MATHEMATICAL ECONOMICS-I

Paper Code: 
ECO 323(A)
Credits: 
4
Contact Hours: 
60.00
Max. Marks: 
100.00
Objective: 

Course Objectives:

The objectives of this course are-

  1. To help the students to understand the application of mathematical techniques to solve optimization problems of a consumer.
  2. To help the students to understand the application of mathematical techniques to solve optimization problems of a firm.
  3. To help students to apply mathematical techniques to understand determination of price and quantity in perfect competition and monopoly.

 

Course Outcomes (COs):

Course

Outcome (at course level)

Learning and teaching strategies

Assessment Strategies 

Paper Code

Paper Title

ECO 323(A)

Mathematical Economics-I

CO38: Develop an understanding of the mathematical analysis of the various theories of consumer behaviour in terms of utility.

CO39: Acquire knowledge of mathematical interpretation of production function and optimizing behaviour of the firm.

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: 
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.

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. R.G.D Allen, Mathematical Economics, Macmillan; 2nd Revised edition, 1959.
  1. B.C. Mehta: Mathematical Economics: Microeconomic Models, Sultan Chand & Sons, New Delhi.
  1. Alpha C Chiang, Fundamental Methods of Mathematical Economics, McGraw-Hill Education.

 

Academic Session: 
2020-21
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