Mathematical Economics

This course provides students with an opportunity to learn how economists apply a wide variety of mathematical tools to analyze economic problems. Students who are interested in graduate study in economics, management science, public policy, and related disciplies are strongly urged to consider this course. It is expected that students entering this course have a solid background in calculus (Mat 208 or 210). Students with more extensive math backgrounds will also benefit from an opportunity to combine the mathematical skills acquired in mathematics courses with the economic models discussed in economics courses.

The course begins with a discussion of a variety of linear economic models. These models include:

• systems of demand and supply equations (N commodities)
• models of macroeconomic equilibrium
• input-output analysis

The next portion of this course involves a discussion of comparative static analysis. Students learn how to use simple derivatives, partial derivatives, total derivatives, and partial total derivatives to determine the effect of changes in the level of exogenous variables on the endogenous variables in the model. The implicit function theorem is used to determine the conditions under which comparative static derivatives can be determined from systems of equations expressed in implicit form.

The course concludes with a discussion of nonlinear optimization techniques. In this section of the course, students examine the first- and second-order conditions for maxima and minima for both unconstrained and constrained problems. As part of this discussion, students learn the economic significance of Lagrangian multipliers.

Prerequisite: Eco 101 & 200, Mat 208 or 210