Math for Economists, Linear Algebra

Tornike Kadeishvili

1 Vector Algebra
1.1 Euclidian Space Rn
R1 is the real line.
R2 = {(x1 , x2 ), x1 , x2 ∈ R} is the Euclidian 2-space.
Rn = {(x1 , ..., xn ), xi ∈ R} is the Euclidian n-space which consists of n-tuples
of real numbers.

1.1.1 Vectors
A vector is an object which has a magnitude (or length) and direction. Graph-
ically a vector is represented as an arrow, connecting an initial point P with
−→
a terminal point Q, notation P Q.
Two arrows represent the same vector if they have the same magnitude
and direction.
Any two points P = (p1 , ..., pn ), Q = (q1 , ..., qn ) ∈ Rn determine the
−→ −→
vector P Q. This vector has coordinates and P Q can be written as row vector

(q1 − p1 , ..., qn − pn )

or column vector  
q1 − p1
 
 ... .
qn − pn
Any vector is equivalent to the vector of the same magnitude and direction
whose initial point is the origin.
Any vector can be identified with its terminal point when as initial point
is assumed the origin.

1.1.2 The Algebra of Vectors

Vector addition: For x = (x1 , ... , xn ), y = (y1 , ... , yn ) ∈ Rn the sum is
defined by
x + y = (x1 + y1 , ... , xn + yn ).

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Scalar multiplication: for c ∈ R and x = (x1 , ... , xn ) ∈ Rn let

c · x = (c · x1 , ... , c · xn ).

These operations satisfy the following conditions:

(1) u + (v + w) = (u + v) + w,
(2) The zero vector O = (0, ... , 0) ∈ Rn is neutral with respect to summation
O + v = v + O = v,
(3) for each v = (x1 , ... , xn ) ∈ Rn there exists opposite vector (−v) =
(−x1 , .., −xn ) ∈ Rn s.t. v + (−v) = O,
(4) v + w = w + v.
(5) r · (s · v) = (r · s) · v, 1 · v = v for each r, s ∈ R .
(6) (r + s) · v = r · v + s · v, r · (v + w) = r · v + r · w.

1.2 Inner Product

The inner product of two vectors x = (x1 , ... , xn ), y = (y1 , ... , yn ) ∈ Rn is
defined as the number
∑
n
x · y = x1 · y1 + ... + xn · yn = xk · yk .
k=1

Properties of inner product:

(1) u · v = v · u,
(2) u · (v + w) = u · v + u · w,
(3) u · rv = r(u · v) = ru · v,
(4) u · u ≥ 0,
(5) u · u = 0 ⇒ u = 0,
Some important concepts concerning vectors such as length, angle, dis-
tance can be expressed in terms of inner product.

1.2.1 Norm of a Vector

The Euclidian
√ norm (length) of a vector x = (x1 , ... , xn ) ∈ Rn is given
by ||x|| = x21 + ... + x2n . It fact the norm can be expressed in terms of inner

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product √
||x|| = x · x.

Generally, a norm on Rn is a function ||...|| : Rn → R which satisfies the

conditions
1. ||v|| > 0 if v ̸= 0 and ||v|| = 0 if v = 0.
2. ||α · v|| = |α| · ||v||.
3. ||v + w|| ≤ ||v|| + ||v||.

The above Euclidian norm

√
||x||E = x21 + ... + x2n

is a norm: it satisfies the above three conditions.

1.2.2 Some Exotic Norms*

There are other norms too:

Manhattan norm (Taxicab norm)

||x||1 = |x1 | + ... + |xn |.

p-norm
1
||x||p = (|x1 |p + ... + |xn |p ) p .

Maximum norm

||x||∞ = max(|x1 |, ... , |xn |).

Note that ||x||p for p = 1 coincides with Manhattan norm ||x||M and for
p = 2 coincides with Euclidian norm ||x||E . Besides the limit limp→∞ ||x||p
coincides with Maximum norm ||x||∞ .

1.2.3 Metric in Rn
Metric (distance) is a function of two arguments d(x, y) which satisfies the
following axioms
1. d(a, b) ≥ 0, d(a, b) = 0 ⇔ a = b;
2. d(a, b) = d(b, a);
3. d(a, c) + d(c, b) ≥ d(a, b).

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 Any norm ||x|| determines a metric

d(x, y) = ||x − y||.

The Euclidian metric in Rn is given by

d(x, y) = ||(x1 , ... , xn ) − (y1 , ... , yn )|| =

√
(x1 − y1 )2 + ... + (xn − yn )2 .

1.2.4 Some Exotic Metrics*

The Manhattan norm induces the Manhattan metric

dM (x, y) = |x1 − y1 | + ... + |xn − yn |.

The Maximum norm induces the Chessboard metric: the minimal

number of moves of chess king to travel from x to y.

dM ax (x, y) = max(|x1 − y1 |, ... , |xn − yn |.

Any norm ||x|| induces the British rail metric

dBR (x, y) = ||x|| + ||y|| if x ̸= y and dBR (x, x) = 0.

1.2.5 Angle Between Two Vectors

Any two vectors x, y ∈ Rn (with initial points at the origin) determine a
plane. In that plane we can measure the angle α between these two vectors.
In fact the inner product can be expressed in terms of the length and the
angle between them: if the angle between vectors x, y ∈ Rn is α, then

x · y = ||x|| · ||y|| · cos α.

Why? Because

||x − y||2 = ||x||2 + ||y||2 − 2||x|| · ||y|| · cos α

and
||x − y||2 = (x − y) · (x − y) = x · x + 2x · y + y · y =
||x||2 + ||y||2 − 2x · y,
that is it!

This formula can be used to find the angle between two vectors:
x·y x1 · y1 + ... + xn · yn
cos α = =√ √ .
||x|| · ||y|| x21 + ... + x2n · y12 + ... + yn2

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The denominator of this expression is positive thus the sign of cos α coincides
with the sign of x · y. Consequently
α is acute iff x · y > 0;
α is obtuse iff x · y < 0;
α is right iff x · y = 0.
The last condition means that x and y are orthogonal if and only if

x · y = 0.
√
Example. Consider the rectangle determined by vectors ( 3, 0) and (0, 1).
Find the angle between the diagonals of this rectangle.
√ √
Solution.
√ The diagonals are the vectors d 1 = ( 3, 1) and d 2 = ( 3 − 0, 0 −
1) = ( 3, −1), thus

d1 · d2 3−1 1
cos α = = = .
||d1 || · ||d1 || 2·2 2

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 Exercises

1. Find the lengths of the vectors (i) (3, 4), (ii) (1, 2, 3).

2. Find the distances (i) d((0, 0), (3, 4)), (ii) d((5, 2), (1, 2)).

3. Find the lengths of the vectors (i) (3, 0, 0, 0), (ii) (1, 1, 1, 1).

4. Find the distances

(i) d((1, 2, 3, 4), (1, 0, −1, 0)), (ii) d((1, 2, 1, 2), (2, 1, 2, 1)).

5. Find the angle between the vectors u and v if (i) u = (1, 0), v = (−1, 1);
(ii) u = (1, 0, 0), v = (0, 0, 1).

6. Find
√ the angle between the vectors u and v if (i) u = (1, 0), v = (2, 2);
(ii) u = ( 3, 0), v = (0, 1).

7. Find a vector of length 1 which points in the same direction as (i)

(3,4); (ii) (6,0); (iii) (1,1,1); (iv) (-1,2,-3).

8. Find a vector of length 2 which points in the opposite direction to (i)

(3,4); (ii) (6,0); (iii) (1,1,1); (iv) (-1,2,-3).

9. Consider the parallelogram determined by vectors (1, 0) and (1, 1).

Find the angle between the diagonals of this parallelogram.

Homework:
1. Write two vectors from R3 so that the angle between them is (a) acute,
(b) right, (c) obtuse.
2. Prove Pythagorean Theorem using vector calculus - description of
orthogonality of two vectors and description of the norm of a vector in terms
of inner product: If two vectors u and v are orthogonal, then ||u + v||2 =
||u||2 + ||v||2 .
3. A circle of radius r centred at (x0 , y0 ) is defined as the set of points
{(x, y) ∈ R2 , d((x, y), (x0 , y0 )) = r}.
Since we have various notions of metric (distance), the circles also can be
different. Plot the circles of radius 1 and centered at origin with respect to
(a) Euclidian distance, (b) Manhattan distance, (c) Chessboard distance.

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 Summary

For x = (x1 , ... , xn ), y = (y1 , ... , yn ) ∈ Rn :

Vector addition: x + y = (x1 + y1 , ... , xn + yn ).
Scalar multiplication: c · x = (c · x1 , ... , c · xn ).
∑
Inner Product: x · y = x1 · y1 + ... + xn · yn = nk=1 xk · yk .

x · y = ||x|| · ||y|| · cos α.

√
Euclidian norm: ||x|| = x · x.
Euclidian metric: d(x, y) = ||(x1 , ... , xn ) − (y1 , ... , yn )||.
Angle Between Two Vectors:
x·y x1 · y1 + ... + xn · yn
cos α = =√ √ .
||x|| · ||y|| x21 + ... + x2n · y12 + ... + yn2

α is acute if x · y > 0; α is obtuse if x · y < 0; α is right if x · y = 0.