## 1. Introduction

Functions

- Linear, consumption
- Quadratic, consumption
- Cubic, costs
- Exponential, growth
- Logarithmic, production

Simultaneous equations

- Demand is Pd = a + bq
- Supply is Ps = j + kq

## 2. Application

**Contingent valuation** is a method of valuing resources for which there is no marker, and therefore no observational unit price. This can be used in cost-benefit analysis to connect intangible benefits and costs to tangible figures capable of controlling the final balance sheet.

**Economic input analysis **is used to analyse and examine the economy. This can be used to determine the dependency of the economic activity of an industry sector or a firm. However, there are several assumptions in the analysis: firms are producing homogenous analysis. The firms have to buy from other industries to survive. Part of the output goes to other sectors and part goes to the final demand. The analysis determines what is needed to satisfy the final demand (C+I+G+E).

To find **profit maximisation**, you need to set total revenue equal to the total cost, differentiate the equation to find the roots q, and then substitute them back into the original equation.

Summation by integration

**Keynesian multiplier**

E = C (consumer expenditure) + I (investments) + G (government spending) + (X (exports) – M (imports))