Basic Mathematical Tools Basic Mathematical Tools
Appendix A
The Summation Operator
1 2 3
1
......
n
i n
i
x x x x x
=
= + +
1 1
.2:
n n
i i
i i
PS cx c x
= =
=
1
.1:
n
i
PS c nc
=
=
1 1 1
.3: ( )
n n n
i i i i
i i i
PS ax by a x b y
= = =
+ = +
1 1 1
: / ( ) / ( )
n n n
i i i i
i i i
Commonerror x y x y
= = =
=
_
1
: (1/ )
n
i
i
Average x n x
=
=
2
_ _ _
2
1 1 1
( ) 0 ( )
n n n
i i i
i i i
x x but x x x n x
= = =
| |
= =
|
\ .
1 1 1 i i i
\ .
_ _ _ _ _ _
( )( ) ( ) ( ) ( )
n n n n
i i i i i i i i
x x y y x y y x x y x y n x y = = =
1 1 1 1
( )( ) ( ) ( ) ( )
i i i i i i i i
i i i i
y y y y y y y
= = = =
Linear Functions
0 1
(1) y x | | = +
0 1
( ) y | |
1 1
/ y x or y x | | A = A = A A
0 1 1 2 2
(2) y x x | | | = + +
0 1 1 2 2
y x x | | | A = + A + A
1 1 2
0 y x if x | A = A A =
1 1 2
0 y x if x | A A A
Quadratic Functions Quadratic Functions
2
| | |
2
0 1 1 2 2
y x x | | | = + +
*
1 2
int: / ( 2 ) Turning Po x | | =
: / 2 Slope y x x | | A A +
1 2
: / 2 Slope y x x | | A A ~ +
Wage Function g
2
525 48 008
* 48/[2( 008)] 30
2
5.25 .48exp .008exp wage er er = +
exp * .48/[2(.008)] 30 er = =
First year of experience is worth .48
y=.48 exper -2(.008)exper with exper=1 and
exper=0 p
Tenth year of experience is worth .32
y= 48 exper 2( 008)exper with exper=1 and y=.48 exper -2(.008)exper with exper=1 and
exper=10
Natural Logarithm
log(x)<0 for 0<x<1; log(1)=0; log(x)>0 for x>1
log(x x )=log(x )+log(x ) |x>0; log(x /x )=log(x ) log(x ) |x>0 log(x
1
x
2
)=log(x
1
)+log(x
2
) |x>0; log(x
1
/x
2
)=log(x
1
)-log(x
2
) |x>0
log(x
c
)=clog(x)
Uses of Logarithms Uses of Logarithms
We are often interested in [%Y/%X] [% % ]
It turns out that log(Y)/ log(x) is a very good g( ) g( ) y g
approximation
Also Log(x1)-Log(X0) is a very good
approximation for % x
Many random variables arent normally
distributed but their logs happen to be distributed, but their logs happen to be