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Mathematical Economics-I
Paper Code:
ECO 513
Credits:
4
Contact Hours:
60.00
Max. Marks:
100.00
Objective:
To understand the microeconomic concepts and theories through mathematical methods so as to refine the verbal logic.
12.00
Unit I:
Review
- Differential Calculus (Functions with one independent variable)-Increasing and decreasing functions, Concavity and convexity, optimization of functions;
- Differential Calculus (Multivariable Functions)-First-and second-order partial derivatives, total differentials, optimization of multivariable functions, constrained optimization with Lagrange multiplier;
- Matrix Algebra-Matrices and Determinants, Crammer’s rule, solving linear equations with the inverse matrix, Bordered Hessian determinant for constrained optimization.
12.00
Unit II:
Theory of Consumer Behaviour-I
- Nature of the utility function, Indifference curves, Rate of commodity substitution;
- Maximization of Utility (First-and second-order conditions);
- Ordinary and Compensated Demand Functions.
12.00
Unit III:
Theory of Consumer Behaviour-II
- Price and Income Elasticity of demand;
- Income and Leisure;
- The Slutsky Equation- Derivation for two commodity case, its elasticity form, Direct and Cross effects, Substitutes and Complements.
12.00
Unit IV:
Theory of Firm-I
(All the concepts covered under unit IV and unit V 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.
12.00
Unit V:
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.
Essential Readings:
- Henderson, J.M. and R.E. Quandt, Microeconomic Theory: A Mathematical Approach, McGraw Hill, New Delhi.
- Chiang, A. C., Kevin Wainwright, Fundamental Methods of Mathematical Economics , McGraw Hill.
References:
- Mehta, B.C. and G.M.K. Madnani, Mathematics for Economists, Sultan Chand & Sons, New Delhi.
- Dowling, E. T, Schaum’s Outline of Theory and Problems of Mathematical Methods for Business And Economics, McGraw Hill.
- Dowling, E. T. , Schaum’s Outline of Theory and Problems of Introduction to Mathematical Economics, McGraw Hill.
- Allen, R.G.D., Mathematical Analysis for Economists, Macmillan Press , London.
Academic Session:
