Business I / Matrix Diagonalisation
Practice question · Multiple choice

Diagonalising A=PDP1A = PDP^{-1} makes AnA^{n} easy because DnD^{n} raises the diagonal entries to the nnth power. Why does that also reveal the long-run behaviour of the system?

Hints
  1. Compare 2n2^{n} with 0.5n0.5^{n} for large nn.
  2. Which term is left standing once you factor out the largest?
Show the answer

D. Because the largest eigenvalue's power eventually dominates

Why

Powers separate the eigenvalues by magnitude. This is exactly why a Markov chain settles into its stationary distribution: the λ=1\lambda = 1 eigenvector survives while everything smaller decays.

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