2
0 −3 4

2.6 Row reduced echelon form of a matrix


Definition : A matrix is in echelon form (or row echelon form) if it has the
Following three properties:
1) All nonzero rows are above any rows of all zeros.
2) Each leading entry of a row is in a column to the right of the leading entry of the
row above it.
3) All entries in a column below a leading entry are zero.
If a matrix in echelon form satisfies the following additional condition then it is in
reduced echelon form (or row reduced echelon form)
4) The leading entry in each non zero row is 1
5) Each leading 1 is the only nonzero entry in its column.
Example : The following matrices are in row echelon form, in fact the second
matrix is in row reduced echelon form

[ ]
2 −3 2 1

[ ]
1 0 0 29
0 1 −4 8
, 0 1 0 16
5
0 0 0 0 0 1 1
2

11
CHAPTER THREE
CONCLUSION
The study was prepared to investigate the theoretical back ground of matrices and and
determinants and its application in Economics .
As mentioned, the matrix and determinant concepts are applicable in fields of social science
especially in Economics. Determinants are also used in solving system linear equations.
Generally, we have shown that the Cramer’s rule is capable of solving system linear equations
whose determinant of its coefficient matrix is non-zero. This method provides an alternative and
supplementary technique to the convectional ways of solving system linear equations. .It is
practical method, easily adaptable on a computer to solve such problems with a modest amount
of problem preparation.

12
References
1. D. C. Lay, Linear algebra and its applications, Pearson Addison Wesley, 2006
2. Bernard Kolman& David R. Hill, Elementary linear algebra, 8th ed., Prentice Hall, 2004
3. H. Anton and C Rorres, Elementary linear algebra, John Wiley &Sons, INC., 1994
4. K. Hoffman & R. Kunze, Linear Algebra, 2nd ed., Prentice Hall INC.1971
5. S. Lipschutz, Theory and problems of linear algebra, 2nd ed. McGraw-Hill1991.
6. DemissuGemeda, An Introduction to Linear Algebra, Department of Mathematics, AAu,
2000
7. C.M. Bender ,S.A.Orszag, Advanced Mathematical Method for scientists and Engineers,
McGraw-Hill, New York , 1978
8. Dr. M. Shantha Kumar, Computer Based Numerical Analysis, First Edition, New Delhi,
1999
9. Frank Ayres, Theory and Differential Equations (Schuam’s outline series, 1981)
10. E. Angel, R. Bellman, Dynamic programming and Partial Differential Equation,
Academic press, New York , 1972
11. L.E. El’sgol’ts,S.B. Norkin, Introduction to the Theory and Application of Differential
Equation with deviating Arguments, Academic press, New York , 1973
12. M. K. Jain, Numerical Solution of Differential Equations, Second Edition, India, 1984

Table of Contents

13
Chapter One.....................................................................................................................................1
Introduction......................................................................................................................................1
1.1 Background of the Study.......................................................................................................1
1.2 Objective of the study............................................................................................................1
1.2.1 General Objective...........................................................................................................1
1.2.2 Specific Objectives.........................................................................................................2
1.3 Significance of the study.......................................................................................................2
Chapter Two....................................................................................................................................3
Preliminary Concepts.......................................................................................................................3
2.1 Definition of a matrix........................................................................................................3
2.2 Types of matrices...................................................................................................................4
2.3 Algebra of matrices...........................................................................................................6
2.4 Transpose of a matrix..........................................................................................................10
2.5 Elementary row and column operations..........................................................................10
2.6 Row reduced echelon form of a matrix...........................................................................11
CHAPTER THREE.......................................................................................................................12
CONCLUSION..............................................................................................................................12
References..................................................................................................................................13

14

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