Application of mathematical methods and models in economics

Abstract

The development of the mathematical basis of methods for model construction in various fields of science and technology today is very intensive and interdisciplinary. From the perspective of quantitative optimization methods, mathematical models of processes are of the utmost importance, whereby these can be generally represented in the form of linear algebraic equations or equivalent representations. Within the procedure of defining assumptions and adopting a process model, the problem formulation is conducted, whereby this refers to determining the level of problem decomposition and the level of detail in which the problem will be solved. The procedure of mathematical model determination, based on a process model, involves constructing a specific model that shows the relationships between the variables which describe the process, as well as the criterion of the solution effectiveness. The field of operations research that deals with this type of models is mathematical programming. Mathematical programming models represent a class of optimization models due to the fact that their goal is finding optimal solutions to problems. Analogously, the basic feature of today's modern economy is the penetration of mathematical methods into the essence of all economic research. In this context, the main aim of this paper is to point out the growing importance of the application of mathematical techniques, methods and models in economics as a science, as their proper application in economics can reduce many ambiguities in economic theory and practice.