Mathematical Economics- I

Paper Code: 
24DECO 511A
Credits: 
6
Contact Hours: 
90.00
Max. Marks: 
100.00
Objective: 
  1. To apply mathematical techniques to consumer behaviour
  2. To apply mathematical techniques to the theory of firms
  3. To understand the price & output determination under Perfect Competition mathematically

 

Course Outcomes: 

Course

Learning outcome (at course level)

Learning and teaching strategies

Assessment Strategies 

Course Code

Course Title

24DECO 511A

Mathematical Economics-I

(Theory)

Students will:

CO67: analyze consumer behaviour mathematically

CO68: evaluate the nature of relationships between key economic variables pertaining to consumers by mathematically interpreting relevant microeconomic theories.

CO69: evaluate production decisions of firms by applying mathematical techniques.

CO70: evaluate different types of production functions and their effect on cost and input decisions of a firm by mathematically analyzing the same.

CO71: evaluate the production decisions of a perfectly competitive firm, mathematically.

CO72: contribute effectively in course-specific interaction.

 

Approach in teaching: Interactive Lectures and Discussions.

 

Learning activities for the students:

Practice Modules and

Assignments.

Class activity, Assignments and Semester end examinations.

 

18.00
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
  • Different types of utility functions

 

18.00
Unit II: 
Theory of Consumer Behaviour-II
  • Price, income and cross price elasticities of demand; nature of goods
  • Relationship between elasticity, MR and TR
  •  Income and leisure-derivation of labour supply function and its properties
  • Slutsky Equation- Derivation for two commodity case, its elasticity form, Direct and Cross effects, Substitutes and Complements

 

18.00
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).

  • Production function – definition and nature
  • Isoquant – definition, slope and MRTS; Isocost line
  • Optimizing behavior of firm- constrained output maximization, constrained cost minimization and profit maximization
  • Elasticity of substitution – definition and measurement

 

18.00
Unit IV: 
Theory of Firm-II
  • Homogeneous Production Functions- definition and properties,
  • Linearly homogeneous production function
  •  Euler’s theorem
  • Derivation of cost and input demand function from Cobb Douglas Production Function
  • Properties of Cobb-Douglas production Function

 

18.00
Unit V: 
Perfect Competition
  • Perfect Competition - characteristics
  • Short run and long run equilibrium of firm and industry
  • Derivation of supply function
  •  Effects of various taxes,
  • Equilibrium – definition, existence and uniqueness,
  • Stability of equilibrium- static stability and dynamic stability (Cobweb model)

 

 

Essential Readings: 
  1. Henderson, J.M. and Quandt, R. E., Microeconomic Theory: A Mathematical Approach, McGraw Hill, 1980.
  2. Chiang, A. C., Wainwright, K., Fundamental Methods of Mathematical Economics, McGraw Hill, 4th Edition, 2005.

 

 

References: 

Suggested Readings:

  1. Mehta, B.C. and Madnani, GMK, Mathematics for Economists, Sultan Chand & Sons, 2008.
  2. Mehta, B.C., Mathematical Economics: Microeconomic Models, Sultan Chand & Sons.

E Resources :

  • Consumption duality | Consumption

https://www.youtube.com/watch?v=YmORFrNr3gM

Journal:

  • International Journal of Mathematics and statistics

http://www.ceser.in/ceserp/index.php/ijms

 

Academic Session: 
2024-25
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