Answer:
The application of linear algebra to economics lies primarily in its use of matrices. A matrix in economics is used as a means to solve a large number of linear equations at once, where the variables are economic indicators and factors. As a whole, then, a matrix represents a transformation from one state to another state, and one can view the economy as a succession of such states. The methods can be extended to linear combinations of non-linear equations, where the entries might be operators rather than numbers. Given the huge number of factors involved, linear algebra has various methods for reducing the complexity of the problem. It also investigates properties of matrices such that one need not always waste time trying to find the precise solutions in order to determine some property of the system. Simulations of systems often use matrices.