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FUNDAMENTAL PRINCIPLES OF ECONOMICS AND MATHEMATICS

2025, UEHS

https://doi.org/10.13140/RG.2.2.12493.76004

This presentation for my students of Fundamentals of Economics at University of Economics and Human Sciences (UEHS) at Warsaw, Poland.

FUNDAMENTAL PRINCIPLES OF ECONOMICS AND MATHEMATICS BY PROFESSOR MARIO ARTURO RUIZ ESTRADA THE CIRCULAR FLOW THE TWO LARGE AREAS OF STUDY IN ECONOMICS MICROECONOMICS AND MACROECONOMICS • MICROECONOMICS • • • MACROECONOMICS • FUNDAMENTALS CONDITIONS OF ANY ECONOMIC MODEL • • • • • PRICE THEORY DEMAND AND SUPPLY HISTORICAL OVERVIEW IT IS NECESSARY TO MENTION THE MAJOR CONTRIBUTION OF DEMAND AS A FUNCTION OF PRICE. COURNOT (1838). COURNOT DERIVED THE FIRST FORMULA FOR THE RULE OF SUPPLY AND HE WAS ALSO THE FIRST ECONOMIST TO DRAW SUPPLY AND DEMAND CURVES ON A GRAPH. THIS AUTHOR BELIEVED THAT ECONOMISTS SHOULD UTILIZE GRAPHS ONLY TO ESTABLISH PROBABLE LIMITS AND EXPRESS LESS STABLE FACTS IN MORE ABSOLUTE TERMS. HE FURTHER HELD THE VIEW THAT THE PRACTICAL USE OF MATHEMATICS IN ECONOMICS INVOLVES NOT ONLY STRICT NUMERICAL PRECISION BUT ALSO GRAPHICAL VISUALIZATION. IN FACT, COURNOT SUGGESTED THE APPLICATION OF THE FIRST QUADRANT OF THE 2-DIMENSIONAL CARTESIAN CO-ORDINATE SYSTEM BY DRAWING TWO LINEAR FUNCTIONS TO REPRESENT DEMAND AND SUPPLY CURVES IN THE SAME GRAPHICAL SPACE. IN ADDITION TO INNOVATIVE ECONOMISTS WHO CONTRIBUTED TO THE ANALYTICAL GRAPH SYSTEMS IN ECONOMICS OVER TIME INCLUDE COURNOT, OTHER LEON WALRAS, VILFREDO PARETO, ALFRED MARSHALL AND FRANCIS YSIDRO EDGEWORTH (MCCLELLAND, 1975). THE REASON BEHIND APPLYING THE DEMAND AND SUPPLY LAW TO THE STUDY OF MARKET BEHAVIOR IS TO FIND MARKET EQUILIBRIUM AMONG A LARGE NUMBER OF POSSIBLE COMBINATIONS BETWEEN TWO SPECIFIC VARIABLES FOLLOWED BY THE PRICE OF THE COMMODITY (EXOGENOUS VARIABLE) AND QUANTITY (ENDOGENOUS VARIABLE) IN A FIXED PERIOD OF TIME AND SPACE. THE MYTHICAL PART HERE IS HOW DIFFERENT ECONOMIC AGENTS (BUYERS AND SELLERS) REACT OR OVERREACT UNCONDITIONALLY ACCORDING TO THE EFFECT OF THE UNEXPECTED BEHAVIOR OF PRICE COMMODITY ON THE QUANTITY DEMANDED AND SUPPLIED. DEMAND AND SUPPLY HISTORICAL OVERVIEW MARKET FORCES (DEMAND) • • • • • • • • • • • • SHIFTS IN THE DEMAND CURVE • • • • • DEMAND CURVE MARKET FORCES (SUPPLY) • • • • • • • • • • • SHIFTS IN SUPPLY • • • • SUPPLY CURVE MARKET FORCES EQUILIBRIUM) • • • • • • • THE EQUILIBRIUM GRAPHICALLY MATHEMATICAL EXPLANATION MULTIDIMENSIONAL DEMAND AND SUPPLY SURFACES SUBSTITUTION EFFECT AND INCOME • • • • • • • • • SUBSTITUTION EFFECT AND INCOME THE THEORY OF PRODUCTION AND COST OF PRODUCTION • • • • • • THE THEORY OF PRODUCTION AND COST OF PRODUCTION • • • • • • • • THE THEORY OF PRODUCTION AND COST OF PRODUCTION • • • • • THE THEORY OF PRODUCTION AND AND COST OF PRODUCTIONPES OF COST • • • • • • • • • • THE THEORY OF PRODUCTION AND COST OF PRODUCTION • • • • • • THE THEORY OF PRODUCTION AND AND COST OF PRODUCTION • • • • • • THE THEORY OF PRODUCTION AND COST OF PRODUCTION • • • • • • THE THEORY OF PRODUCTION AND AND COST OF PRODUCTION • • • • • • • • • THE THEORY OF PRODUCTION AND COST OF PRODUCTION • • • • • • • • GRAPHICAL VISUALIZATION ANALYSIS OF COMPETITIVE MARKETS PROFIT MAXIMIZATION FOR A COMPETITIVE FIRM IN THE SHORT TERM PROFIT MAXIMIZATION FOR A COMPETITIVE FIRM IN THE SHORT TERM IN MONOPOLY END