Mathematics is vital to economics as it allows clarity when issues are being discussed. The relationship between mathematics and economics is essential and some applications of mathematics in relation to economics include:
• Statistical analysis
This is vital to the running of any business, and is an important part of any business plan. The knowledge gained from surveys and questionnaires can be vital to the economy of a business, and the use of mathematics in achieving these goals helps as statistics can be presented in the form of graphs and pie charts, using percentages and fractions.
• Helping a business to understand inflation and interest rates
It is important that a business understands the need to alter prices of products as and when it is necessary. This can be made simpler by understanding interest rates and inflation, and the prices can be amended to suit the interest rates that may occur. This is essential as if the business was not able to understand certain elements of mathematics, they would not know how much to increase prices by. Failure to do this could lead to losses in the business and this would have an adverse effect on the business and its employees.
• Transactions the business makes
A basic understanding of mathematics is essential to any business, and therefore to the economics of a business. The basic math is needed to calculate profit and loss, and to see where the business is sitting financially. The future of a business also depends on a cash flow forecast, which any successful business will complete, so that they have aims and objectives to work towards. Different budgets, and pots of money are affected, as money needs to be removed from a bank account and invested in certain areas of the business.
• Statistical analysis
This is vital to the running of any business, and is an important part of any business plan. The knowledge gained from surveys and questionnaires can be vital to the economy of a business, and the use of mathematics in achieving these goals helps as statistics can be presented in the form of graphs and pie charts, using percentages and fractions.
• Helping a business to understand inflation and interest rates
It is important that a business understands the need to alter prices of products as and when it is necessary. This can be made simpler by understanding interest rates and inflation, and the prices can be amended to suit the interest rates that may occur. This is essential as if the business was not able to understand certain elements of mathematics, they would not know how much to increase prices by. Failure to do this could lead to losses in the business and this would have an adverse effect on the business and its employees.
• Transactions the business makes
A basic understanding of mathematics is essential to any business, and therefore to the economics of a business. The basic math is needed to calculate profit and loss, and to see where the business is sitting financially. The future of a business also depends on a cash flow forecast, which any successful business will complete, so that they have aims and objectives to work towards. Different budgets, and pots of money are affected, as money needs to be removed from a bank account and invested in certain areas of the business.
