Mathematical Methods for Economics: Matrices and Matrix Operations

DC-1

Semester-II

Paper-IV: Mathematical methods for Economics-II

Lesson: Matrices And Matrix Operations

Lesson Developer: Sanjeev Kumar

College/Department: Dyal Singh College, University of Delhi

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 Mathematical Methods for Economics: Matrices and Matrix Operations

Contents of the Present Chapter

1.0 Learning Outcomes

1.1 Introduction
1.1.1 Matrices
1.1.2 Types of Matrix
1.2 Operations of Matrix
1.2.1 Addition and Multiplication by a Scalar
1.2.2 Rules of Matrix Addition and Multiplication by Scalars
1.3 Matrix Multiplication
1.3.1 Properties or Rules of Matrix Multiplication
1.4 Power of Matrices, Idempotent Matrix, Orthogonal Matrix
1.5 System of Equation in Matrix Form
1.6 Invertible Matrix
1.7 Problem Set and Answer

1.8 References

1.0 Learning Outcomes

In the present chapter you will learn about the following aspects;

 Understand the concept of matrices

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 Mathematical Methods for Economics: Matrices and Matrix Operations

 You will be able to apply matrix operations.

 Understand the properties of matrix.
 Rules of matrix multiplication
 Understand the concept of power of matrix
 Understand the concept of invertible matrix

1.1 Introduction

The subject of matrices had its origin in various types of problems. Of these, solutions of
a given system of equations d liner transformations in geometry are extremely interesting. In
1857, the British mathematician Arthur Cayley formulated the general theory of matrices. He
developed the properties of matrices as pure algebraic structure, though matrices as arrays of
coefficients in homogeneous linear equation were recognized long before. A matrix is a very
useful tool to analysed of various problems in different subjects.
1.1.1 Matrices
A matrices is ordered set of numbers listed rectangular form; i.e.
 a11 a12 a13 
a a23 
 21 a22
 a31 a32 a33 

OR

A matrices is simply a rectangular table of numbers written in either ( ) or [ ] brackets.

These symbols are also called the notation of matrix. Matrix has many application in science,
engineering, computing and Economies. In economies, matrices is useful to study of stock
market tends, optimization of profit, minimization of loss, input - output analysis etc. Do not
confuse a matrix with determinants which use vertical bar, i.e. . Basically, matrix is a simple

pattern of numbers on the other hand determinant gives us a single number. The size of matrix is
written a ij , where, i =row and j = columns. a ij is the element of a matrix.

For examples

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 Mathematical Methods for Economics: Matrices and Matrix Operations

 a11 
a   a11 a12 a13 
 a11 a12  a
a   2  2 Matrix  21   4 1 Matrix  21 a22 a23  3 3matrix
 21 a22   a31 
   a31 a32 a33 
 a41 

1.1.2 Types of matrix

 Square Matrix: If a matrix has ‘n’ rows and ‘n’ columns then we say it is a square
matrix. For example;

 a11 a12 a13 

 a11 a12 
a or  a21 a23 
a22  2 2
a22
 21  a31 a32 a33  33

 Diagonal Matrix: It is a square matrix where all non-diagonal element is zero such that

 a11 0 0
A   0 a12 0 
 0 0 a13  33

 Row Matrix: A matrix with one row is called a row matrix.

A   a11 , a12 , a13 13

 Column Matrix: A matrix with one column is called a column matrix.

 a11 
A   a21 
 a31  31

 Zero Matrix: If the all elements of an matrix is zero then it is called zero matrix.

0 0 0
 
A  0 0 0
0 0 0
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 Mathematical Methods for Economics: Matrices and Matrix Operations

 Opposite Matrix: If the all elements of an matrix multiply by negative sign then we get
opposite matrix

aij =  aij

 Transpose Matrix: If we convert row to column and column to row of an matrix then we
gent transpose of an matrix. For example;

 a11 a12 a13 

A   a21 a22 a23 
 a31 a32 a33  33

Then;

 a11 a21 a31 

A   a12
T
a22 a32 
 a13 a23 a33  33

It is also true for m  n matrix

We can also write;

 
AT  A'  a ' ij , where a’ij =  aij

Example: Given;

  1 0 2
A , find A
T

 2 3 1 

Solution:

  1 2
A  A   0 3
T '

 2 1 3 x 2
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 Mathematical Methods for Economics: Matrices and Matrix Operations

Rules of Transposition

 A 
1 1
 A..................(i)

  A  B  A1  B1..................(ii )
1

 (A1 )  A1 and  B    .............(iii) (is constent )

1

  AB   B1 A1........................(iv)
1

 Symmetric Matrix: A square matrix is said to be symmetric matrix, it is is equal to its

transpose matrix.
i.e. aij  a ji  i & j
or A  A '  AT A  a n x n
ij

 Skew - symmetric Matrix: It is defined as;

aij  a ji
orA   A '   AT { A  (aij ) nn & A  (a ji ) nn }

 Identity Matrix: An identity matrix (I) is an diagonal matrix with all diagonal elements

is equal to one. It is also known as unit matrix

1 0 0 0
1 0 0  0 0 0 
I 3  0 1 0 
1
In  
.. .. .. .. 
0 0 1  33  
0 0 0 ...1 nn

Or A In = InA = A

Example: Construct the 3  3 matrix A = (aij)3  3 with aij = 2i  j

Solution: Total element of matrix = 3  3 = 9

Given; aij = 2i  j

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 Mathematical Methods for Economics: Matrices and Matrix Operations

 a11  2 x1  1  1, a12  2  2  0, a13  2  3  1

a21  4  1  3, a22  4  2  2, a23  4  3  1
a32  6  2  4, a33  6  3  2, a23  4  3  3

Then Matrix;

 a11 a12 a13 

A   a21 a22 a23 
 a31 a32 a33  33

Putting the values;

1 0 1
A  3 2 1 
5 4 3  33

2.1 Operations of Matrix

Equality Matrix: Suppose, A = (aij)m  n and B = (bij) m  n be the two mn matrices.
Then A and B is said to be equal matrices if A = B

aij  bij i  1,2,      m & j  1,2,        n

Thus, if both matrices have some dimension then they called equal. Otherwise they called
unequal matrix such that A  B.

Example: Given;

 3 y  1  z  2 2 
  
2 x   4 3 

Solve for x, y, and z.

Solution: By equation of matrices

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 Mathematical Methods for Economics: Matrices and Matrix Operations

3 y  1  z  2 2
2 
 x   4 3

 Z  2  3 or Z  5, y  1  2, y  3 and x  3

1.2.1 Addition and Multiplication by a Scalar

Let A = aij)m x n and B = (bij) be the two martices thent the sum of A and B matrices is
defined as;

A + B = (aij)m x n + (bij)m x n

A + B = (aij + bij)m x n

If  is a real mumber, then

A =  (aij)m x n = (aij)m x n

and B =  (aij)m x n = (bij)m x n

 A + B = (aij + bij) m x n

Example : Given,

1 2 3  1 0 2
A   , B   
 4 2 - 3 0 2 1

1
Compute A + B, and 2 A  B
2

Solution:

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 Mathematical Methods for Economics: Matrices and Matrix Operations

1 2 3  1 0 2
AB    
 4 2 -3   0 2 1
 11 2  0 3  2 
  
 4  0 2  0 -3  1
2 2 5 
  
 4 4 -2 

And

1 2 3  1 1 0 2
2A  ½B  2    
4 2 -3  2  0 2 1 
2 4 6 ½ 0 1 
     
8 4 -6   0 1 ½
 2  ½ 4  0 6  1   2½ 4 7 
  
 8  0 4  1 -6  ½   8 5 5½ 

1.2.2 Rules of Matrix Addition and Multiplication by Scalars

If A, B and C are m  n matrix and  and  are scalar then;

o (A + B) + C = A + (B + C)
o A+B=B+A
o A+0=A
o A + (A) = 0
o ( + ) A = A + A
o  (A + B) = A + B
1.3 Matrix Multiplication:

Let us consider two matrices A and B, such that

 a11 a12 a13   b11 b12 b13 

A   a21 a22 a23  and B  b21 b22 b23 
 a31 a32 a33  3 3 b31 b32 b33  3 3

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 Mathematical Methods for Economics: Matrices and Matrix Operations

Then the product of A and B is denoted by AB and it is given by;

 a11b11  a12b21  a13b31 a11b12  a12b22  a13b32 a11b13  a12b23  a13b33 

AB   a21b11  a22b21  a23b31 a21b12  a22b22  a23b32 a21b13  a22b23  a23b33 
 a31b11  a32b21  a33b31 a31b12  a32b22  a33b32 a31b13  a32b23  a33b33  3 3

Example: Given;

2 3
4
A  2 0 and B   
1 2 2

Compute AB and BA

Solution:

2 x 4  3x 2  14
AB  2 x 4  0 x 2   8 
1x 4  2 x 2  8 

BA  4x2  2x3 4x2  2x0 4x1  2x2  14 8 8

Problem : Given that A = (aij)mn and B (bij)mp then compute the product of both matrix

i.e. C = AB

Solution: The product of two matrix is given by;

C  AB

or (cij ) m x p  (aj ) m x n (bij ) n x p

or Cij  aij bij  ai 2b2 j  .........  ain bnj

Product of i th row of A and jth column of B

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 Mathematical Methods for Economics: Matrices and Matrix Operations

In general;

 b11 b12    b1 j    bip 

 C11 C12    C1 j   
Cip   
   a11 a12    a1k   ain  . . . . 
. . . .  .
. . . .  . . . . 
. . .    
  . . . .  . . . . 
. . . .    b
C bk 2    bkj    bkip 
Ci 2    Cij    Cip  . . . . 
 k1 
 i1  a ai 2    aik    ain  . . . . 
. . . .    i1   
  . . . .  . . . . 
. . . .  . . . .  . . . . 
 Cm 2 Cm 2    Cmj    Cmp     
  . . . .  bn1 bn 2    bnj    bnp 
  a
   m1 am 2    amk    Cmn   
 
    m  n  
   
mp
 m  p

1.3.1 Properties or Rules of Matrix Multiplication

 Matrix Multiplication is not commutative:

If A and B are two matrix, then
AB  BA

1 0  0 1
For example, let A  and B 
0  1 1 0

and, if AB and BA are both defined, then,

1 0   0 1 
AB    
0 1 1 0 
 1 0  0 1 11  0  0 
  
0  0  (1) 1 0 1  (1)  0 
 0 1
  
 1 0 

And

0 1 1 0  0 x 1  1 x 0 0 x 0  1 x (1)
BA       
1 0 0  1 1 x 1  0 x 0 1 x 0  0 x (1)

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 Mathematical Methods for Economics: Matrices and Matrix Operations

0  1
BA   
1 0 

So, we can say; AB  BA

Hence commutative law does not held

Note: Sometime it may hold but it does not always hold

 Matrix Multiplication is Associative;

If A, B and C are three mn, np and pq matrices respectively

Then, (AB)C= A(BC)

 Matrix Multiplication is distributive with respect to addition of matrices :

Suppose A, B, C are three mn, np and pq matrices respectively, then

A(B + C) = AB + AC

 Matrix Multiplication by a unit Matrix:

If a is square matrix of order nn and I is the unit matrix of the same order, then

AI = A = IA {Also, I I = I}

 If the product of two matrices is a zero matrix, then it is possible that none of them is a
zero matrix, i.e.
AB = 0, then A  0 and B  0

Where RHS ‘0’ is zero matrix

Let

 1 1 2 2
A   and B  
 1 1   2 2

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 Mathematical Methods for Economics: Matrices and Matrix Operations

Then

1 2  (1)  2 1  2  (1)  2  0 0 

AB   
 1 2  1 2 1 2  1  2  0 0

Hence, the product is zero matrix.

 Cancellation law does not hold in matrix multiplication:

Suppose A, B, C are three matrices such that AB and AC are defined, then AB = AC does
not imply B = C

3 4 2 6
A  and B   
2 7 1 5

Then find AB, A2, B2, and (A + B)2. Is (A + B)2 = A2 + B2 + 2AB ?

Solution: We have given

3 4 2 6
A  and B   
2 7 1 5

3  2 4  6 5 10
 A B     
 2  1 7  5 3 12

3 4 2 6 3  2  4  1 3  6  4  5 
and AB        2 x2  7 x1 2  6  7  5
 2 7  1 5   

10 38 
  
11 47 

Now

 3 4  3 4  9  8 12  28
A2        
2 7 2 7 6  14 8  49 
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 Mathematical Methods for Economics: Matrices and Matrix Operations

17 40 
  
 20 57 

2 6 2 6  4  6 12  30 
B2        
1 5  1 5   2  5 6  25 

10 42 
  
 7 31

17 40 10 42 10 38 

 A2  B 2  2 AB    2 11 47 
 20 57   7 31  

17 40 10 42  20 76

    
 20 57   7 31  22 94

17  10  20 40  42  76
  
 20  7  22 57  31  94 

 47 158
                (1)
 49 182

Also,

5 10 5 10 5  5  10  3 5 10  10 12

 A  B   
2
   
3 12 3 12  3 5  12  3 310  12 12 

55 170
  
 51 174 ----------------------------------------------(ii)

from (i) and (ii)

A  B2  A2  B2  2AB

1.4 Power of Matrices

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 Mathematical Methods for Economics: Matrices and Matrix Operations

Suppose A is a square matrix, then the power matrix is defined as; A2  AA

A3  AAA and so on----------

In general An  AAA......... A Here, A is repeated n times

1 1
Example: Let A  then prove that;
0 1

1 k 
Ak   
0 1

Solution: Given

1 1
A 
0 1

1 1  1 1 1
A. A     
0 1  0 1

1 1  2 

0 1 

1 1   k  1 1 1
Then AK  AK  1. A    0 1
0 1   

1 k 
A  Pr oved
0 1 

Idempotent Matrix: Let A be an square matrix then the product A by itself is called Idempotent
matrix. It is defined as;

AA = A , AAA = A3 = A

In General An = A

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 Mathematical Methods for Economics: Matrices and Matrix Operations

Orthogonal Matrix: Let A is the nn square matrix then A is said to be orthogonal matrix if,

or (A)nn (A') nn = I nn

 a b 
Example: Given; A   
 b a  2 2

Prove that A is orthogonal iff a2 + b2 = 1

Solution: Given,

 a b 
A 
 b a  2 2

 a b
Than A   
 b a  2 2

Now by property of orthogonal matrix,

 a b   a b 
AA     
b a   b a 

 a 2  b 2 ab  ba 
 2
ba  ab b  a 
2

 a 2  b 2 ab  ba 
 2
ba  ab a  b 
2

a 2  b2 
0
 
 0 a b 
2 2

Given, a2 + b2 = 1 then

1 0 
AA     I2 Hence Proved
0 1 
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 Mathematical Methods for Economics: Matrices and Matrix Operations

1.5 Systems of Equations in Matrix form

It is defined as;

2x + 3y = 4 --------- (1)

6x - y = 2 --------- (1)

Now, these equation can be written as;

2 3   x 4
A  , X    and b    then;
6 1  y 2

2 3   x 2 x  3 y 
AX   ,  y   6 x  y 
6 1    

It is equivalent to the matrix equation

AX = b

3 4 
Example: If A    then prove by mathematical induction
1 1

1  2n 4n 
An  
 n 1  2n 

3 4 
Solution: Let A   
1 1

3 4 3 4 5 8

A2  A. A       1 3
1 1 1 1  

1  2  2 4  2 

 1 2 1  2  2

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 Mathematical Methods for Economics: Matrices and Matrix Operations

1  2n 4n 
A3  A. A  
1  2n 
proved
 n

Example: (i) A matrix P is orthogonal if P'P = 1. Prove that if P is an nn matrix whose columns
are all of length 1 and mutually orthogonal then P is orthogonal .

(ii) Find out if A is an orthogonal matrix.

1 1 1
A  1 3 4 
7 5 2 

Solution: (i) Let P   P1 P2     Pn  and Pi ' Pi  1

 P11 P11 P2  P11 Pn 

 1  1 0    0
P11 P2  P21 Pn  0 1
 P2 P1
    0 
 . . . 
PP      .  .  I
 . . .   
 .  .
 . . . 
  0 0    1 
 Pn P1
1
Pn P2     Pn Pn 

 P is orthogonal

(ii) No, A is not orthogonal matrix because columns of A are not of length 1
then;

AA  I 3

Example: (i) Let D be the 33 diagonal matrix with entries d1, d2 and along d3 along the
diagonal and zero's elsewhere. Let A = (aij) be an arbitrary 33 matrix. Compute AD and DA.
Show that AD multiplies the ith column of A be entry di while DA multiples the ith row of A by
entry di.

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 Mathematical Methods for Economics: Matrices and Matrix Operations

(ii) If D is the 33 diagonal matrix with entries

d1 = 2, d2 and d3 = 4, find the A such that AD = DA

 d1 0 0  a11 a12 a13 

Solution: (i) Given D   0 d 2 0  , A  a
 21 a22 a23 
 0 0 d3   a31 a32 a33 

 d1a11 d 2 a12 d3a13 

AD   d1a21 d 2 a22 d3a23  ith column multiply by di ----- (i)
 d1a31 d 2 a32 d3a33  3  3

 d1a11 d 2 a12 d3a13 

DA   d1a21 d 2 a22 d3a23  ith row multiply by di ----- (2)
 d1a31 d 2 a32 d3a33  3  3

By (1) & (2)

AD = DA

 a11 0 0
(ii) Given; A   0 a22 0 

 0 0 a33  3  3

2 0 0
D   0 3 0 
 0 0 4 

  2  1
Example: For what value of β, D    is symmetric?
2   1

Solution: Given,

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 Mathematical Methods for Economics: Matrices and Matrix Operations

  2  1
A  
2   1

A is symmetric matrix then,

A = AT = A1

  2  1   2 
     2 
2   1    1   1

By equating the matrices,

2  1  2
or  2  3

or    3, the matrix is symmetric

1.6 Invertible matrix

A square matrix A is called invertible matrix, if

AB = BA = In

or AB = I

and BA = I {Hence B is inverse of matrix A}

Problem Set

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 Mathematical Methods for Economics: Matrices and Matrix Operations

(1) Given,

1  2  x 1
A   , B 
 1
, find x and y
 2 1 y

1 q  1 nq 
(2) Let B    , the prove B n   
0 1 0 1 

3 2
If A   , find A2  5 A  7 I
1
(3)
5

1 3 0 0 1 0 
(4) If A  1 1 0 , B  1 0 0 then prove that AB  BA
 
 4 1 0 0 5 1 

2 3  3 1 
(5) Let B    , B   , prove that  AB   BA
 4 5  2 5

(6) Given,

 2 2 4 
A   1 3 4  , then prove A is idempatent matrix
 1 2 3

1
(7) For   the following given matrix is orthogonal
2

 0  
A    0   
 0 1 0 

3 1 2
(8) Show that A  1 2 0  , is symmetic matrix
 2 0 1 

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 Mathematical Methods for Economics: Matrices and Matrix Operations

(9) Give an example of three matrices X, Y and Z to show that if

XY = ZX, then it does not necessary that y = z

(10) If  is a scalar, A and B are matrices of order 3  4, then show that (A + B) =  A +


Answers of the Problem Set

(1) x=1&y=2

 11 6 
(3)  15 23
 

 2 6  4 2
1 1 1 
(9) X   , y   1 10  , z   4 6 
 
 2 2 2  4 2   3 2 

REFRENCES
 Allen, R.G,D, Mathematical Analysis for Economists, London: Macmillan and Co. Ltd

 Chiang, Alpha C., Fundamental Methods of Mathematical Economics, New York: McGraw Hill

 Knut Sydsaeter and Peter J. Hammond, Mathematics for Economic Analysis, Prentice Hall

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 Mathematical Methods for Economics: Matrices and Matrix Operations

 Carl P. Simon and Lawrence Blume, Mathematics for Economists, London: W .W. Norton & Co.

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