Mathematical Economics I

Paper Code: 
ECO 323(A)
Credits: 
4
Contact Hours: 
60.00
Objective: 

To understand the economic concepts and theories through mathematical methods so as to refine the verbal logic.

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: 
Theory of firm I

Production function: Properties of a well behaved production function -Cobb-Douglas, CES and Leontief Production Functions; product curves; output elasticity of factor input; properties of an isoquant, Elasticity of substitution, homogeneous and linearly homogeneous 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. R.G.D Allen, Mathematical Economics, Macmillan; 2nd Revised edition, 1959.
3. B.C. Mehta: Mathematical Economics: Micro Economic Models, Sultan Chand &              Sons, New Delhi.
4. Alpha C Chiang : Fundamental Methods of Mathematical Economics, McGraw-Hill          Education; 2nd edition.
5. Chiang, Alpha C. and Wainwright, Kevin, Fundamental Methods of Mathematical              Economics, McGraw Hill Education; Fourth Edition, July 2017.
Academic Session: 
2018-19
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