3 Lagrangean Method concepts you must know

Lagrangean method is a way of locating local optimum subject to constraints. Suppose we have an objective function f(x,y) and we want to find an optimum of this function subject to the constraint g(x,y) =c. In order to find optimum, form a lagrangean function L(x,y,λ; c) = f(x,y) + λ(c-g(x,y)), where λ is the lagrangean multiplier.

In this series of videos, we formally derive the first order conditions and second order conditions of lagrangean method. Then, to support our formal proof, we provide some example of how lagrangean method works in practice Continue reading →

7 Optimization in Economics videos

Individuals, firms or Government maximize their utility/profits/social welfare subject to constraints. They maximize utility/welfare/profits or minimize expenditure/costs. Hence optimization plays an important role in economics. We will look at the optimization of single-valued or multi-valued functions. In this series, we will look at the motivation behind first order and second order conditions and then we discuss some simple applications of optimization of multi variate functions in economics

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5 Logarithmic functions applications

Here, we discuss, what are logarithmic functions, what is their relationship with exponential functions? What is the difference between common logarithm and natural logarithm? How do you graph both of them?

Then, we discuss several very simple applications of logarithmic functions:

Calculation of growth rates of variables
Calculation of elasticities
Growth Accounting

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3 Exponential Functions and their applications concepts

Any function of the form f(x) = b^x ,where b > 0 and b ≠0, is an exponential function.

In these videos, we explain

Why such a form (f(x) = b^x ,where b > 0 and b ≠0) for exponential functions?
Why we don’t consider negative base in exponential functions?
How to draw graphs of simple exponential function?
What are the properties of an exponential function?
How to draw a graph of f(x) = e^x? How to derive the value of e = 2.718, using Taylor’s series?
Lastly, we will be doing an application of an exponential function, where we derive the formula for continuous interest compounding Continue reading →

3 Application of Integrals in Economics videos-I

From these videos, we will start application of integrals in economics. You will need a prior knowledge of differential and integral calculus, in order to understand this series of videos.

The following applications are discussed here

Given any MR function, how would you derive TR function. Integration of MR function is done
Given any MR function, how would you find optimal value of x which maximizes TR. This is a simple application of maxima and minima
What is consumer surplus? Given any demand function, how would you find consumer surplus? Continue reading →

3 Total derivatives and Implicit function theorem concepts

In this series, we explain what are differentials and when you calculate them how error arises? In the second video, we discuss what are total derivatives, we provide two examples of how to calculate total derivatives. In the last video, we explain, very simple form of implicit function theorem, along with, two examples. Continue reading →