Mathematical Economics – I

Paper Code: 
24ECO 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

Learning outcome (at course level)

Course Code

Course Title

24ECO 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 ofoptimizing 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.

 

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.

 

  1. B.C. Mehta: Mathematical Economics: Microeconomic Models, SultanChand& Sons.

 

 

References: 

Suggested Readings:

  1. R.G.D Allen, Mathematical Economics,Macmillan; 2nd Revised edition, 1959.
  1. 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: 
2024-25
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