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Mathematical Economics-I
Paper Code:
ECO 502(A)
Credits:
3
Contact Hours:
45.00
Max. Marks:
100.00
Objective:
1. To apply mathematical techniques to consumer behavior.
2. To apply mathematical techniques to the theory of firms.
3. To understand the Price and Output Determination under Perfect Competition mathematically.
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.
9.00
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:
1. Henderson, J.M. and R.E. Quandt, Microeconomic Theory: A Mathematical Approach, McGraw Hill, 1980.
2. Chiang, A. C., Kevin Wainwright, Fundamental Methods of Mathematical Economics McGraw Hill, 4th Edition, 2005
References:
1. Mehta, B.C. and G.M.K. Madnani, Mathematics for Economists, Sultan Chand & Sons, 2008.
2. Mehta, B.C., Mathematical Economics: Microeconomic Models, Sultan Chand & Sons.
Academic Session:
