Mathematical Economics

PURPOSE OF COURSE

Mathematical economics is an approach to economic analysis in which an economist makes use of mathematical symbols in the statement of the problem and also draws upon known mathematical theorems to aid in reasoning. It can be applied to the analysis of microeconomic theory, macroeconomic theory, public finance, urban economics, development economics, etc. The main objective of this course is to enable students acquire mathematical tools that will provide a foundation for understanding other courses in economics like Microeconomics, Macroeconomics, Econometrics and other related courses.

EXPECTED LEARNING OUTCOMES

By the end of the course unit students should be able to;

§  Explain  linear & quadratic equations in market equilibrium analysis and National income equilibrium analysis

§  Acquired skills of applying matrix algebra to market equilibrium analysis, national income models & appreciate its use in the input-output analysis

§  Explain  the concept of derivatives and differential calculus to the costs & revenue, market model & national income model; learnt the use of Jacobian determinants, applications to national income, elasticity, savings & production functions and appreciate its use in a single commodity market model

§  Discuss how to optimize costs, revenue and profits and the conditions that govern this situation; learn the application of the Hessian matrix to solving output, revenue & profit problems of multi-product firms; know the use of the Lagrange function & application of the bordered Hessian to Utility maximization and consumer demand

§  Calculate  integral calculus to cost theory, consumption theory, finding consumer & producer surplus from the demand and supply functions respectively, to deriving the time path of capital & capital formation