Mathematical Economics – I

Paper Code: 
25ECO 323A
Credits: 
4
Contact Hours: 
60.00
Max. Marks: 
100.00
Objective: 
  1. To help the students understand the application of mathematical techniques to solve optimization problems of a consumer.
  2. To help the students examine the application of mathematical techniques to solve optimization problems of a firm.
  3. To help students apply the mathematical techniques to understand determination of price and quantity in perfect competition and monopoly.

 

Course Outcomes: 

Course Outcomes (COs):

Course

Learning outcome (at course level)

Learning and teaching strategies

Assessment Strategies 

Course Code

Course Title

25ECO 323(A)

Mathematical Economics-I

(Theory)

Students will -

CO85: analyze the various aspects of consumer behavior mathematically, in terms of cardinal and ordinal utility, demand etc.

CO86: analyze the various aspects of consumer behavior mathematically, in terms of tradeoff between income and leisure, linear expenditure system, duality in consumption etc.

CO87: analyze the various aspects of producer behavior mathematically, in terms of production functions and related aspects

CO88: analyze the various aspects of producer behavior mathematically, in terms of optimizing behavior of the firm and related aspects

CO89: examine the price output determination of firms under perfect competition and monopoly and related aspects

CO90: contribute effectively in course-specific interaction.

Approach in teaching: Interactive Lectures and Discussions.

 

Learning activities for the students:

Practice Modules and

Assignments.

Class activity, Assignments and Semester end examinations.

 

12.00
Unit I: 
Theory of Consumer Behaviour I
  • Nature of a Utility Function; properties of an Indifference curve; Maximization of utility
  • Derivation of Demand functions- Ordinary and compensated
  •  elasticity of demand, elasticity relations
  • Restrictions on demand functions; Slutsky Equation - 2 and n- commodity cases, elasticity form and important results.

 

12.00
Unit II: 
Theory of Consumer Behaviour II
  • Income and Leisure - Derivation of labour supply function and its properties,
  • Linear Expenditure System
  • Homogeneous, homothetic, direct, indirect, additive and separable utility functions
  • Duality in Consumption, Roy's Identity

 

12.00
Unit III: 
Production function
  • Properties of a well behaved production function -Cobb-Douglas,CESand Leontief Production Functions
  • product curves; output elasticity of factor input; properties of an isoquant
  • Elasticity of substitution, homogeneous and linearlyhomogeneous production functions, Expansion path.

 

12.00
Unit IV: 
Theory of firm II
  • Optimization behaviour of a firm- Constrained cost minimization, constrained output maximization and profit maximization
  • properties and derivation of input demand functions
  • Cost functions- properties and derivation of short run and long run cost functions,
  • determination of optimum size of plant.

 

12.00
Unit V: 
Price and Output Determination
  • Perfect Competition: short run and long run equilibrium
  • Effects of taxes.
  • Monopoly- Profit Maximization, sales revenue maximization, price discrimination,
  • Multi-Plant Monopolist, effect of various taxes on output and price under monopoly.

 

Essential Readings: 
  1. James. M. Henderson and Richard E. Quandt, Microeconomic Theory: A Mathematical Approach, McGraw-Hill Inc., US; 3rd Revised edition,1980.
  2. B.C. Mehta: Mathematical Economics: Microeconomic Models, SultanChand& Sons.

 

 

References: 

Suggested Readings:

1.     R.G.D Allen, Mathematical Economics,Macmillan; 2nd Revised edition, 1959.

2.     Alpha C Chiang, Fundamental Methods of Mathematical Economics, McGraw-Hill Education.

 

E-Resource:

·       Consumption duality | Consumption

https://www.youtube.com/watch?v=YmORFrNr3gM

 

Journal:

Journal of Mathematical Economics

Academic Session: 
2025-26
  • Printer-friendly version
  • PDF version