ABSTRACT
Econometrics is concerned with both measuring and analysing economic relationships. The meaning of the word 'econometrics' is derived from the Greek words for economy and measure, and it has been suggested that this field of economics has its origins in the fifteenth century. If the number of endogenous variables is less than the number of equations, there will be more than one set of values of the endogenous variables that will simultaneously satisfy all the equations. An economic model consists of a set of mathematical equations designed to explain certain economic phenomena, the quantity demanded and the quantity supplied of some commodity. In order to be able to solve a model to obtain unique values for the endogenous variables, a necessary mathematical condition is that the number of equations should be set equal to the number of endogenous variables included in the model.
