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Mathematical Economics-I [1]

Paper Code: 
ECO 502(A)
Credits: 
3
Contact Hours: 
45.00
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.

9.00
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.
9.00
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
9.00
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.
9.00
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.
9.00
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: 

1. Henderson, J.M. and R.E. Quandt, Microeconomic Theory: A Mathematical Approach, McGraw Hill, 1980.

2. Chiang, A. C., Kevin Wainwright, Fundamental Methods of Mathematical Economics McGraw Hill, 4th Edition, 2005

References: 

1. Mehta, B.C. and G.M.K. Madnani, Mathematics for Economists, Sultan Chand & Sons, 2008.

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

Academic Session: 
2022-23 [2]

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Source URL: https://economics.iisuniv.ac.in/courses/subjects/mathematical-economics-i-20

Links:
[1] https://economics.iisuniv.ac.in/courses/subjects/mathematical-economics-i-20
[2] https://economics.iisuniv.ac.in/academic-session/2022-23