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CHAPTER 3 - Matrix Algebra and Applications in Economics & Business To Students

The document discusses different types of matrices including row, column, square, diagonal, identity, zero, and triangular matrices. It also covers matrix operations such as addition, subtraction, multiplication, transposition, and determinant calculation.

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0% found this document useful (0 votes)
93 views10 pages

CHAPTER 3 - Matrix Algebra and Applications in Economics & Business To Students

The document discusses different types of matrices including row, column, square, diagonal, identity, zero, and triangular matrices. It also covers matrix operations such as addition, subtraction, multiplication, transposition, and determinant calculation.

Uploaded by

kellaraydenn
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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CHAPTER 3: MATRIX ALGEBRA AND APPLICATIONS IN ECONOMICS/BUSINESS

A matrix is a rectangular array of numbers in rows and columns enclosed in bracket.


A matrix with n rows and p columns is said to be an 𝑛 × 𝑝 matrix or n by p matrix.
For example, the general form:
𝑎11 𝑎12 𝑎13 … 𝑎1𝑝
𝑎21. 𝑎22. 𝑎23 … 𝑎2𝑝
A= [ .. .. .. ]
.
𝑎𝑛1 𝑎𝑛2 𝑎𝑛3 … 𝑎𝑛𝑝

Is an 𝑛 × 𝑝 matrix denoted 𝐴𝑛𝑝 , that is a matrix of order 𝑛𝑝.

3 5 4
2 3
Examples: 𝐵 = [ ] is a 2 × 2 matrix denoted 𝐵22 and C= [6 7 6] is a 3× 3
1 4
4 −3 5
denoted 𝐶33 .
Remark: matrix names are always in capital letters (eg A or B or C …) and the
elements of a matrix are represented by lower case subscripted letters. For instance
𝑎𝑖𝑗 stands for the element in the 𝑖𝑡ℎ row and 𝑗𝑡ℎ column.

A) Types of matrices
- Row matrix: it is a matrix with only one row. For example A= [2 3] is a 1 × 2
matrix and B = [2 3 − 4] is a 1 × 3 matrix.
2
- Column matrix: it is a matrix with only one column. For example A =[ ] is a 2×
3
2
1 matrix and B =[ 3 ] is a 3 × 1 matrix.
−4
- Square matrix: it is a matrix in which the number of rows is equal to the
2 3
number of columns. For example 𝐴 = [ ] is a 2 × 2 matrix and B =
1 4
2 3 4
[2 3 4] is a 3 × 3 matrix.
1 4 5
- Diagonal matrix: it is a matrix that has zeros everywhere except on the leading
or main diagonal (the diagonal running from the upper left to the lower right).
2 0 0 2 0 0
2 0
For example, = [ ] ; B = [0 0 0] and C = [0 4 0]are diagonal
0 4
0 0 0 0 0 6
matrices.
Thus, we can say that a matrix is diagonal if 𝑎𝑖𝑗 is equal to zero for all elements
when 𝑖 ≠ 𝑗 and 𝑎𝑖𝑗 is not equal to zero for at least one element when 𝑖 = 𝑗.

1
- Identity matrix: it is a square matrix with the leading diagonal elements all
equal to 1 (one) and all other elements equal to 0 (zero). In other words, it is a
diagonal matrix with ones in the leading diagonal and zeros elsewhere.
1 0 0
1 0
Examples: = [ ] ; B = [0 1 0]
0 1
0 0 1
Note that if we multiply a matrix 𝐴𝑛𝑝 (with n = p) by an identity matrix, we
will obtain the same matrix regardless of whether we pre-multiply or post-
multiply. That is, 𝐼𝑛𝑛 × 𝐴𝑛𝑛 = 𝐴𝑛𝑛 × 𝐼𝑛𝑛 = 𝐴𝑛𝑛
- Zero or null matrix: it is a square matrix where every element is zero.
0 0
Example: 𝐴 = [ ]
0 0
Note that when we add or subtract a null matrix from another matrix, the
matrix remains unchanged. Note also that pre or post multiplying a matrix
with a zero matrix results to another zero matrix.
- Scalar matrix: it is a diagonal matrix whose diagonal elements are equal. For
1 0 0
2 0
𝐴=[ ] ; B = [0 1 0]
0 2
0 0 1
Note that all identity matrices are scalar matrices but not all scalar matrices
are identity matrices.
- Triangular matrix: a square matrix whose elements 𝑎𝑖𝑗 equal zero, when 𝑖 > 𝑗
is called an upper triangular matrix. If all elements 𝑎𝑖𝑗 equal zero when 𝑖 < 𝑗,
we have a lower triangular matrix. Examples:
1 3 4
A=[0 3 5 ] is an upper triangular matrix
0 0 10
1 0 0
B= [2 3 0] is a lower triangular matrix
4 6 1
Note that the transpose of a lower triangular matrix gives an upper triangular
matrix and vice versa.

B) OPERATIONS OF MATRICES
- MATRIX ADDITION AND SUBTRACTION
Given two matrices A and B of the same order, their addition is obtained by
adding their corresponding elements. Equally their subtraction is obtained by
subtracting their corresponding elements. For instance, if
2 3 1 1 1 8
A= [4 3 8] and B= [0 7 6] then
5 7 9 2 6 4
2+1 3+1 1+8 3 4 9
A + B = [4 + 0 3 + 7 8 + 6] = [4 10 14]
5+2 7+6 9+4 7 13 13
2
2−1 3−1 1−8 1 2 −7
A – B = [4 − 0 3 − 7 8 − 6] = [4 −4 2]
5−2 7−6 9−4 3 1 5
Take home:
3 −2 5 2 3 2
1) A = [ ],B=[ ] find (a) A + B and (b) A – B
−1 2 3 −3 4 6

- MULTIPLICATION OF TWO MATRICES


The main rule here is that for multiplication of two matrices to be possible, the
number of columns in the first matrix should equal the number of rows in the
second matrix. For instance
𝐴22 × 𝐵12 is not possible because A has two columns and B has but one row. On
the contrary, 𝐴22 × 𝐵21 can be multiplied; number of columns of the first matrix
equal number of rows of the second matrix.
Examples:
2 3 1 (2 × 1) + (3 × 2) 8
1) A = [ ] and B = [ ] then A×B = [ ]=[ ]
4 5 2 (4 × 1) + (5 × 2) 14
3 1
8 0 5 4
2) A = [2 4] B = [ ]
3 2 1 1
7 4
A×B =
(3 × 8) + (1 × 3) (3 × 0) + (1 × 2) (3 × 5) + (1 × 1) (3 × 4) + (1 × 1)
[(2 × 8) + (4 × 3) (2 × 0) + (4 × 2) (2 × 5) + (4 × 1) (2 × 4) + (4 × 1) ]
(7 × 8) + (4 × 3) (7 × 0) + (4 × 2) (7 × 5) + (4 × 1) (7 × 4) + (4 × 1)
27 2 16 13
A×B =[28 8 14 12 ]
68 8 39 32

We can observe that the resulting matrix of a multiplication has as order number
of rows of the first matrix and number of columns of the second matrix.

Remarks: (i ) A×B ≠ 𝐵 × 𝐴 that is multiplication of matrices is not commutative. (ii)


if multiplication of A×B is possible, then it does not necessarily mean 𝐵 × 𝐴 is
possible, unless the two matrices are square matrices.

Take home:
1 2 2 1
1) A = [ ], B = [ ] find AB and BA
2 4 3 2
1 2
0 2 3
2) A = [ ], B = [2 −1] find AB and BA
1 2 −1
3 3

3
1 2 −1 2
0 2 3
3) A = [ ], B = [2 −1] and C = [ 1 0 ] find A(B+C)
1 2 −1
3 3 2 −2

- TRANSPOSITION
The transpose of a matrix A of order n×p is a p×n matrix denoted 𝐴/ or 𝐴𝑇 whose
rows are the columns of A and whose columns are the rows of A. Examples:
𝑎 𝑏 𝑎 𝑐
A=[ ] then 𝐴𝑇 = [ ]
𝑐 𝑑 𝑏 𝑑
0 1
0 2 3 𝑇
A=[ ] then 𝐴 = [2 2 ]
1 2 −1
3 −1
Remarks:
(i) The transpose of a diagonal matrix is the same diagonal matrix. For
instance
2 0 0 2 0 0
A = [0 1 0] is a diagonal matrix. And 𝐴 = [0 1 0]  A = 𝐴𝑇
𝑇

0 0 2 0 0 2
(ii) If the transpose of a square matrix A equals the square matrix, then A is a
symmetric matrix. For instance
−1 5 −3 −1 5 −3
A = [ 5 0 4 ] and we have 𝐴 = [ 5 0 4 ]  A = 𝐴𝑇
𝑇

−3 4 9 −3 4 9
(iii) If we have a symmetric matrix A and A × A = A, then the matrix A is said to
be idempotent. All identity matrices are symmetric and idempotent. For
example:
1 0
A=[ ] is an identity matrix and 𝐴𝑇 = 𝐴 and equally A × A = A.
0 1

Take home:
1 2 2 1
1) If A = [ ], B = [ ] find (AB)𝑇 and find 𝐴𝑇 𝐵𝑇
2 4 3 2
3 1
8 0 5
2) A = [2 4] B = [ ] find 𝐴𝑇 𝐵𝑇
3 2 1
7 4

- DETERMINANT OF A MATRIX
It is a scalar obtained from the elements of a matrix by a specified operations. The
determinant is specified only for square matrices.
(i)For a 2×2 matrix
𝑎11 𝑎12
A = [𝑎 𝑎 ] the determinant of A denoted |𝐴| or det(A) or 𝐴𝑑𝑒𝑡
21 22
|𝐴| = 𝑎11 𝑎22 − 𝑎21 𝑎12
8 9
Example: A = [ ]  |𝐴| = 8 × 5 − 2 × 9
2 5
4
(ii)For a 3×3 matrix
Here we have basically two methods: Artistic method and the Co-factor/Laplace
method.

Artistic method:
𝑎1 𝑎2 𝑎3
Given A= [𝑏1 𝑏2 𝑏3 ]
𝑐1 𝑐2 𝑐3
This method follows 4 steps:
- Rewrite the first two columns of the matrix to the right of the original matrix;
- Locate the elements of the three primary diagonal P1, P2 and P3 and those of
the secondary diagonal S1, S2 and S3; and
- Multiply the elements of each primary and each secondary diagonal.
- The determinant equals the sum of the products for these 3 primary
diagonals minus the sum of the products for the 3 secondary diagonals.
P1 P2 P3
𝑎1 𝑎2 𝑎3 𝑎1 𝑎2
𝑏1 𝑏2 𝑏3 𝑏1 𝑏2
𝑐1 𝑐2 𝑐3 𝑐1 𝑐2
S1 S2 S3

|𝐴| =(𝑎1 𝑏2 𝑐3 + 𝑎2 𝑏3 𝑐1 + 𝑎3 𝑏1 𝑐2 ) − (𝑐1 𝑏2 𝑎3 + 𝑐2 𝑏3 𝑎1 + 𝑐3 𝑏1 𝑎2 )

Example:
3 1 2
A= [−1 2 4] determine det(A)
3 −2 1

Solution:
P1 P2 P3
3 1 2 3 1
−1 2 4 −1 2
3 −2 1 3 −2
S1 S2 S3

|𝐴| = ((3 × 2 × 1) + (1 × 4 × 3 ) + (2 × −1 × −2 )) − ((3 × 2 × 2 ) + (−2 × 4 ×


3 )+ (1 × −1 × 1 ))
= (6 + 12 + 4) – (12 – 24 – 1)
|𝐴|= 22 – (-13) = 35

Take home:

5
2 3 1 1 1 8
Find the determinants of A= [4 3 8] ⇒ 𝑑𝑒𝑡𝐴 = −33 and B= [0 7 6]
5 7 9 2 6 4
⇒ 𝑑𝑒𝑡𝐵 = −108 using the artistic method.
Co-factor method
For any square matrix A, we can find a matrix of cofactors (Ac). To determine the
cofactor Cij of element 𝑎𝑖𝑗 𝑜𝑓 a matrix, we can either use simple mental reasoning or
a pencil to cross off row 𝑖 and column 𝑗 in the original matrix. Then focus on the
remaining elements that form a sub-matrix of the original matrix. Then look for the
determinant of the sub-matrix which is referred to as the minor of element 𝑎𝑖𝑗 .

The cofactor is then gotten by multiplying the minor by either positive one (+1) or
negative (-1) depending on the position of the element 𝑎𝑖𝑗 , that is (−1)𝑖+𝑗 × 𝑚𝑖𝑛𝑜𝑟.
Thus
𝒄𝒐𝒇𝒂𝒄𝒕𝒐𝒓 𝒄𝒊𝒋 = (−𝟏)𝒊+𝒋 × 𝒎𝒊𝒏𝒐𝒓

𝑎1 𝑎2 𝑎3
Given A= [𝑏1 𝑏2 𝑏3 ]
𝑐1 𝑐2 𝑐3
To calculate the determinant we choose a row. Suppose we choose row one. Then
𝑏 𝑏3 𝑏 𝑏3 𝑏 𝑏2
|𝐴| = 𝑎1 (−1)1+1 | 2 | + 𝑎2 (−1)1+2 | 1 | + 𝑎3 (−1)1+3 | 1 |
𝑐2 𝑐3 𝑐1 𝑐3 𝑐1 𝑐2

Example:
3 1 2
A= [−1 2 4] determine det(A) using the co-factor method.
3 −2 1

Solution:
Determinant with respect to the first row is given by:

|𝐴| = 3(−1)1+1 | 2 4| + 1(−1)1+2 |−1 4| + 2(−1)1+3 |−1 2 |


−2 1 3 1 3 −2
= 3(10) – (-13) + 2(-4)
= 30 + 13 – 8 = 35
Take home:
3 1 2
A= [−1 2 4] find the det(A) using the co-factor method with respect to the
3 −2 1
second row.

6
1 2 0
B= [ 1 0 −1] find the det(A) using the artistic and the co-factor methods.
−1 3 2

- Properties of a determinant
1) If two rows or columns are interchanged a matrix will retain absolute value of
the determinant but it will change its sign.
𝑎1 𝑎2 𝑎3 𝑏1 𝑏2 𝑏3
𝑑𝑒𝑡 [𝑏1 𝑏2 𝑏3 ] = −𝑑𝑒𝑡 [𝑎1 𝑎2 𝑎3 ]
𝑐1 𝑐2 𝑐3 𝑐1 𝑐2 𝑐3

2) If rows are changed into columns and columns into rows then the
determinant will remain unchanged. Thus the determinant of a matrix equals
the determinant of its transpose.
𝑎1 𝑎2 𝑎3 𝑎1 𝑏1 𝑐1
𝑑𝑒𝑡 [𝑏1 𝑏2 𝑏3 ] = 𝑑𝑒𝑡 [𝑎2 𝑏2 𝑐2 ]
𝑐1 𝑐2 𝑐3 𝑎3 𝑏3 𝑐3

3) If two rows or columns are identical in a matrix then the determinant is zero.
𝑎1 𝑎2 𝑎3
𝑑𝑒𝑡 [𝑎1 𝑎2 𝑎3 ]=0
𝑐1 𝑐2 𝑐3
2 3 4
𝑒𝑥𝑎𝑚𝑝𝑙𝑒 𝑐𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒: 𝑑𝑒𝑡 [2 3 4]
1 4 5
4) If any row or column of a matrix is multiplied by a constant, k, the
determinant obtained is k times the original determinant.
𝑎1 𝑎2 𝑎3 𝑎1 𝑎2 𝑎3
𝑑𝑒𝑡 [𝑘 𝑏1 𝑘𝑏2 𝑘𝑏3 ] = 𝑘 × 𝑑𝑒𝑡 [𝑏1 𝑏2 𝑏3 ]
𝑐1 𝑐2 𝑐3 𝑐1 𝑐2 𝑐3

For instance, given


2 3
𝐵=[ ], det 𝐵 = |𝐵| = (2 × 4) − (1 × 3) = 5
1 4

7
4 6
If we now multiply the first row by 2, we have [ ], whose determinant is given
1 4
by:

(4 × 4) − (1 × 6) = 10 =2|𝐵|

5) If to any row or column is added k times the corresponding element of


another row or column, the determinant remains unchanged.
𝑎1 𝑎2 𝑎1 + 𝑘𝑏1 𝑎2 + 𝑘𝑏2
𝑑𝑒𝑡 [𝑏 𝑏2 ] = 𝑑𝑒𝑡 [ ]
1 𝑏1 𝑏2

For instance, given the above matrix and k = 2

2 3 2 + 2(1) 3 + 2(4)
𝑑𝑒𝑡 [ ] = 𝑑𝑒𝑡 [ ]=5
1 4 1 4
6) If any row or column is the sum of two or more elements then the
determinant can be expressed as a sum of two or more determinants.

𝑎1 + 𝑘1 𝑎2 + 𝑘2 𝑎3 + 𝑘3 𝑎1 𝑎2 𝑎3 𝑘1 𝑘2 𝑘3
| 𝑏1 𝑏2 𝑏3 | = |𝑏1 𝑏2 𝑏3 | + |𝑏1 𝑏2 𝑏3 |
𝑐1 𝑐2 𝑐3 𝑐1 𝑐2 𝑐3 𝑐1 𝑐2 𝑐3

7) If determinant vanishes (that is equal to zero) by putting x = a, then x – a is a


factor of determinant.

- INVERSE OF A MATRIX

If for an nxn matrix, A, there is another nxn matrix, B, such that their product is the
identity matrix of order nxn.

𝐴𝑛𝑥𝑛 × 𝐵𝑛𝑥𝑛 = 𝐼𝑛𝑥𝑛

Then B is said to be inverse or reciprocal of A. A matrix which has an inverse is


known as a non-singular matrix. A matrix which has no inverse is said to be a
singular matrix.

The inverse of a 2x2 matrix is calculated by interchanging the elements in the


leading diagonal and multiplying the elements in the other diagonal by – 1, the
resultant matrix is then multiplied by the inverse of the original matrix’s
determinant |𝐴|.

8
𝑎11 𝑎12
𝐴 = [𝑎 𝑎22 ]
21

1 𝑎22 −𝑎12
𝐴−1 = [ 𝑎11 ]
|𝐴| −𝑎21

Illustration
2 3
𝐵=[ ]
1 4
1 4 −3
𝐵−1 = [ ]
5 −1 2
4/5 −3/5
𝐵−1 = [ ]
−1/5 2/5

For a 3 x 3 matrix, we have the following procedure:

1) Determine the matrix of cofactors Ac from matrix A.

The cofactor of any element 𝑎𝑖𝑗 is given by:

𝒄𝒐𝒇𝒂𝒄𝒕𝒐𝒓 𝒄𝒊𝒋 = (−𝟏)𝒊+𝒋 × 𝒎𝒊𝒏𝒐𝒓


The sign (−𝟏)𝒊+𝒋 is positive if 𝑖 + 𝑗 is even and it is negative if 𝑖 + 𝑗 is odd. Thus the
sign alternates whether vertically or horizontally, beginning with a plus in the upper
left hand corner.
+ − +
That is, a 3 x 3 matrix will have the following signs: [− + −]
+ − +
1 2 0
[
Illustration: for a matrix : 𝐴 = 1 0 −1]
−1 3 2
Hence the cofactor of element 𝑎11 𝑖𝑠 𝑐11 = 3, the cofactor of 𝑎12 𝑖𝑠 𝑐12 = −1, the
cofactor of 𝑎13 𝑖𝑠 𝑐13 = 3 and so on.
𝑐11 𝑐12 𝑐13 3 −1 3
Matrix of cofactors of A: 𝐴𝑐 = [𝑐21 𝑐22 𝑐23 ] = [−4 2 −5]
𝑐31 𝑐32 𝑐33 −2 1 −2
Here our determinant is gotten by adding the products of the element in any row (or
column) multiplied by their cofactors. Considering the first row, we have:

9
|𝐴| = (1 × 3) + (2 × −1) + (0 × 3) = 1

2) Determine the adjoint matrix which is the transpose of Ac.

Note: The transpose of a matrix is obtained by changing rows into columns and
columns into rows (transpose).
𝐴 𝐵 𝐶 𝐴 𝐷 𝐺
The adjoint of matrix [𝐷 𝐸 𝐹 ] is written as [𝐵 𝐸 𝐻]
𝐺 𝐻 𝐼 𝐶 𝐹 𝐼
With our example, the adjoint matrix is given by:
3 −4 −2
𝐴𝑎 = [−1 2 1]
3 −5 −2
3) The inverse of the matrix

The inverse is given by:


1
𝐴−1 = |𝐴| ×(the adjoint of the matrix of cofactors, 𝐴𝑎 )

3 −4 −2
−1 1
In our case, 𝐴 = [−1 2 1]
1
3 −5 −2
NB: EXCEL can be used to get the determinant and the inverse of a matrix

C) APPLICATIONS OF MATRICES
-Solving simultaneous equations
- Markov processes

10

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