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Mathematical Economics-I [1]

Paper Code: 
ECO 513
Credits: 
4
Contact Hours: 
60.00
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.

Course Outcomes (COs):

Course

 Outcome (at course level)

Learning and teaching strategies

Assessment Strategies 

Paper Code

Paper Title

ECO 513

Mathematical Economics-I

CO68: Students will apply the mathematical techniques in the analysis of behaviour of consumers, producers and firms.

 

Approach in teaching: Interactive Lectures and Discussions.

 

Learning activities for the students:

Practice Modules and

Assignments.

Class activity, Assignments and Semester end examinations.

 

12.00
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.

 

12.00
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.

 

12.00
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.

 

12.00
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.

 

12.00
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: 
  • Henderson, J.M. and R.E. Quandt, Microeconomic Theory: A Mathematical Approach, McGraw Hill, New Delhi, 1980.
  • Chiang, A. C., Kevin Wainwright, Fundamental Methods of Mathematical Economics  (Fourth Edition), McGraw Hill, 2005
  • Mehta, B.C. and G.M.K. Madnani, Mathematics for Economists, Sultan Chand & Sons, New Delhi.
  • Mehta, B.C. , Mathematical Economics: Microeconomic Models, Sultan Chand & Sons, New Delhi.
Academic Session: 
2021-22 [2]

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Source URL: https://economics.iisuniv.ac.in/courses/subjects/mathematical-economics-i-18

Links:
[1] https://economics.iisuniv.ac.in/courses/subjects/mathematical-economics-i-18
[2] https://economics.iisuniv.ac.in/academic-session/2021-22