Mathematical Techniques for

Economic Analysis

Australian National University

Dr Reza Hajargasht
Lecture-1 Semester1-2023
 Teaching Staff

Name Role Room Email Consultation

Reza Hajargasht Convenor RSSS gholamreza.hajargasht@anu.edu.au Wed 13-14 or
Lecturer
4.09 by appointment
Darapheak.Tin@anu.edu.au
Darapheak Tin Tutor
Kazuki.Tomioka@anu.edu.au
Kazuki Tomioka Tutor
Yiwen.Kai@anu.edu.au
Yiwen Kai Tutor

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Textbooks

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Other Useful References

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 Assessments

Task Weighting Learning Outcome Due date

Assignment-1 5% 1,2,3 10/03
Assignment-2 5% 1,2,3 24/03
Assignment-3 5% 1,2,3 05/05
Assignment-4 5% 1,2,3 19/05
Mid-Term 30% 1,2,3
Final 50% 1,2,3

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 How much Maths do you need
• If you want to become an applied economist:
Basic Algebra
Calculus (Univariate and Multivariate)
Basic Linear Algebra (Matrix Algebra)
Optimisation
• If you want to become an econ-theorist:
Foundations: Set Theory, Logic and Basic Topology
Advanced Linear Algebra
Advanced Calculus including Differential Equations
Real Analysis
Stochastic Calculus
Optimisation (Static, Dynamic, Game Theory)
Other topics depending on your area of expertise
 What is this Subject about?
Class Summary

Week 1 Sets, Numbers, Coordinates, and Distances

Week 2 Mappings, Functions, and Correspondences

Week 3 Sequences, Series, Limits Assignment 1

Week 4 Univariate Differential Calculus I

Week 5 Univariate Differential Calculus II Assignment 2

Week 6 Matrix Algebra I

Week 7 Matrix Algebra II

Week 8 Multivariate Differential Calculus

Week 9 Multivariate Differential Calculus II Assignment 3

Week 10 Optimisation

Week 11 Integration Assignment 4

 Set Theory
Reference: Chapter-1 of your texbook. Some slides are taken from
Set Theory Slides by Rosen 6th ed.

• A set is an unordered collection of distinct objects.

• Set theory deals with operations between, relations
among, and statements about sets.
• For sets, we’ll use S, T, …
• We can denote a set S by listing all of its elements in
curly braces e.g.
S={1, 2, 3, 4}
or set builder notation
S={x|x is an integer where x>0 and x<5}
 Sets
• Sets are unordered:
No matter what objects a, b, and c denote,
{a, b, c} = {a, c, b} = {b, a, c} =
{b, c, a} = {c, a, b} = {c, b, a}.
• All elements are distinct (unequal);
multiple listings make no difference!
{a, b, c} = {a, a, b, a, b, c, c, c, c}.

• Two sets are declared to be equal if and only if they contain

exactly the same elements.
S={x|x is an integer where x>0 and x<5}
T={x|x is a positive integer whose square is >0 and <25}
S=T
 Infinite Sets

• A set may be infinite (i.e., without end,

unending).

• Symbols for some special infinite sets:

N = {0, 1, 2, …} The natural numbers.
Z = {…, -2, -1, 0, 1, 2, …} The integers.
R = The “real” numbers

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 Membership

• xS (“x is in S”) is the proposition that object x is

an element or member of set S.
– e.g. 3N, “a”{x | x is a letter of the alphabet}
• Can define set equality in terms of  relation:
S,T: S=T  (x: xS  xT)
“Two sets are equal iff they have all the same
members.”
• xS “x is not in S”

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 Empty Set

•  (“null”, “the empty set”) is the unique set

that contains no elements whatsoever.
•  = {}
• Mathematically x| x.
• Examples:
Set of all months with 32 days
All natural numbers less than 1
The set of all triangles with four sides.
{x∈ N |2x = 1}
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 Subset and Super Set

• ST (“S is a subset of T”) means that every

element of S is also an element of T.
• ST  x : xS  xT
• S, SS.
• ST (“S is a superset of T”) means T S.
• Note S=T  ST ST.
• S / T means (ST), i.e. x (xS  xT)

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 Subset and Super Set

• ST (“S is a proper subset of T”) means

that ST but T / S .

Example:
S T {1,2} 
{1,2,3}

Venn Diagram equivalent of ST

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 Union of Sets

• For sets A, B, their union AB is the set

containing all elements that are either in A,
or (“”) in B (or, of course, in both).
• Formally, A,B: AB = {x | xA  xB}.
• Note that AB contains all the elements of
A and it contains all the elements of B:
A, B: (AB  A)  (AB  B)

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 Union Example

• {a,b,c}{2,3} = {a,b,c,2,3}
• {2,3,5}{3,5,7} = {2,3,5,3,5,7} ={2,3,5,7}

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 Intersection of Sets

• For sets A, B, their intersection AB is the

set containing all elements that are
simultaneously in A and (“”) in B.
• Formally, A,B: AB{x | xA  xB}.
• Note that AB is a subset of A and it is a
subset of B:
A, B: (AB  A)  (AB  B)

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 Examples

• {a,b,c}{2,3} = 
• {2,4,6}{3,4,5} = {4}

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 Disjoint Sets

• Two sets A, B are called Help, I’ve

been
disjoint (i.e., unjoined) disjointed!
iff their intersection is
empty. (AB=)
• Example: the set of even
integers is disjoint with
the set of odd integers.

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 Set Difference

• A\B is what’s left after B

“takes a bite out of A”

Chomp!
Set
A−B

Set A Set B
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 Set Difference

• For sets A, B, A minus B, written as A\B, is

the set of all elements that are in A but not
in B.
• A \ B : x  xA  xB

{1,2,3,4,5,6} - {2,3,5,7,9,11} =

• Z \ N = {… , -1, 0, 1, 2, … } − {0, 1, … }
= {x | x is an integer but not a nat. #}
= {x | x is a negative integer}
= {… , -3, -2, -1}
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 Set Complement

• Set of all elements that are not in A

A = {x | x  A}

A
A

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 Set Identities

• Identity: A=A AU=A

• Domination: AU=U A=
• Idempotent: AA = A = AA
• Double complement: A = A
• Commutative: AB=BA AB=BA
• Associative: A(BC)=(AB)C
A(BC)=(AB)C

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 Proving Set Identities

To prove statements about sets of the form E1 = E2

Prove E1  E2 and E2  E1 separately.

Example: Show A(BC)=(AB)(AC).

• Show A(BC)(AB)(AC).
– Assume xA(BC) & show x(AB)(AC).
– We know that xA, and either xB or xC.
• Case 1: xB. Then xAB, so x(AB)(AC).
• Case 2: xC. Then xAC , so x(AB)(AC).
– Therefore, x(AB)(AC).
– Therefore, A(BC)(AB)(AC).
• Show (AB)(AC)  A(BC). …
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 DeMorgan Laws

• Prove the following famous results

A B = A  B
A B = A  B

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 Sets of Numbers

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 Some Mathematical Notations
x For any x
x There is one x
x There does not exists even one x
A Not A
A B A or B
A B A and B
A implies B

A B if A then B (B if A)
A is sufficient for B (B is necessary for A)

A is equivalent to B

A  B A if and only if B (A iff B)
A is necessary and sufficient for B

 Mathematical Proofs

• A proof is a valid argument that establishes the truth

of a statement
• Types of Proofs
Direct Proofs
Indirect Proofs
– Proof by Contraposition
– Proof by Contradiction (reductio ad absurdum)
Proof by Induction
 Mathematical Proof
• A theorem is a statement that can be shown to be true
using definitions, other theorems
– axioms (statements which are given as true)
– rules of inference
• A lemma is a ‘helping theorem’ or a result which is
needed to prove a theorem.
• A corollary is a result which follows directly from a
theorem.
• Less important theorems are sometimes called
propositions.
• A conjecture is a statement that is being proposed to be
true. Once a proof of a conjecture is found, it becomes a
theorem. It may turn out to be false.
 Example of Direct Proof
• Prove that for any integers m and n, if m and n are
perfect squares, so is mn.
 Example of Proof by Contrapositive
• Prove that For any integer k, if 3k + 1 is even, then k
is odd
 Example of Proof by Contradiction
• Prove that the number of prime numbers are infinite
 Proof by Induction
• When we are asked to prove a statement that depends
on natural numbers i.e. P(n), it can be proven by
Induction which has the following steps:
• Prove P(1) is true
• Assume P(k) is true and then prove P(k+1) is true

Mathematical induction proves that

we can climb as high as we like on a
ladder, by proving that we can climb
onto the bottom rung and that from
each rung we can climb up to the
next one.
 Example of Proof by Induction
• Prove that
n ( n + 1)
S ( n ) = 1 + 2 +. + n =
2