EASTERN MEDITERRANEAN UNIVERSITY
FACULTY OF BUSINESS AND ECONOMICS
DEPARTMENT OF ECONOMICS
2010-2011 SPRING SEMESTER
Course Title
ECON 603: Mathematical Economics
Instructor’s Name
Dr. Sevin Ugural
Room and Tel No.
BE 218, Tel.: 630 1547,
Web site and e-mail
http://fbemoodle.emu.edu.tr,
Assitant
Hesam Shahrivar, (Ph.D. candidate)
Hesam.shahrivar@gmail.com
Main Text Books
Silberberg, E. and Suen W. (2001) The Structure of Economics: A Mathematical
Analysis, Third Edition, McGraw-Hill, Singapore
Nicholson, W., Snyder, C. (2008), Microeconomic Theory: Basic Principles and Extensions,
Tenth Edition, (Chapters 8, 17,18)
Course Description
This course aims at exploring the use of quantitative analysis as an approach to
economic analysis. It will provide students with an understanding of how the economic
relationships can be expressed in mathematical models by introducing the most
important mathematical techniques used in the modern economics and how to solve
them. The emphasis in this course will be on the interrelationship of mathematics and
economics on the theoretical level with some applications. The topics covered will deal
with advanced microeconomic issues.
The students are expected to have mathematical knowledge on partial derivatives, the
chain rule, maxima and minima regarding functions of several variables, homogeneous
functions and Euler’s theorem, matrix operations, determinants and Cramer’s rule.
Students need to have successfully completed Econ 501 and Econ 601 before taking
Econ 603.
WEEK
1
DATE
SUBJECT
16 February Review of basic calculus techniques
Derivatives of Multivariate Functions; Monotonic Transformations; Homogenous and
Homothetic Functions and Euler’s Theorem; Optimization (constrained and
unconstrained); Envelope Theorem.
Silberberg and Suen: Selected topics from Chapters 2, 3 and 7.
2
23 February Review of Consumer Theory
The Behavioral Postulates; Utility Maximization; Interpretation of the Lagrange Multiplier;
Cost Minimization; Marshallian Demand Functions; Compensated Demand Functions; Modern
Derivation of the Slutsky Equation, Separable Utility Functions.
Silberberg and Suen: Chapter 10
3
2 March
Special Topics in Consumer Theory
Revealed Preferences and Exchange; The Strong Axiom of Revealed Preferences;
Integrability; The Composite Commodity theorem.
Silberberg and Suen: Chapter 11, pp 314-340
4
9 march
Special Topics in Consumer Theory, continued.
Household Production Functions; Consumer’s Surplus,
Silberberg and Suen: Chapter 11, pp 341-357
5
16 March
Capital Markets
Capital and the Rate Of Return; Determination of the Rate of Return; Price of Future Goods;
Demand for Future Goods; Intertemporal Impatience; The Firm’s Demand for Capital; Present
Discounted Value Approach To Investment Decisions.
Nicholson and Snyder: Chapter 17 and lecture notes.
6
23 March
Intertemporal Choice
n-Period Utility Maximization; Intertemporal Indifference Curv; Intertemporal Budget Line;
Time Preference; Fisherian Investment; Fisher Separation Theorem; Determination of Interest
Rates; Stocks and Flows.
Silberberg and Suen: Chapter 12.
7
30 March
MID-TERM EXAMINATION I
8
6 April
Strategy and Game Theory
Basic Concepts; Prisoners’ Dilemma; Mixed Strategies; Continuum of Actions;
Sequential Games; Repeated Games; Incomplete Information; Signaling Games.
Nicholson and Snyder: Chapter 8
9
13 April
Economics of Information
Asymmetric Information; Market for Lemons; Principal-Agent Model; Hidden Actions;
Moral Hazard;
Nicholson Chapter 18 and lecture notes
10
20 April
Economics of Information continued
Nonlinear Pricing; Adverse Selection; Market Signaling.
Nicholson and Snyder: Chapter 18, and the Extensions
11
27 April
MID-TERM EXAMINATION II
4 May
Maximization With Inequality and Nonnegativity Constraints
Nonnegativity, inequality constraints, Kuhn-Tucker conditions, saddle point theorem, nonlinear
programming.
Silberberg and Suen: Chapter 14
12
11 May
General Equilibrium I: Linear Models
Fixed-coefficient technology, linear activity analysis model, the Rybczinski theorem,
Silberberg and Suen: Chapter 17
13
18 May
General Equilibrium I: Linear Models, continued
The Stolper-Samuelson theorem, the dual problem, the simplex algorithm.
Silberberg and Suen: Chapter 17
14
25 May
Computable General Equilibrium: An Application
Nuru Giritli’s Ph.D. Thesis
15
16 June
FINAL EXAMINATION
Notice: Depending on our collective progress, supplementary course hours might be scheduled.
COURSE ASSESSMENT:
Assignments:
Mid- term Exam I:
Mid-term Exam II:
10%
25%
25%
Final Exam :
40%
Schedule of Assignments:
No.
1
2
3
4
5
6
7
8
9
10
Assignment
Date Distributed
Date Due
Notice: Additional exercise questions may be announced in the class.
PLAGIARISM:
Individual work must reflect an individual’s own effort. Do not copy from others. Academic dishonesty
carries a penalty that may range from receiving a grade of zero to expulsion from the University. Plagiarism
is an offence and will be dealt with according to University regulations.
MAKE-UP EXAM
A comprehensive make-up examination will be given at the end of the semester. Students who have valid
excuses for not taking either the midterm or the final exam , will be allowed to take the make-up exam.
IMPORTANT DATES
-
Feb 15 - RELIGIOUS HOLIDAY
Feb 17 - LAST DAY FOR LATE REGISTRATION
Feb 24 - LAST DAY FOR ADD / DROP
March 26 – April 06 – Mid Term Exams
April 22 – Course Withdrawal Deadline
April 23 - NATIONAL SOVEREIGNTY & CHILDREN’S DAY
May 1 - WORKERS' AND SPRING DAY
May 18 - LAST DAY OF CLASSES
May 19 - ATATÜRK COMMEMORATION, YOUTH AND SPORTS DAY
May 23 – June 07 – Final Exams