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Mathematical Economics-I
Paper Code:
ECO 502(A)
Credits:
3
Contact Hours:
45.00
Max. Marks:
100.00
Objective:
Course Objectives:
The objectives of this course are-
- To develop an understanding of the use of differential calculus with respect of multivariable functions.
- To help the students to understand the application of mathematical techniques to solve optimization problems of a consumer.
- To help the students to understand the application of mathematical techniques to solve optimization problems of a firm.
Course Outcomes (COs):
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Course |
Outcome (at course level) |
Learning and teaching strategies |
Assessment Strategies |
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Paper Code |
Paper Title |
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ECO 502(A) |
Mathematical Economics-I |
CO 37: Understand the techniques which can be used in the mathematical analysis of behaviour of consumers, producers and firms.
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Approach in teaching: Interactive Lectures and Discussions.
Learning activities for the students: Practice Modules and Assignments. |
Class activity, Assignments and Semester end examinations. |
9.00
Unit I:
Theory of Consumer Behaviour-I
- Nature of the utility function, properties of indifference curves, Rate of commodity substitution;
- Maximization of Utility ;
- Derivation of ordinary and Compensated Demand Functions.
Unit II:
Theory of Consumer Behaviour-II
- Price and Income Elasticity of demand; nature of goods
- Income and Leisure-derivation of labour supply function and its properties ;
- The Slutsky Equation- Derivation for two commodity case, its elasticity form, Direct and Cross effects, Substitutes and Complements.
9.00
Unit III:
Theory of Firm-I
(All the concepts covered under unit III and unit IV shall be illustrated with the help of Cobb-Douglas production function only).
- Nature of the production function, isoquants and isocost line;
- Optimizing Behaviour- constrained output maximization, constrained cost minimization and profit maximization;
- Elasticity of substitution.
9.00
Unit IV:
Theory of Firm-II
- Homogeneous Production Functions-Properties, Euler’s theorem, Linearly homogeneous production function as a special case;
- Properties of Cobb-Douglas production Function.
9.00
Unit V:
Price and Output Determination under Perfect Competition
- Perfect Competition: short run and long run equilibrium, derivation of supply function, effects of taxes,
- Existence and uniqueness of equilibrium, Stability of equilibrium, Static stability, dynamic stability- Lagged adjustment- Cobweb model.
Essential Readings:
- Henderson, J.M. and R.E. Quandt (1980), Microeconomic Theory: A Mathematical Approach, McGraw Hill, New Delhi.
- Chiang, A. C., Kevin Wainwright, Fundamental Methods of Mathematical Economics (Fourth Edition), McGraw Hill, 2005
References:
- Mehta, B.C. and G.M.K. Madnani, Mathematics for Economists, Sultan Chand & Sons, New Delhi.
- Mehta, B.C. , Mathematical Economics: Microeconomic Models, Sultan Chand & Sons, New Delhi.
Academic Session:
