problem solving in applied economics

1.3 How Economists Use Theories and Models to Understand Economic Issues

Learning objectives.

By the end of this section, you will be able to:

• Interpret a circular flow diagram
• Explain the importance of economic theories and models
• Describe goods and services markets and labor markets

John Maynard Keynes (1883–1946), one of the greatest economists of the twentieth century, pointed out that economics is not just a subject area but also a way of thinking. Keynes ( Figure 1.6 ) famously wrote in the introduction to a fellow economist’s book: “[Economics] is a method rather than a doctrine, an apparatus of the mind, a technique of thinking, which helps its possessor to draw correct conclusions.” In other words, economics teaches you how to think, not what to think.

Watch this video about John Maynard Keynes and his influence on economics.

Economists see the world through a different lens than anthropologists, biologists, classicists, or practitioners of any other discipline. They analyze issues and problems using economic theories that are based on particular assumptions about human behavior. These assumptions tend to be different than the assumptions an anthropologist or psychologist might use. A theory is a simplified representation of how two or more variables interact with each other. The purpose of a theory is to take a complex, real-world issue and simplify it down to its essentials. If done well, this enables the analyst to understand the issue and any problems around it. A good theory is simple enough to understand, while complex enough to capture the key features of the object or situation you are studying.

Sometimes economists use the term model instead of theory. Strictly speaking, a theory is a more abstract representation, while a model is a more applied or empirical representation. We use models to test theories, but for this course we will use the terms interchangeably.

For example, an architect who is planning a major office building will often build a physical model that sits on a tabletop to show how the entire city block will look after the new building is constructed. Companies often build models of their new products, which are more rough and unfinished than the final product, but can still demonstrate how the new product will work.

A good model to start with in economics is the circular flow diagram ( Figure 1.7 ). It pictures the economy as consisting of two groups—households and firms—that interact in two markets: the goods and services market in which firms sell and households buy and the labor market in which households sell labor to business firms or other employees.

Firms produce and sell goods and services to households in the market for goods and services (or product market). Arrow “A” indicates this. Households pay for goods and services, which becomes the revenues to firms. Arrow “B” indicates this. Arrows A and B represent the two sides of the product market. Where do households obtain the income to buy goods and services? They provide the labor and other resources (e.g., land, capital, raw materials) firms need to produce goods and services in the market for inputs (or factors of production). Arrow “C” indicates this. In return, firms pay for the inputs (or resources) they use in the form of wages and other factor payments. Arrow “D” indicates this. Arrows “C” and “D” represent the two sides of the factor market.

Of course, in the real world, there are many different markets for goods and services and markets for many different types of labor. The circular flow diagram simplifies this to make the picture easier to grasp. In the diagram, firms produce goods and services, which they sell to households in return for revenues. The outer circle shows this, and represents the two sides of the product market (for example, the market for goods and services) in which households demand and firms supply. Households sell their labor as workers to firms in return for wages, salaries, and benefits. The inner circle shows this and represents the two sides of the labor market in which households supply and firms demand.

This version of the circular flow model is stripped down to the essentials, but it has enough features to explain how the product and labor markets work in the economy. We could easily add details to this basic model if we wanted to introduce more real-world elements, like financial markets, governments, and interactions with the rest of the globe (imports and exports).

Economists carry a set of theories in their heads like a carpenter carries around a toolkit. When they see an economic issue or problem, they go through the theories they know to see if they can find one that fits. Then they use the theory to derive insights about the issue or problem. Economists express theories as diagrams, graphs, or even as mathematical equations. (Do not worry. In this course, we will mostly use graphs.) Economists do not figure out the answer to the problem first and then draw the graph to illustrate. Rather, they use the graph of the theory to help them figure out the answer. Although at the introductory level, you can sometimes figure out the right answer without applying a model, if you keep studying economics, before too long you will run into issues and problems that you will need to graph to solve. We explain both micro and macroeconomics in terms of theories and models. The most well-known theories are probably those of supply and demand, but you will learn a number of others.

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Applied Economics: Definition, How It Works, and How It's Used

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

Investopedia / Michela Buttignol

What Is Applied Economics?

The aim of applied economics is to inform economic decisions and predict possible outcomes. Applied economics relates the conclusions drawn from economic theories and empirical studies to real-world situations.

The purpose of applied economics is to improve the quality of practice in business, public policy, and daily life by thinking rigorously about costs versus benefits, incentives, and human behavior. It can involve the use of case studies and econometrics , which is the application of real-world data to statistical models and comparing the results against the theories being tested.

Key Takeaways

• Applied economics is the use of the insights gained from economic theory and research to make better decisions and solve real-world problems. 
• Applied economics is a popular tool in business planning and for public policy analysis and evaluation.
• Individuals can also benefit from applying economic thinking and insights to personal and financial decisions.

Understanding Applied Economics

Applied economics is the application of economic theory to determine the likely outcomes associated with various possible courses of action in the real world. By better understanding the likely consequences of choices made by individuals, businesses, and policymakers, we can help them make better choices. If economics is the science of studying how people use various, limited means available to them to achieve given ends, then applied economics is the tool to help choose the best means to reach those ends. As a result, applied economics can inform a "to-do" list identifying steps that can be taken to increase the probability of positive outcomes in real-world events.

The use of applied economics may first involve exploring economic theories to develop questions about a circumstance or situation and then drawing upon data resources and other frames of reference to form a plausible answer to that question. The idea is to establish a hypothetical outcome based on the specific ongoing circumstances drawn from the known implications of general economic laws and models.

Applied Economics Relevance in Financial Choices

Applied economics can illustrate the potential outcomes of financial choices made by individuals. For example, if a consumer desires to own a luxury good but has limited financial resources, an assessment of the cost and long-term impact such a purchase would have on assets can compare them to the expected benefit of the good. This can help determine if such an expense is worthwhile . Beyond finances, understanding the meaning of the economic theories of rational choice , game theory , or the findings of behavioral economics and evolutionary economics can help a person make better decisions and plan for success in their personal life and relationships.

For example, a person who wants to quit smoking might recognize that they are prone to hyperbolic discounting and might choose to employ precommitment strategies to support their long-term preference to quit over more powerful short-term preferences to smoke. Or a group of friends sharing a large bowl of popcorn might explicitly or implicitly agree to limits, or shares, for how much popcorn each will take in order to avoid a tragedy of the commons situation.

Making Better Business Decisions

Applied economics can also help businesses make better decisions. Understanding the implications of economic laws of supply and demand combined with past sales data and marketing research regarding their target market can help a business with pricing and production decisions. Awareness of economic leading indicators and their relationship to a firm's industry and markets can help with operational planning and business strategy. Understanding economic ideas such as principal-agent problems , transaction costs , and the theory of the firm can help businesses design better compensation schemes, contracts, and corporate strategies. 

Bottom Line

Applied economics is an invaluable tool for public policymakers. Many economists are employed to predict both the macro- and microeconomic consequences of various policy proposals or to evaluate the effects of ongoing policy. Applied macroeconomic modeling is routinely used to project changes in unemployment, economic growth, and inflation at the national, regional, and state levels.

Understanding the way the economic incentives and compensating behaviors created by public policy impact real-world trends in things like job growth, migration, and crime rates is critical to implementing effective policy and avoiding unintended consequences . For example, understanding what the application of the laws of supply and demand implies about the effects of price floors, along with case studies and empirical research, can inform better policy regarding minimum wage laws.

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Problem Solving in Economics

• By (author): 
• Monojit Chatterji ( University of Cambridge, UK )
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• Description
• Supplementary

This book reinforces an understanding of Economics by showing how basic mathematics is used to construct models of the economy. By taking wide-ranging examples drawn for virtually all areas of economics, it shows how model-building is an indispensable aid to understanding economics.

The mathematical techniques used in the book are fairly rudimentary — optimisation methods and equation-solving are the primary tools used. A brief explanation of constrained optimisation using Lagrange multipliers is provided. Throughout, the emphasis is on how these techniques are fruitfully deployed in constructing economic models and solving economic problems. It bridges the gap between mathematical analysis and economic logic. For readers, it builds confidence in constructing their own models for purposes of analysis. The book is well-suited for self-study.

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Sample Chapter(s) Preface Chapter 1: Fundamental Concepts of Consumer Theory

• Budget Sets
• Consumer Preferences
• Utility and Preferences
• Consumer Optimum
• Demand Analysis
• Demand and Decomposition
• Some Special Cases
• Responsiveness of Demand
• Labour Supply
• Endogenous Income
• Costs and Technology
• Costs: Total, Average and Margin Functions
• Costs in the Short and Long Run
• The Significance of Fixed Costs
• The Supply Curve of the Firm
• The Market Demand and Supply Curves
• Elasticity: Alternate Measures and Applications
• Short-Run Equilibrium Price
• Consumer and Producer Surplus
• Taxation and Competitive Markets
• Long-Run Equilibrium in Competitive Markets
• Duopoly and Oligopoly
• Discriminating Monopoly
• Discounting, Interest Rate and Budget Line
• Discounting and Preferences
• Inter-Temporal Consumer Optimum
• Saving and Investment
• Efficiency and Planning
• The Contract Curve and Welfare Theorems
• Production and Planning: the Robinson Crusoe Economy
• Production and Competition in the Robinson Crusoe Economy
• Efficiency and Competition with Increasing Returns
• Externalities and the Environment
• National Income
• Comparing National Incomes
• Labour Market Measures
• Measuring Economic Growth
• Behavioural Equations, Structure and Reduced Form
• The Method of Comparative Statics
• More Complex Models
• Labour Demand
• Market Equilibrium
• Unemployment
• The Goods Market
• Real and Nominal Rates of Interest
• Money and the Price Level
• Overview and Classical Dichotomy
• The Simple Keynesian Model
• Investment Functions and Goods Market Equilibrium
• The Money Market
• Output and Employment in the Generalised Keynesian Model
• Fiscal Policy
• Changing the Money Supply
• Changing the Interest Rate
• Aggregate Supply, Aggregate Demand and Inflation
• Exchange Rates
• Exports, Imports and Capital Flows
• The Open Macroeconomy: Floating Exchange Rates
• The Open Macroeconomy: Fixed Exchange Rates
• Basic Growth Concepts
• Production and Technology
• Capital Accumulation
• Steady State and Dynamics
• The Golden Rule

Readership: This book will be of primary interest to students. It starts at a basic level but smoothly climbs into more advanced topics. So, it can profitably be used not only by starting and intermediate undergraduates but also by graduates seeking to convert from another subject to Economics.

FRONT MATTER

• Pages: i–xiv

https://doi.org/10.1142/9789811273360_fmatter

• About the Author

Chapter 1: Fundamental Concepts of Consumer Theory

• Pages: 1–18

https://doi.org/10.1142/9789811273360_0001

The conventional economic model of the consumer postulates a self-seeking individual who does the best she can, subject to affordability. When faced with a choice of how much of each good to buy, the consumer chooses the “best” bundle of goods that is affordable. We start by focusing on a precise meaning of affordability leaving a description of what is meant by the “best” till later.

Chapter 2: Consumer Optimum and Demand

• Pages: 19–42

https://doi.org/10.1142/9789811273360_0002

In this chapter, we use the concepts developed in Chapter 1 to analyse the consumer’s optimum choice bundle. Specifically, we will address the question of how the consumer’s optimum bundle is characterised and whether the characterisation depends on the nature of preferences (utility function). We illustrate different possibilities in the examples. We also create examples to illustrate how the optimum changes as prices or money income change.

Chapter 3: Generalisations, Applications and Extensions of the Choice Model

• Pages: 43–53

https://doi.org/10.1142/9789811273360_0003

In the analysis of consumer choice, we focused a lot on the tangency solution. Our analysis was restricted to the two good cases, and the “derivation” of the tangency condition was essentially geometric intuition. Furthermore, in all the examples so far, the constraint was essentially linear. Before looking at further applications and extensions, it would be helpful to sketch a general solution method which works with more than two variables and also can encompass nonlinear constraints. The treatment of this important problem is heuristic rather than rigorous. We focus on how to use the method…

Chapter 4: The Firm: Technology, Costs and Supply

• Pages: 55–72

https://doi.org/10.1142/9789811273360_0004

In this chapter, we begin our analysis of the behaviour of another major player: the business firm.

Chapter 5: Demand, Supply and the Competitive Market

• Pages: 73–92

https://doi.org/10.1142/9789811273360_0005

In Chapter 3, we saw how to derive an individual’s demand curve for a commodity starting from their preferences, their income and the market price. Holding all else constant, the demand curve for a price-taking utility maximising individual shows the quantity demanded by the individual at every conceivable market price. The inverse demand curve expresses the same relationship with price as the dependent variable and quantity as the independent variable. Similarly, in Chapter 4, we saw how to derive an individual firm’s supply curve for a commodity starting from their technology, factor prices and the market price of the commodity. Holding all else constant, the supply curve for a price-taking firm relates the quantity supplied by the profit-maximising firm at every conceivable market price. The inverse supply curve expresses the same relationship with price as the dependent variable and quantity as the independent variable. In this chapter, we use these ideas to discuss the configurations that arise when we consider many price-taking consumers and many price-taking firms to arrive at market demand and supply. We will study the market equilibrium and how it changes in both the short and the long run.

Chapter 6: Market Power and Imperfect Competition

• Pages: 93–107

https://doi.org/10.1142/9789811273360_0006

In the previous chapter, we analysed equilibrium price–quantity configurations in a competitive market. The essence of such a market is that each agent — firm and consumer — takes market price as given and reacts to it by choosing a quantity to sell or buy. In effect, this means no agent has any market power to influence the price. In this chapter, we look at situations where at least one agent has market power and can directly influence the price. We will focus on firms as the agents possessing market power. Examples of consumer market power (through consumer associations, etc.) are rare. There are many different ways in which economists have conceived the market power of firms. We shall look at the most common forms in this chapter.

Chapter 7: Inter-temporal Economics

• Pages: 109–124

https://doi.org/10.1142/9789811273360_0007

In the previous chapters, we assumed that decision-making never involved commodities beyond a single period, i.e., today. However, there are very important decisions which by their nature are spread over time. Examples include how to balance present with future consumption. One strategy is to save (consume less than current income) today and invest the savings to generate income for future consumption. We start by assuming that the decisions to save and invest are carried out by the same agent. We further imagine that there are only two periods of time which we call the “current” or “today” (period 0) and the “future” or “tomorrow” (period 1). In reality, the future consists of many periods but nothing conceptually important is lost by the simplicity of the two-period model. We assume there is only one good called corn which can be consumed today or tomorrow.

Chapter 8: Coordination of Exchange and Production

• Pages: 125–157

https://doi.org/10.1142/9789811273360_0008

In all economies, there are many economic agents taking decisions simultaneously. Consumers are deciding what to buy, how much to save, etc. Firms are deciding what and how much to produce and sell, how much to invest, how many workers and machines to hire, etc. In this chapter, we study the issue of how such myriad decision-making is coordinated. Do we get order or chaos? We will analyse the role played by markets and a planner in coordination…

Chapter 9: Macroeconomic Concepts and Measurement

• Pages: 159–167

https://doi.org/10.1142/9789811273360_0009

Macroeconomics is concerned with the analysis of aggregate variables which affect human well-being. In particular, we will focus on the determinants of the level and growth of national income, the price index and inflation, employment and unemployment, and the balance of our economic relationships with other countries. The role of government in policymaking intended to improve macroeconomic outcomes is a central part of the analysis. In all economies, there are many economic agents taking decisions simultaneously. Consumers/workers are deciding what to buy, how much to save, how much to work, etc. Firms (including banks) are deciding what and how much to produce and sell, how much to invest, how many workers and machines to hire, etc. Government seeks to influence these decisions by changing the environment in which the private sector (consumers/workers and firms) operates.

Chapter 10: Equilibrium and Comparative Statics in Macro Models

• Pages: 169–179

https://doi.org/10.1142/9789811273360_0010

When macroeconomists seek to analyse the economy, they construct a little miniature of the economy which embodies the key features of interest. Such an artificial construction is called a model. Typically, a model will consist of a set of equations that link the variables of interest. These equations are usually of two types. The first type is what is called an equilibrium condition. The concept of equilibrium is fundamental to a study of economics. An equilibrium is a situation in which there is no force for change — a situation which can be sustained. For example, in macroeconomics, a situation where planned expenditure equals national income is often described as an equilibrium. In later chapters, we will show how this can be justified. For now, we simply assume that planned expenditure equals national income represents a macroeconomic equilibrium. Denoting national income by Y , consumption by C and investment by I , then in a simple closed economy with no foreign trade, planned expenditure Z is simply the sum of consumption and investment. The equilibrium condition in this particularly simple economy is thus Z = C + I = Y or Y   =   C   +   I .           (10 .1) …

Chapter 11: The Classical Labour Market

• Pages: 181–197

https://doi.org/10.1142/9789811273360_0011

This model of the labour market has enjoyed popularity for a considerable length of time. It is based on the idea of perfect competition which implies that all agents in the market are price takers. The price-taking assumption means that agents take the price as given and simply choose optimising quantities in the belief that any action they take cannot influence the price. At its simplest, the agents are of two opposite types. First, there are firms which use labour (together with other inputs) to produce output which is sold in the search for profits. This is the source of the demand for labour. On the other side are workers. They supply labour in return for remuneration which finances their consumption. Given relevant prices, firms only have to choose how much labour to hire while workers have to decide whether to work or not.

Chapter 12: The Classical Model of Money, Interest and the Price Level

• Pages: 199–216

https://doi.org/10.1142/9789811273360_0012

In the previous chapter, we showed how real wage flexibility determines both the level of employment and output. In this chapter, we extend the analysis to the other main macroeconomic variables, namely interest rates and the price level. The role of the money supply is emphasised particularly in the determination of the price level. We assume a closed economy in which there is no foreign trade. And in the spirit of the classical theory, we assume all relevant prices are fully flexible.

Chapter 13: Sticky Prices and Keynesian Macroeconomics

• Pages: 217–235

https://doi.org/10.1142/9789811273360_0013

In the previous two chapters, we analysed the macroeconomy from the classical perspective which is based on the presumption of fully flexible real prices. In particular, we showed how real wage flexibility determines both the level of employment and output in the labour market. In this chapter, we explore another view — one associated with John Maynard Keynes and referred to as Keynesian macroeconomics. The essence of this view is that real and nominal prices are sticky, even rigid and do not adjust at least in the short run. Hence, output is not predetermined by the prior determination of employment in the labour market. On the contrary, it is output that determines employment.

Chapter 14: Monetary Economics

• Pages: 237–250

https://doi.org/10.1142/9789811273360_0014

In the previous chapter, we analysed the role of Fiscal Policy — government spending and tax — on the macroeconomy from the Keynesian perspective which is based on the presumption of fixed price level in the short run. We saw that changes in government spending and taxation or both can influence output and hence employment. The size of the impact — the multipliers — was dependent on how government spending was financed. In this chapter, we extend the ideas of the previous chapter to focus on monetary policy. Initially, we take monetary policy to mean a change in money supply M s brought about by the Central Bank (CB). The CB does this by buying government bonds from or selling government bonds to the public. CB sale of bonds reduces money supply while CB purchase of bonds increases money supply. If the price level P is fixed, then every change in nominal money supply M s produces a similar change in the real money supply M r because M r = M s / P .

Chapter 15: Open Economy Macroeconomics

• Pages: 251–266

https://doi.org/10.1142/9789811273360_0015

Up to now, the fact that most countries trade with each other has been ignored. In this chapter, we consider how international factors influence the macroeconomy and may constrain macroeconomic policy options. We consider the case of a small open economy, like the UK. The small open economy cannot influence the world economy but is influenced by events and policies in the world economy. For ease of exposition, we consider the macroeconomics of a domestic small open economy (the UK prototype) trading with the large “rest of the world economy” which we call ROW. The currency of the domestic economy is pounds (£) and that of ROW is dollars ($). They are linked by the concept of the exchange rate.

Chapter 16: Capital Accumulation and Economic Growth

• Pages: 267–279

https://doi.org/10.1142/9789811273360_0016

In our analysis of macroeconomics so far, we have distinguished between the short run and the long run. The short run is conceived as a period of time in which prices are fixed and cannot change. By contrast, the long run has been conceived of as a period of time in which prices can fully adjust. However, both in the short-run as well as in the long-run analyses, we have maintained the implicit assumption that the productive capacity of the economy is unchanged. The capital stock is assumed to be constant. Investment adds to aggregate demand but its impact on capital accumulation and hence capacity has been ignored. In this chapter, we analyse the role of capital accumulation in moving the economy forward. Investment is the source of additions to the capital stock or capital accumulation. This in turn leads to greater output which in turn leads to greater savings. If these savings are partly or wholly converted into investment, the process continues driving output upwards. This may be thought of as the economics of the very long run.

BACK MATTER

• Pages: 281–288

https://doi.org/10.1142/9789811273360_bmatter

Applied Economics

The study of economic principles when they are applied to specific scenarios or situations

What is Applied Economics?

Applied economics is generally considered to be the study of economic principles when they are applied to specific scenarios or situations. In the study and research of economics, there exist two fundamental areas of distinction. The first being “core,” and the second being “applied.”

When something is a part of applied economics, one is taking academic principles discussed on the core side of economics and applying them to real-life and practical examples. It helps to better contextualize and exemplify the theoretical, and often abstract, concepts that are put forth within the core field of economic study.

Understanding Applied Economics

Applied economics reduces abstract concepts into examples that can be discussed and related to the business community at large. However, depending on whom you ask, what constitutes applied economics versus what constitutes core economics is open to interpretation.

A popular philosophy taught in many business schools as to what constitutes the field of economics more broadly is that economics is the study of whatever economists themselves do. For simplicity’s sake, the mainstream view of applied economics is generally thought of as consisting of the below:

• Labeling variables as core-specific
• Providing numerical estimates
• Interpreting real-world events
• Providing a structure to draw conclusions

Why is Mainstream Economics Important?

Understanding the world in which we live is pivotal to many economic theories. Economics helps explain market phenomena, such as corrections and recessions , or even why we as consumers are more inclined to purchase one product or another. Applied economics is at the center of everything we do, and it is pivotal to explaining and conveying market principles.

Business leaders and managers can draw on the lessons in applied economics in order to better avoid potential pitfalls and make stronger decisions as managers. Even everyday consumers can better understand the prices they are paying at the grocery store. It can help explain why certain prices rise and fall and why sales occur.

Variability in the Usage of the Term

Historically, the term applied economics is often applied to different areas of study. It is important to understand that the term is fluid and can depend on what period it is referencing or which author is writing about it.

The definition of the term is not fixed, and thus, the reader must also understand its possible wide range of uses and contextualization that may present themselves. The list below represents some classical uses of the term from the latter part of the 20 th century:

• Economic areas that are more specific and require more detail
• Demographics
• Accounting, actuarial science , and insurance

Real-World Problems Understood: The Value of Applied Economics

Applied economics helps us deal with real-world problems by making the abstract tangible. Understanding abstract theory is often not enough, and it must be tested and put into practice in order to effectively understand and critique economic concepts. Consumers, economists , and scholars alike can use applied economic theories to test existing concepts or even come up with new ones.

Understanding Applied Economics: A Summary

• In the study of economics, there exist two fundamental areas of distinction – core and applied.
• Applied economics is at the center of everything we do, and it helps explain economic theory and apply it to our everyday lives.
• Applied economics can help us understand more about the prices we pay, how delivery charges work, and why things may go on sale.
• Business leaders and managers can draw on the lessons from applied economics to make them better managers.
• Applied economic theories allow us to test and formulate hypotheses.

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CFI is the official provider of the global Commercial Banking & Credit Analyst (CBCA)™  certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional CFI resources below will be useful:

• Keynesian Economic Theory
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Department of Economics

Ec134: topics in applied economics (1a).

Emil Kostadinov

Principal aims.

This module provides an introduction to a set of applied economics topics, which are not systematically covered in other core or optional modules. It allows students to gain insight into how the abstract principles of economic theory and econometric analysis can be applied to various specific contexts. The topics covered reflect the varying interests of teaching staff and may change each year.

Principal Learning Outcomes

Subject Knowledge and Understanding:…demonstrate a familiarity with knowledge and basic understanding of economic principles; core concepts and methods in micro and macroeconomics. The teaching and learning methods that enable students to achieve this learning outcome are: Lectures and guided reading. The summative assessment methods that measure the achievement of this learning outcome are: Examination.

Subject Knowledge and Understanding:…demonstrate a familiarity with knowledge and basic understanding of: Economic information: specific economic trends and patterns; understanding of particular problems and solutions in economic measurement. The teaching and learning methods that enable students to achieve this learning outcome are: Lectures and guided reading. The summative assessment methods that measure the achievement of this learning outcome are: Examination.

Subject-specific and Professional Key General Skills:…demonstrate a basic understanding of research skills such as: Data skills: Use of library and internet as information sources; knowledge of how to locate relevant data, extract appropriate data, analyse and present material. The teaching and learning methods that enable students to achieve this learning outcome are: Lectures and guided reading. The summative assessment methods that measure the achievement of this learning outcome are: Examination.

Subject-specific and Professional Key General Skills:…demonstrate a basic understanding of research skills such as: Mathematical/Statistical skills: use/application of mathematics and diagrams in economic analysis; understanding of statistical analysis of data. The teaching and learning methods that enable students to achieve this learning outcome are: Lectures and guided reading. The summative assessment methods that measure the achievement of this learning outcome are: Examination.

Subject-specific and Professional Key General Skills:…demonstrate a basic understanding of research skills such as: Written communication skills. The teaching and learning methods that enable students to achieve this learning outcome are: Lectures and guided reading. The summative assessment methods that measure the achievement of this learning outcome are: Examination

Cognitive Skills:…demonstrate capacity of policy evaluation and the analysis of institutions. The teaching and learning methods that enable students to achieve this learning outcome are: Lectures and guided reading. The summative assessment methods that measure the achievement of this learning outcome are: Examination.

Subject Knowledge and Understanding:…demonstrate a familiarity with knowledge and basic understanding of research issues; familiarity with contemporary empirical debates and latest research in some specialized areas of economics; understanding of how to approach an economic problem from the perspective of a contemporary researcher in economics. The teaching and learning methods that enable students to achieve this learning outcome are: Lectures and guided reading. The summative assessment methods that measure the achievement of this learning outcome are: Examination.

Cognitive Skills:…demonstrate capacity of analytical thinking, reasoning and application. The teaching and learning methods that enable students to achieve this learning outcome are: Lectures and guided reading. The summative assessment methods that measure the achievement of this learning outcome are: Examination.

Cognitive Skills:…demonstrate capacity of abstraction and problem solving. The teaching and learning methods that enable students to achieve this learning outcome are: Lectures and guided reading. The summative assessment methods that measure the achievement of this learning outcome are: Examination.

The syllabus each year will cover up to three topics selected from within the broad area of ‘Applied Economics’. The selection will be drawn from all sub-fields within the discipline, including labour, industrial, development, trade, behavioural, experimental, financial, public, health, education, history, environmental, ethics, philosophy, happiness, and auctions. This list will expand as reflecting staff interests. In years in which other first year 15 CATS optional modules do not run, one possibility will be to compress them into topics within this module. In selecting topics, the main criteria will include:

(i) scope for the topic to provide a context in which, through application, students can begin to develop their understanding of key concepts in economics and applied economics,

(ii) importance of the topic within the general field of Economics,

(iii) policy relevance of the topic,

(iv) complementing topics covered elsewhere within the degree programmes.

Exam Rubric

Time Allowed: 2 Hours

Read all instructions carefully - and read through the entire paper at least once before you start entering your answers.

There are THREE sections in this paper. Answer BOTH questions in Section A (33 marks total), BOTH questions in Section B (33 marks total) and BOTH questions in Section C (34 marks total).

Approved pocket calculators are allowed.

Previous exam papers can be found in the University’s past papers archive . Please note that previous exam papers may not have operated under the same exam rubric or assessment weightings as those for the current academic year. The content of past papers may also be different.

Reading Lists

Master of Science in Applied Economics

Why Applied Economics Is the Preferred Degree No Matter Your Career Path

Whether you are just getting started in your career or are a seasoned professional aiming for a C-suite job, a  master’s degree in applied economics  offers important advantages. The degree program is designed to develop “T-shaped professionals:” those professionals with sophisticated technical skills and soft skills, both of which are fundamental for success in solving today’s complex problems and working across industry sectors, organizational environments, and geographic contexts.

Employers have cited the need for more T-shaped professionals. In a recent  Financial Times article , top employers around the globe identified and discussed the most and least important skills they seek as part of their responses to the 2018 MBA Skills Gap survey. Survey results show that soft skills are the most in demand by leading employers; however, the article continues to say that without demonstrated technical skills, job candidates are not even scoring initial interviews.

How can professionals determine which graduate course of study best prepares them to meet these divergent skills gaps? Let’s start with one of the most frequently asked questions: What exactly is the relationship between the MBA and the Master’s in Applied Economics?

Applied Economics vs. MBA

“I think these two programs are perfect complements for one another,” said Michael Hanson, a student in the Boston College M.S. in Applied Economics degree program and a graduate of Boston College’s dual MBA and MSF degree programs. “I think of the MBA as where you learn core business functional skills and broad skills in leadership, negotiation, and management. The M.S. in Applied Economics degree program, on the other hand, is where you learn how to approach problem-solving, how to make data-driven decisions, and how to simplify what the evidence is telling you so that it makes sense for an organization to use as the basis of strategy.”

Ed Ryan, a seasoned professional of more than 40 years, agrees. “The MBA gives you what you need to get started in finance, marketing, and operations. But, there is no question that the world is moving toward artificial intelligence and big data,” said Ryan. “The Master’s in Applied Economics program is at that intersection between what the market needs and the skills its graduates learn. We need to be sure the business world understands what these graduates can offer.”

How does the Master’s in Applied Economics degree program uniquely prepare its graduates to be in-demand T-shaped professionals?

Applied Economics: Analytical Approaches

Applied Economics students develop a toolkit of analytical approaches that leverage what they already have learned in theoretical microeconomics, macroeconomics, and statistics. This means that before any time-consuming work begins, graduates of an Applied Economics program can review the problem to be solved from several different angles to determine the best approach. Should this problem be addressed from the top down, for example, or from the bottom up? What should be the plan for getting to the most meaningful result? Students in the program learn to think through the problem and design the process versus just diving in.

In addition to learning how to think like an economist and a consultant, students in the program have the opportunity to learn specific technical skills that are in high demand, such as forecasting and predictive analytics, transfer pricing, measuring business cycles, and more.

Applied Economics: Big Data and Coding Techniques

As mentioned in the Financial Times article, finding professionals who can work with big data is one of the most difficult searches for leading employers. In the  Boston College M.S. in Applied Economics  program, students have the opportunity to work with real-world data sets that are often unstructured, complex, and require some knowledge of coding to manage effectively. Virtually every industry – and many nonprofits and government agencies – continue to move further into data-driven strategic models. Knowing how to work with this kind of data in a time- and cost-effective way can give these professionals an edge in the job market.

Applied Economics: Team Collaboration Skills

The Boston College M.S. in Applied Economics degree program brings together a diverse group of students in each of its courses. Less than half of the student population is from the U.S. International students come from across the globe and bring a wealth of diversity in backgrounds and cultures, in styles and approaches to problem-solving, and in professional interests and connections. In addition, the program has a mix of students who are early in their careers looking for the perfect job, and students who are seasoned professionals seeking new skills and advancement to the next level. Courses in the program often require team-based projects and deliverables so that graduates of the program have deep experience in communicating and collaborating with diverse team members and in having to accommodate and find leverage in differences around skills, schedules, and styles.

Applied Economics: Communication and Presentation Skills

Finally, the Boston College M.S. in Applied Economics degree program requires students to deliver polished presentations on the analytical work they are doing for course projects. Faculty act as presentation coaches for the students so that each student receives extensive feedback on areas for improvement. Students are coached on making sure they have boiled down their findings to simple language and concepts so that anyone can follow the presentation. Students are also asked to deliver strategic insights from their work so that leaders can use their findings in order to make decisions.

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Using Documented Problem Solving in Economics

Documented problem solving has been used effectively in Principles of Economics courses at a large, public, research institution over the last few years. It's been used with the topics of production possibilities, supply and demand, price elasticity and consumer demand, market structures, the labor market, unemployment, fiscal and monetary policy, GDP per capita and economic growth, effective tax rates, international trade plus many more. Clearly, it can be applied to virtually any economics course. Students find the process challenging at first, but because the process itself is not graded, they soon relax and enjoy it as a tool that serves to enhance their learning process.

Documented Problem Solving Fosters Development of Critical Thinking and Problem-Solving Skills

Angelo & Cross (1993, p. 222) write "To become truly proficient problem solvers, students need to learn to do more than just get correct answers to textbook problems. At some point, they need to become aware of how they solved those problems and how they can adapt their problem-solving routines to deal with messy, real-world problems. . . Understanding and using effective problem-solving procedures is, after all, a critical component of mastery in most disciplines." Documented problem solving requires students to reflect on how they solve a problem and then write down the steps they use.

As students describe how they break an economic problem down into small, basic steps, they frequently write:

• First, I reviewed the definition of...
• I opened my notes to the section on...
• The first thing my group thought about was...
• I remembered the graph you drew and...
• The directions say to find where the...
• According to the equation...
• I read the question and then I read it again...

Thus, documented problem solving provides a window through which the instructor can see students' thinking processes. It is rewarding for instructors to see students become more purposeful and deliberate in their approach to solving problems and to even develop problem-solving patterns that can be transferred to other areas in economics and other fields of study. Through the use of documented problem solving, students become more efficient learners; more expert-like in their thinking process.

Documented Problem Solving - Question Types

Documented problem solving works well with multiple choice, true/false and short answer questions. Questions from test banks will typically work and are readily available. Alternatively, faculty may choose to write their own questions. Questions do not need to be overly challenging in order to be suitable for documented problem solving, but they must require a multi-step thought process in order to arrive at the answer.

Economics questions that work well with this approach are those that:

• Require students to follow a predictable path to arrive at the correct answer.
• Involve calculations and require students to select the proper equation to use.
• Include data and require students to interpret it.
• Challenge students to think beyond what was delivered in the lecture or discussed in the text.
• Require students to combine several independent concepts or ideas to achieve the correct answer.
• Address topics that students typically struggle with.

A suitable economic question that students can write a documented problem solution for because it requires a multi-step process.

For product XYZ, the price elasticity of demand has an absolute value of 3. Ceteris paribus , this means that quantity demanded will increase by:

a) 1 percent for each 3 percent decrease in price. b) 1 unit for each $3 decrease in price.

c) 3 percent for each 1 percent decrease in price. d) 3 units for each $1 decrease in price.

Student's answer: First I opened my notes to read the definition for price elasticity of demand. Price elasticity measures the change in quantity demanded because of a change in price. The formula is (% change in quantity demanded) ÷ (% change in price). So for the answer to be 3, 3 goes on top (% change in quantity demanded) and 1 goes on bottom (% change in price). The real number is negative 3 because price and quantity demanded move in opposite directions. For this question, if price goes up by 1%, the quantity demanded goes down by 3%. Then I looked at the answer choices to see which one matched. If price goes down by 1%, then quantity demanded will go up by 3%, so c is the correct answer.

Economics questions that don't work well with this approach

Definition-type questions and questions that ask students to pick from a list are not good choices if they merely require students to recall memorized information. In such a case, there are no multiple steps for the student to describe. Remember, one of the primary reasons for using documented problem solving is to help students breakdown their solution process into individual steps which will ultimately assist them in developing analytical and critical thinking skills.

An unsuitable economic question that students cannot write a documented problem solution for because no problem-solving skills are required.

Which of the following countries produces the most output each year?

a) China b) United States c) Russia d) Mexico

Student's answer: The United States because that's what the table in the text says.

However, given that much of economics relies on analytical reasoning, it is easy to find plenty of questions that are appropriate.

Getting started with documented problem solving

The majority of the information that is needed to begin using documented problem solving is presented beginning with the Main page of this module.

« Previous Page       Next Page »

Browse Course Material

Course info.

• Prof. Jonathan Gruber

Departments

As taught in.

• Microeconomics

Learning Resource Types

Principles of microeconomics, problem set 1.

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Preparation

The problem set is comprised of challenging questions that test your understanding of the material covered in the course. Make sure you have mastered the concepts and problem solving techniques from the following sessions before attempting the problem set:

• Introduction to Microeconomics
• Applying Supply and Demand

Problem Set and Solutions

• Problem Set Questions (PDF)
• Problem Set Solutions (PDF)

Problem Solving Video

In the video below, a teaching assistant demonstrates his approach to the solution for problems 1 and 4 from the problem set. The teaching assistant notes common mistakes made by students and provides problem solving techniques for approaching similar questions on the problem set and exams.

• Download video
• Download transcript

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Applied Economics: Insights, Impact, and Everyday Applications

Last updated 03/28/2024 by

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What is applied economics?

Understanding applied economics, applied economics relevance in the real world, applied economics in business, applied economics for public policy, applied economics in daily life, case study: housing market trends, key insights.

• Understanding economic indicators in the housing market.
• Predicting price fluctuations using supply and demand analysis.
• Influencing informed decision-making for buyers and sellers.

Pros and cons of applied economics

• Improved decision-making
• Real-world problem-solving
• Applicability to business, policy, and personal decisions
• Potential oversimplification of complex issues
• Dependency on accurate economic models and data
• Challenges in predicting human behavior accurately

Behavioral economics and personal finance

The psychological factors at play, understanding the irrationalities, the intersection of economic theories and human behavior, practical applications in everyday life, the role of applied economics in behavioral finance, guiding informed financial choices, real-world implications, choosing a career path, navigating the housing market, personal financial decisions, enhancing decision-making in relationships, addressing global challenges, frequently asked questions, what distinguishes applied economics from theoretical economics, how does applied economics contribute to better decision-making in personal finance, can applied economics be beneficial for small businesses, what role does behavioral economics play in applied economics, how can policymakers utilize applied economics for effective decision-making, key takeaways.

• Applied economics informs decisions and predicts outcomes in real-world situations.
• It is a valuable tool in business planning, public policy analysis, and personal finance.
• Understanding economic theories enhances decision-making for individuals, businesses, and policymakers.
• Behavioral economics provides insights into how psychological factors influence economic choices.
• Applied economics is crucial for small businesses, aiding in pricing strategies, production decisions, and operational planning.

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MPS in AEM Curriculum & Concentrations

The Master of Professional Studies (MPS) in Applied Economics and Management program entails 30 credit hours of training in applied economics and management through coursework and a capstone problem-solving project. All students are required to select one of six industry-focused concentrations. Students must meet general MPS AEM degree requirements in addition to concentration-specific coursework.

Core/Pre-requirements

• Statistics, or BTRY 6010 – Statistical Methods I
• Intermediate microeconomics or AEM 5600 – Managerial Economics
• Undergraduate calculus or “Math camp for MBAs” (or Khan Academy calculus)

Required Coursework

• AEM 5111 – Introduction to Econometrics (Fall, 3 credits)
• AEM 5410 – Marketing Research (Spring, 3 credits)
• AEM 5840 – Python for Business Analytics (Fall, 3 credits)
• AEM 5850 – R Programming for Business Analytics and Business Modeling (Spring, 3 credits)
• AEM 6120 – Applied Econometrics (Fall, 4 credits)
• AEM 6061 – Risk Simulation and Monte Carlo Methods (Spring, 3 credits)
• AEM 6940 – Introduction to Machine Learning (Spring, 3 credits)
• CEE 5102 – Basics of Programming in Python (Spring, 1 credit)
• CRP 5250 – Methods for Spatial Economic and Demographic Analysis (Spring, 4 credits)
• HADM 5760 – Visual Basic for Applications: End-User Programming (Fall/Spring, 3 credits)
• NBA 6200 – Marketing Research (Spring, 3 credits)
• NBA 6550 – Business Data Analysis with SQL (Spring, 1.5 credits)
• NBA 6921 – Machine Learning Applications in Business (Spring, 3 credits)
• STSCI 5010 – Applied Statistical Computation with SAS (Fall, 4 credits)
• STSCI 5040 – R Programming for Data Science (Fall, 4 credits)
• STSCI 5045 – Python Programming and its Applications in Statistics (Fall, 4 credits)
• STSCI 5120 – Introduction to R Programming (Fall, 2 credits)
• STSCI 5740 – Data Mining and Machine Learning (Fall/Spring, 4 credits)
• AEM 5305 – Global Citizenship (Fall, 1 credit)**
• AEM 5700 – Management Communications (Fall/Spring, 1.5 credits)
• Problem-solving project (6 credits): AEM 6991 (Fall, 3 credits)** and AEM 6992 (Spring, 3 credits)**
• Core coursework specific to each concentration (9 credits)
• Courses must be relevant to your career goals and approved by your concentration leader. Students can select 5000 level courses from across Cornell University for electives.

* Course number TBD ** CEMS students do not take these courses. See CEMS requirements information.

Applied Economics and Management Concentrations

Behavioral finance.

Professor David Ng Behavioral Finance Concentration Leader

Required Courses (6 credits):

• AEM 6140 – Behavioral Economics and Managerial Decisions (fall, 3 credits)
• AEM 5230 – Contemporary Topics in Behavioral Finance (fall, 3 credits)

Electives (min. 3 credits)

• AEM 5570 – Corporate Finance (fall/spring, 3 credits)
• AEM 5280 – Valuation of Capital Investment (spring, 3 credits)
• AEM 5290 – International Financial Management (spring, 3 credits)
• AEM 5670 – Investments in the Global Economy (fall/spring, 3 credits)
• AEM 6940 – Applied Behavioral Economics in Finance and Marketing (spring)
• NBA 5060 – Financial Statement Analysis (fall/spring, 1.5 credits)
• NBA 5090 – Advanced Financial Statement Analysis (fall/spring, 1.5 credits)
• NBA 5111 – Foundations of Financial Modeling (fall/spring, 3 credits)
• NBA 5120 – Applied Portfolio Management (fall/spring, 3 credits)
• NBA 5130 – International Finance Cases (fall, 1.5 credits)
• NBA 5420 – Investment and Portfolio Management (Spring, 3 credits)
• NBA 5550 – Fixed Income Securities and Interest Rate Options (fall, 3 credits)
• NBA 5590 – The Venture Capital Industry and Private Equity Markets (spring, 0.5 credits)
• NBA 6060 – Evaluating Capital Investment Projects (fall, 1.5 credits)
• NBA 6730 – Derivatives Securities Part I (fall, 1.5 credits)
• NBA 6740 – Derivatives Securities Part II (fall, 1.5 credits)

Behavioral Marketing

Assistant Professor Nathan Yang Behavioral Marketing Concentration Leader

Required Courses(6 credits):

• AEM 6440 – Consumer Behavior (spring, 3 credits)

Concentration Electives (min. 3 credits):

• AEM 5435 – Data-Driven Marketing (fall, 1.5 credits)
• AEM 5550 – Marketing Strategy (fall, 1.5 credits)
• AEM 6700 – Economics of Consumer Demand (fall, 1.5 credits)
• NBA 6290 – Special Topics in Marketing (fall, 1.5 credits)
• NBA 6620 – Brand Management (fall, 1.5 credits)
• PUBPOL 5400 – Economics of Consumer Policy (fall, 4 credits)
• NBA 6340 – Customer Strategy and Analytics (spring, 1.5 credits)
• HADM 6430 – Wine Marketing (spring, 3 credits)
• HADM 6435 – Luxury Marketing (spring 3 credits)
• NCC 5530 – Marketing Management* (spring, 3 credits)

**Will not count as a CEMS elective for CEMS students as they were required to take a basic marketing management course as a CEMS prerequisite .

Business of Food

Associate Professor Bradley Rickard Business of Food Concentration Leader

Required Courses (3 credits):

Electives (min. 6 credits):

• AEM 5210 – Business and Economics of Food (spring, 3 credits)
• AEM 5270 – Supply Chain Strategy and Supermarket Simulation (fall, 3 credits)
• AEM 6455 – Toward a Sustainable Global Food System (fall, 3 credits)
• AEM 6485 – Economics of Food and Malnutrition (fall, 3 credits)
• GDEV 5030 – Food Cycle: Systems Thinking Toward Circular Economy for Organic Resources (fall, 3 credits)
• AEM 6880 – Global Food, Energy, and Water Nexus – Engage the US, China, and India for Sustainability (fall, 3 credits)
• HADM 6310 – Environmental, Social and Governance Strategy in the Food and Beverage Industry (fall, 3 credits)
• FDSC 5100 – Sensory Evaluation of Food (fall, 2-3 credits)
• AEM 5480 – From Labels to Lab-Grown Meat: Consumer Behavior and the Food Industry (spring, 3 credits)
• AEM 6480 – Food and Consumer Packaged Goods Industry Dynamics (spring, 3 credits)
• AEM 5260 – Cooperative Business Management (spring, 3 credits)

International and Development Economics (IDE)

Professor Mark Constas International and Development Economics Concentration Leader

Select 3-4 courses (min. 9 credits):

• AEM 5420 – Emerging Markets (fall, 3 credits)
• AEM 6050 – Agriculture Finance and Development (spring, 1.5 credits)
• AEM 6300 – Policy Analysis: Welfare Theory, Agriculture and Trade (spring, 4 credits)
• AEM 6455 – Toward a Sustainable Global Food System: Food Policy for Developing Countries (fall, 3 credits)
• AEM 6880 – Global Food, Energy, and Water Nexus – Engage the US, China and India for Sustainability (fall, 3-4 credits)
• AEM 6600 – Natural Resources and Economic Development (spring, 3 credits)
• AEM 6940 – Product Design and International Development (spring, 1.5 credits)
• AEM 6410 – Commodity Futures and Options (spring, 3 credits)
• AEM 6960 – Perspectives in Global Development (spring, 1 credit)
• CRP 6720 – International Institutions (spring, 3 credits)
• CRP 6770 – Seminar on Issues in African Development (fall, 2 credits)
• ECON 7660 – Microeconomics of International Development (spring , 3 credits)
• GDEV 6820 – Community Organizing and Development (fall, 3 credits)
• IARD 6960 – Perspectives in International Development (spring, 1 credit)
• INFO 5505 – Computing and Global Development (fall, 3 credits)
• NBA 5255 – Global Macroeconomics News and Events (spring, 1.5 Credits)
• NBA 6030 – Strategies for Sustainability (spring, 1.5 credits)
• NBA 6370 – Current Global Issues for Business: the US, Europe, China and Emerging Markets (spring, 1.5 credits)
• NBA 6380 – Finance and Sustainable Global Enterprise Colloquium (spring, 1 credit)

* Course listing number TBD

Sustainable Business and Economic Policy

Students in the SBEP concentration study the interrelationships among business, the economy, and the environment; examine the role of sustainability in business and economic development; and learn how to design policies and management strategies to promote sustainability, environmental protection, clean technologies, and the optimal and sustainable use of natural resources, taking into account how individuals and businesses respond to these policies.

Professor Catherine Louise Kling Sustainable Business and Economic Policy Concentration Leader

• AEM 5115 – Green Energy Strategies (fall, 3 credits)
• AEM 5585 – Sustainable Business (fall, 3 credits)
• AEM 6880 – Global Food, Energy, and Water Nexus-Engage the US, China, and India for Sustainable Future (fall, 3 credits)
• AEM 6490 – Financial Markets and Sustainability (fall, 3 credits)
• BEE 5459 – Energy Seminar (fall, 1 credit)
• CEE 5200 – Econonomics of the Energy Transition (fall, 3 credits)
• CHEME 6661 – Bioenergy and Biofuels Module (fall, 1 credit)
• PUBPOL 5717 – Energy Transition: Policy, Financial, and Business Interactions (fall, 3 credits)
• NTRES 6350 – Planning for Environmental Conservation and Sustainability (fall, 3 credits)
• AEM 5500 – Resource Economics (spring, 3 credits)
• AEM 5510 – Environmental Economics (spring, 3 credits)
• AEM 6960 – Perspectives in Global Development (fall/spring 1 credit)
• BEE 5299 – Sustainable Development (spring, 3 credits)
• NBA 5255 – Global Macroeconomics News and Events(spring, 1.5 credits)
• NBA 6030 – Strategies for Sustainability (fall/spring, 1.5 credits)
• NBA 6370 – Current Global Issues for Business: the US, Europe, China, and Emerging Markets (spring, 1.5 credits)
• PADM 5418 – Strategic Stakeholder Engagement (spring, 1.5 credits)

Technology Management

Do you have a background in technology? Looking to market your own innovations in technology? With an MPS in Applied Economics and Management concentrating in Technology Management, you will develop the business skills that are required to manage your business ventures in technology.

This concentration allows you to deepen your understanding of the management and strategies related to technology, innovation, and entrepreneurship. Technology management focuses on business processes and practices that facilitate the creation of new technologies; innovation strategies that allow business organizations to successfully launch new technologies in the economy; and the development of an entrepreneurial mindset that is needed to instigate change in organizations and markets. We encourage students to combine the technology management concentration with additional skill-building in data science and analytics to maximize job market opportunities in technology industries.

Professor Aija Leiponen Program Director, MPS and Technology Management Concentration Leader

Required Courses:

• AEM 5220 – Digital Business Strategy (fall, 3 credits)

Electives (min. 6 credits)

• AEM 5225 – Systems and Analytics in Accounting (fall, 3 credits)
• AEM 5615 – Digital Platform Strategy (spring, 1.5 credits)
• AEM 5605 – Predictive Analytics in Business Strategy (spring, 3 credits)
• AEM 5650 – Strategic Management of Innovation (spring, 3 credits)
• INFO 5100 – Visual Data Analytics for the Web (fall, 3 credits)
• INFO 5145 – Privacy and Security in the Data Economy (fall, 3 credits)
• INFO 5240 – Designing Technology for Social Impact (fall, 3 credits)
• INFO 5556 – Business Intelligence Systems (fall, 4 credits)
• NBA 5180 – Design and Innovation (fall, 1.5 credits)
• NBA 5410 – Project Management (fall, 1.5 credits)
• NBA 6070 – Designing Data Products (spring, 1.5 credits)
• NBA 6145 – AI Strategy and Applications (fall, 1 credit)
• NBA 6500 – Operations Practicum (project; guest speakers; class; site visits – 4 credits)
• Optional electives on operations management

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A four-label-based algorithm for solving stable extension enumeration in abstract argumentation frameworks, 1. introduction, 2. related work on reduction-based methods and direct solving for af, 3. background, 3.1. abstract argumentation framework and stable extensions, 3.2. the relationship between arguments and labelings, 4. comparison of two-label and three-label enumeration algorithms for stable extensions, 4.1. labeling model for stable extensions, 4.2. comparison of two-label and three-label algorithms.

• Step 1: Argument a 1 is labeled as i n and propagates the o u t label to argument a 2 , with all propagated labels being legal.
• Step 2: Argument a 3 is labeled as i n and propagates the o u t label to arguments a 4 and a 5 . The arguments a 2 , a 4 , and a 5 , labeled as o u t , are all legal.
• Step 3: Argument a 6 is labeled as i n without propagating any other argument labels, so no labeling legality check is needed. At this point, all arguments have been legally labeled, so the set of arguments labeled as i n   { a 1 , a 3 , a 6 } forms a stable extension.
• Step 1: Argument a 1 is labeled as i n and propagates the label o u t to argument a 2 . No labeling legality check is needed in this round.
• Step 2: Argument a 3 is labeled as i n and propagates the labels m u s t _ o u t and o u t to arguments a 4 and a 5 , respectively. A legality check is performed for argument a 4 , which is labeled as m u s t _ o u t .
• Step 3: Argument a 6 does not propagate any other argument labels, so no legality check is needed.

5. The Labeling Algorithm for Four-Label Enumeration Stable Extension

5.1. the concept of the four-label enumeration stable extension algorithm.

• Step 1: During preprocessing, the initial argument a 1 is labeled as m u s t _ i n , and other ordinary arguments are labeled as b l a n k . The arguments in the m u s t _ i n label set are then prioritized for the i n transition. Consequently, argument a 1 is labeled as i n and propagates the label o u t to argument a 2 .
• Step 2: The argument a 3 is selected from the ordinary argument set. Then argument a 3 is labeled as i n and propagates labels m u s t _ o u t and o u t to arguments a 4 and a 5 , respectively. The labeling legality of argument a 4 , which is labeled as m u s t _ o u t , is then checked and found to be legal. Next, the algorithm attempts to further propagate labels based on the propagated arguments a 4 and a 5 . Argument a 4 propagates the label m u s t _ i n to argument a 6 , which is then labeled as i n . At this point, a stable extension { a 1 , a 3 , a 6 } is obtained.

5.2. Four-Label Algorithm Description

6. Experiment Analysis

6.1. experiment setup, 6.2. experiment results and analysis.

• ArgTools_3lab: The basic Argtools solver which uses three labels.
• ArgTools_3lab+: Argtools solver with the preprocessing strategy applied.
• ArgTools_3lab++(ArgTools_4lab): Argtools solver with the proposed four-label method applied.
• ArgSemSAT: Stable extension solving algorithm based on the reduction model.
• DREDD: The basic DREDD solver using three labels.
• DREDD_4lab: DREDD solver with the proposed four-label method applied.

7. Conclusions and Future Work

Author contributions, institutional review board statement, informed consent statement, data availability statement, conflicts of interest.

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Luo, M.; He, N.; Wu, X.; Xiong, C.; Xu, W. A Four-Label-Based Algorithm for Solving Stable Extension Enumeration in Abstract Argumentation Frameworks. Appl. Sci. 2024 , 14 , 7656. https://doi.org/10.3390/app14177656

Luo M, He N, Wu X, Xiong C, Xu W. A Four-Label-Based Algorithm for Solving Stable Extension Enumeration in Abstract Argumentation Frameworks. Applied Sciences . 2024; 14(17):7656. https://doi.org/10.3390/app14177656

Luo, Mao, Ningning He, Xinyun Wu, Caiquan Xiong, and Wanghao Xu. 2024. "A Four-Label-Based Algorithm for Solving Stable Extension Enumeration in Abstract Argumentation Frameworks" Applied Sciences 14, no. 17: 7656. https://doi.org/10.3390/app14177656

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Ensemble of physics-informed neural networks for solving plane elasticity problems with examples

• Original Paper
• Published: 29 August 2024

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• Aliki D. Mouratidou   ORCID: orcid.org/0000-0002-8382-1263 1 ,
• Georgios A. Drosopoulos 2 , 3 &
• Georgios E. Stavroulakis 1  

Two-dimensional (plane) elasticity equations in solid mechanics are solved numerically with the use of an ensemble of physics-informed neural networks (PINNs). The system of equations consists of the kinematic definitions, i.e. the strain–displacement relations, the equilibrium equations connecting a stress tensor with external loading forces and the isotropic constitutive relations for stress and strain tensors. Different boundary conditions for the strain tensor and displacements are considered. The proposed computational approach is based on principles of artificial intelligence and uses a developed open-source machine learning platform, scientific software Tensorflow, written in Python and Keras library, an application programming interface, intended for a deep learning. A deep learning is performed through training the physics-informed neural network model in order to fit the plain elasticity equations and given boundary conditions at collocation points. The numerical technique is tested on an example, where the exact solution is given. Two examples with plane stress problems are calculated with the proposed multi-PINN model. The numerical solution is compared with results obtained after using commercial finite element software. The numerical results have shown that an application of a multi-network approach is more beneficial in comparison with using a single PINN with many outputs. The derived results confirmed the efficiency of the introduced methodology. The proposed technique can be extended and applied to the structures with nonlinear material properties.

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The work of A.D.M. and G.E.S. has been supported by the Project Safe-Aorta, which was implemented in the framework of the Action “Flagship actions in interdisciplinary scientific fields with a special focus on the productive fabric”, through the National Recovery and Resilience Fund Greece 2.0 and funded by the European Union-NextGenerationEU (Project ID:TAEDR-0535983)

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Mouratidou, A.D., Drosopoulos, G.A. & Stavroulakis, G.E. Ensemble of physics-informed neural networks for solving plane elasticity problems with examples. Acta Mech (2024). https://doi.org/10.1007/s00707-024-04053-3

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Received : 26 February 2024

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DOI : https://doi.org/10.1007/s00707-024-04053-3

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