Module Title:             Mathematical Methods for Economics

Programme:               BA Economics/ BA (Hon) Economics

Module Code:            MQM 201

Credit Value:             12

Module Tutor:           Dr. Kailashpati

General Objectives:

The academic aim of this module is to provide requisite mathematical techniques for a thorough and rigorous study of Economics appropriate for joint honors course with Economics, to justify the need for abstraction and to provide foundation for the study of Econometrics

Learning Outcomes

At the end of this module, the students are expected to be able to:

• Apply mathematical technique of derivatives to study some economic theories
• Demonstrate proficiency in algebra of matrices and functions
• Compute and apply definite and indefinite integrals

• Solve simple differential equations and understand their role in Economics
• Explain the concepts of basic set theory
• Explain the concepts of elementary coordinate of geometry

Learning and teaching approach

Lectures (60 hours in 15 weeks)

Tutorials (15 hours in 15 weeks)

Discussions (5 hours in 15 weeks)

Group work and Assignments (40 hours in 15 weeks)

Assessment

Semester end examination (60%)

Assignments (10%)

Class tests (3 x 10%)

Subject Matter

1.      Determinant and Matrix                                                                       (10 hours)

Determinants and their Basic Properties; Solution of Simultaneous Equations through Cramer’s Rule; Concept of Matrix and Types; Matrix Inverse and Rank of a Matrix; Introduction to Input-Output Analysis           

2.      Set, relation and functions, Coordinates of Geometry                          (5 hours)

3.      Limits and Continuity                                                                          (10 hours)

Calculation of limit of a point and at infinity, Application to interest compounded annually, n times year and continuously. Continuity Definition, testing continuity, Types of discontinuity.                                    

4.      Derivatives                                                                                           (10 Hours)

Differentiability of functions, Interpretation of linear and non-linear functions. Graphical interpretations, technique of derivation. Maxima and Minima. Points of inflexion. Testing of concavity and convexity of functions. Economic applications of derivatives (relative extrema, inflection point, optimization of function, marginal concepts).

5.      Functions of two variables                                                                   (15 hours) 

Partial derivatives, Total differentials, second order partial derivatives. Homogeneous functions, Euler’s theorem (proof).Statement of converse, maxima minima of a function of two or more variable, Economic Application of Multivariables (marginal productivity, income determination multipliers and comparative statics, cross elasticity & optimization of economic functions).

6.      Integration, Difference and differential equations of the first order, Applications (consumer & producer surplus, investment rate)                                  (10 hours)

Reading list

Essential Reading:

1.      Chiang, A. C., & Wainwright, K. (2005). Fundamental methods of mathematical economics. (15^th Edition), McGraw-Hill/Irwin.

2.      Dowling, E. (2001). Introduction to Mathematical Economics, Schaum’s Outline series, McGraw Hill. 

Suggested reading:

1.      Allen, R. G. D. (2002). Mathematical analysis for economists. Delhi: AITBS Publishers and Distributors.

2.      Sydsaeter, K. & Hammonds, P. ( 2002).  Essential Mathematics  for Economists, Prentice Hall.

3.      Renshaw, G. (2005). Maths for Economists. Delhi: OUP.

(Updated June, 2013)