MATHEMATICAL ECONOMICS-I

Paper Code: 
ECO 323 (A)
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.

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,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.

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

References: 

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

2.      Alpha C Chiang, Fundamental Methods of Mathematical Economics, McGraw-Hill Education.

Academic Session: 
2023-24
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