Mathematical Economics - II

Paper Code: 
DECO 611A
Credits: 
6
Contact Hours: 
90.00
Max. Marks: 
100.00
Objective: 

1.      To understand the Price and Output Determination under monopoly and duopoly mathematically.

2.      To explain the concept of game theory and its application.

3.      To comprehend the techniques of input output analysis and linear programming.

18.00
Unit I: 
Monopoly

·         Monopoly – Characteristics

·         Equilibrium of simple monopoly - profit maximization

·         Sales revenue maximization by monopolist

·         Price discrimination: meaning, degrees and determination of price and output

·          Multi-Plant Monopolist

·         Effects of various taxes on output and price under monopoly;yn

18.00
Unit II: 
Duopoly

·         Duopoly - Meaning and characteristics

·         Quasi competitive solution

·          Collusion solution

·          Cournot solution

·         Market share solution

18.00
Unit III: 
Game Theory

·         Basic concept, pay-off matrix.

·         Types of games –game of strategy and game of chance, two-person constant-sum and zero-sum games

·          Maximin, minimax and saddle point solution;

·         Dominant strategies

·         Pure and mixed strategies

·         Nash Equilibrium

18.00
Unit IV: 
Input-Output Analysis
  • Concept of ‘Open & Closed’, ‘Static & Dynamic’ Model
  • Assumptions of input-output model
  • Input-output transactions table and coefficient matrix
  • Determination of gross output in an open & static input-output model

Hawkins-Simon viability conditions  

18.00
Unit V: 
Linear Programming
  • Meaning, assumptions and ingredients of linear programming
  • Basic concepts of linear programming-feasible region, convex set, feasible solution, basic feasible solution and optimal solution
  • Formulation of linear programming problem and its graphical solution
  • Simplex Method (for maximization only)
  • Concept of Primal and Dual.
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: 

1.    Mehta, B.C. andMadnani, G.M.K., Mathematics for Economists, Sultan Chand & Sons.

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

Academic Session: 
2023-24
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