“Various fundamental mathematical tools are really helpful in modern economics to calculate different quantities and to measure some relationships. To view such relationships we study the following mathematical tools in economics:"
Generally the quantities which change their values are called variable. In mathematics the alphabets (x, y, z) are used to represent variables. But in economics usually the first letter of the quantity is used as its variable. For example: P for price, S for savings and u for utility etc. some symbols are also being used to represent some quantities in economics such as π for profit etc.
Types of Variables:
Variables are divided into some important parts which are described as follows:
Continuous variable never leaves even a slightest gap within its range in the values. For example: time is a continuous variable as we had noticed that the needle of the clock or watch pass through all the points on it.
A variable which leaves gaps while changing its values. Price of a good is a common example of discontinuous variable. A change in the price of good changes from Rs. 50 to Rs. 60 per Kg.
A variable whose value does not depend on any certain condition and it can assume its value on its own is known as independent variable. These variables cannot get affected from any influence.
Those variables whose occurrence and non-occurrence are dependent on independent variables are known as dependent variables.
It is also a mathematical tool which is really helpful in advanced economics. Constant is defined as a quantity which does not change its value in a given period. For example: 2, 5, 8 or 56, 98 etc.
The third mathematical tool which we use in economics is called parameter. The certain quantities which do change in real life but in economics we assume them as constant. For example: price of a raw material, condition of weather etc.