Indeed, each of the activities pictured in Figure 1 can be represented in the form of an equation. An equation could also be constructed to represent household purchases of cars or any other goods and services. 12 W states that households spend 12 percent of their wages and salaries on clothing. If W is the value of the wages and salaries households earn, and C is household expenditures on clothing, then the equation C =. Consider household purchases of output, shown as activity 4 in Figure 1. To represent magnitudes more conveniently, economists employ a mathematical model, a set of equations that describe various relationships between variables. The diagrammatic model of Figure 1 has certain disadvantages when it comes to representing quantities such as the value of the wage and salary payments or the number of cars produced.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |