Role Of Mathematics in Business & Economics
Mathematics have been one of the primary elements of business and economics since ancient times, when farmers had to count the animals in their possession and merchants had to have a clear picture of their goods' value. With the introduction of money as the universal legal tender, all goods acquired a numerical value, making math calculations even more important. Furthermore, in the competitive global market environment of today, businesses have to take advantage of every opportunity for profit, making frequent statistical market analyses a necessity. Business Mathematics:
Business mathematics is mathematics used by commercial enterprises to record and manage business operations. Commercial organizations use mathematics in accounting, inventory management, marketing, sales forecasting, and financial analysis. Mathematics typically used in commerce includes elementary arithmetic, elementary algebra, statistics and probability. Business management can be made more effective in some cases by use of more advanced mathematics such as calculus, matrix algebra and linear programming. Commercial Maths:
Another meaning of business mathematics, sometimes called commercial math or consumer math, is a group of practical subjects used in commerce and everyday life. The practical applications typically include checking accounts, price discounts, markups and markdowns, payroll calculations, simple and compound interest, consumer and business credit, and mortgages.
Importance of Mathematics in Business & Economics:
Mathematics is used in most aspects of daily life. Many of the top jobs such as business consultants,company directors and a host of others require a solid understanding of basic mathematics, and in some cases require a quite detailed knowledge of mathematics. Money Transactions
The four basic math operations are essential to understand transactions and calculate profits and losses. On every transaction, from paying your grocery bill to making an investment, a certain amount of money is removed from one budget to another. Hence, a transaction always includes a subtraction from the buyer's budget and an addition to seller's budget. In cases of mass payments, such as during a monthly payday or when people buy tickets for a concert, you can multiply the value of individual tickets or paychecks by the number of spectators or employees. This way you can find the total cost of a payroll or the total gate earnings. Identifying Market Trends
Market analysis is one of the core elements of a business plan. Understanding the needs of a consumer base, as well as your competitor's strengths in the market is knowledge that can give an edge to your business. You must analyse data from questionnaires, as well as from official sources like the Census Bureau and use your statistical skills to group them and convert them into percentages to discover the consumers' trends and your piece of the market pie chart. Measuring Economic Performance
The Gross Domestic Product, commonly known as the GDP, is the sum of private consumption plus government spending plus gross investment plus the difference or exports minus imports. It's a lot of additions and --- in a failing economy --- subtractions, for which you need math skills to compute. To find the GDP per capita, you must divide the nominal GDP by the country's population. Furthermore, the growth --- or shrinking --- of an economy is evident when subtracting the newest GDP estimates with older data. Understanding Inflation and Interest Rates
Interest rate is the percentage of surplus value a borrower has to give the lender. A quite simplistic example of an interest rate is when a borrower receives $100 with a 3 percent interest and has to repay $103. Another occasion when math knowledge on percentages is helpful in economics is when you must calculate the future prices of products and services based on the current rate of...
References: * Contemporery Math for business & Consumers-By Brechner, Robert. (2006)
* The Role of mathematics in Business Decision -By Stephen F Keating – 1973
* The Role of Mathematics and Logic-By Kenneth Ewart Boulding-1971
* THE ROLE OF MATHEMATICS IN ECONOMICS-Journal of Political Economy, 56, 3 (June 1948): 187-199.
* Heriot Watt University: Mathematics for Economics and Business -Lecture 1
* U.S. Small Business Administration: Market Analysis
* emathzone: The Importance of Statistic
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