HE1004 BASIC MATHEMATICS FOR ECONOMISTS I

Introductory Topics I: (Simple) Algebra

1.1 The Real Numbers

1.2 Integer Powers
1.3 Rules of Algebra
1.4 Fractions
1.5 Fractional Powers
1.6 Inequalities
1.7 Intervals and Absolute Values

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1.1 The Real Numbers ( )

The basic numbers are

Positive integers (or natural numbers): 1, 2, 3, 4, …
Negative integers: -1, -2, -3, -4, …
o Above both together with “0” make up integers.
o Even numbers: 0, ±2, ±4, ±6, ±8, …
o Odd numbers: ±1, ±3, ±5, ±7, …

The rational numbers can be written in the form a/b

__, where and are both
integers, and b is a nonzero number.

Examples:

If a real number is not a rational number, then it must be an irrational number.

An irrational number _____
cannot be written as the form of , where and are
integers.

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 Real Numbers = Rational numbers + Irrational numbers

Graphical Example:

Therefore, real numbers can be either _________________.

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1.2 Integer Powers

If is any number and is any positive number, then is defined by

= × × × …× = factors of
o power of ; is the base, and is the exponent.

We define = 1 for 0. What if =0? undefined

We define = . That means = × × …× [___________ ]

We have defined all the integer cases for the exponent . The “exponent” or
the “power” can be any integers. (refer to Section 1.5 for non-integer cases)

1.2.1 Properties of Powers

(i) × = ; (ii) ( ) = ; (iii) ( + ) +

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 Powers are used in practically every branch of applied mathematics,
including economics. For example, in calculating compound interest.

If the original amount is $ and the interest rate is % per year, by the end of
the first year, the amount will be ( + × %), ( + × ) or (1 +
) dollars. The growth factor per year is thus (1 + ) and the growth rate
is %.

Example:
If you deposit $1000 in the bank with an interest rate of 8% per year, then by the end of
the year, the money will grow to $1080.
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1+ = 1000 1 + = 1000 × 1.08 = 1080
100 100

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 In general, after t (whole) years, the original investment of $K will have
grown to an amount 1+ when the interest rate is % per year and
interest is compounded annually.

Example:
If you deposit $1000 in the bank and the interest rate is 8% per year, then by the end of
your year 4, the money will grow to around $1360.48

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1+ = 1000 1 + 1360.48
100 100

Question:
How do we interpret 1 + ?

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1.3 Rules of Algebra

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 The three important quadratic identities are:
( + ) = +2 +

( ) = 2 +

( + )( )= (difference of squares formula)

Exercise:
1. ( + )

2. ( + )( )

3. 201 199

4.
( )

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1.4 Fractions

a÷b= = =a b
if < , the fraction is called a _______
proper fraction.
If > the fraction is called an _______
improper fraction

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 .
Remark for the rule 1: = , c is the _____________.
common factor b and c are nonzero.
.

When we simplify fractions, only common factors of the numerator and

denominator can be removed.
o ; is not a common factor.

( )
o = = (1 + ). is the common factor and can be
removed.

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1.5 Fractional Powers
Sometimes the exponent (or power) is not an integer. It is a fraction. In this
case, we define = , where (in general) > 0, an integer, and a
natural number. Alternatively, we can assume and is integer with
0.

Some special cases of

(i) If = 1, = , where is a natural number and is positive*, we say
it is the root of , = .

(ii) Let follow (i) with = = 2. Then it is a square root of : = =

, must be non-negative/
______________. Why? (Real number)
nonzero a>=0

(iii) If = = 3, then the cube root of : = = , where can be

negative if is an odd number

Remark: In general, + +
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1.6 Inequalities

Recall: Real numbers consist of negative and positive numbers, as well as

zero. [Graph].

We use > and < as an expression for strict inequalities, e.g., ___________
5>3,6<9

We use and as an expression for weak inequalities, e.g., ___________

5>=5

For a positive number , we write > 0, and say that is greater than zero.
Alternatively, we can say zero is smaller than , 0 < . On the other hand,
if is the negative number, we write < 0 or (0 > ).

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 Some Algebra Properties:

(a) If the two sides of an inequality are multiplied by a positive number, the
direction of the inequality is_______.
preserved

Example:
5 > 3 and if both sides are multiplied by 2, then 5 × 2 > 3 × 2 10 > 6

(b) If the two sides of an inequality are multiplied by a negative number, the
direction of the inequality is _______.
reserved

Example:
5 > 3 and both sides are multiplied by -1, 5 × ( 1) < 3 × ( 1) 5< 3

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Two inequalities that are valid ___________
simutaneously are often written as a double
inequality.

o Example 1: If < and < , then we can write as < < . (the direction
of inequalities is important; the inequalities must be facing in the same direction).
Therefore, we can write either < < or > >

o Example 2: If < and > , there is no way we know the exact inequality
relationship among , , and . Hence, we are not able to write double
inequalities.

< < (?)

< < (?)

< > (?)

z< > (?)

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1.7 Intervals and Absolute Values

If and are any two numbers on the real line, then the set of all numbers
that lie between and is called an interval.

Example: 2 and 9

The set of all the numbers between 2 and 9 is called an interval.

If 2 and 9 are not included into the set, the set is called an open interval from
2 to 9.

If 2 and 9 both are included into the set, the set is called a closed interval from
2 to 9.

Only either 2 or 9 is included into the set, the set is called a half-open interval
from 2 to 9.

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Below can be used to correspond to the above example, where is 2 and
is 9.

All the intervals mentioned so far are all ______

bounded intervals. That is the interval
______by
bounded a number, e.g., 2 or 9. However, some intervals are unbounded. In
other words, there is endpoint.

[ , ),(a, ) or ( , ), or ( , ], …

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 Absolute Value:
Let be a real number and considers its position on the real line. The distance
between and 0 is called the absolute value of . If is positive or 0, then
the absolute value is the number itself. If is negative, then because
distance must be positive, the absolute value is equal to the positive number
.

The absolute value of is denoted by | |, and defined as follows.

, if 0
| |=
, if < 0

Example: Using the definition above, we can rewrite | 2| as follows.

2, if 2
| 2| =
________,
2+x if < 2

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Remarks:
(1) If is a positive number and | | < , then the distance from to 0 is less
than . In other words,

| |< implies < < .

(2) When is nonnegative, and | | , the distance from to 0 is less than

or equal to . In other words,

| | implies .

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