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How can I create matrices in general in LaTeX? As well as the one below? enter image description here

Are there packages that are preferred over others?

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Use amsmath: it defines 6 types of matrix environments: matrix (without any delimiter), pmatrix (delimiters: ( )), bmatrix ([ ]), Bmatrix ({ }), vmatrix (| |), Vmatrix (|| ||). Columns are centred.

Still better: with mathtools, an extension of amsmath, you have starred variants which accept an optional argument for the columns alignment ([l], [r] or [c], valid for all columns).

Here is a code for your image:

\[ \begin{pmatrix}x'\\y'\end{pmatrix}=
   \begin{bmatrix}
     \cos\theta & -\sin\theta\\
     \sin\theta & \cos\theta
   \end{bmatrix}
   \begin{pmatrix}x \\y \end{pmatrix} \]

The use of \[ ... \] can be substituted by the equation environment \begin{equation} ... \end{equation}

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