EASTERN MEDITERRANEAN UNIVERSITY

FACULTY OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS

2015 – 2016 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 / Mariam Mohamed Alkawfi RD107 Tel: 6301286 email:
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)
Supplementary Text Books / Varian, H. R. (1992) Microeconomic Analysis, Third Edition, Norton.
Jehle, G. A. and Reny P.J. Advanced Microeconomic Theory, Second Edition, Addison Wesley, Longman.
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 / DATE / SUBJECT
1-2 / 25 Feb
3 March / Review of basic calculus techniques
Introduction and 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.
3 / 10 March / 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
QUIZ on 28 March at 16:30
4 / 17 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
5 / 24 March / Special Topics in Consumer Theory, continued.
Household Production Functions; Consumer’s Surplus,
Silberberg and Suen: Chapter 11, pp 341-35
6 / 31 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.
7 / 7 April / 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.
8 / 20 April / MID-TERM EXAMINATION
9 / 21 April / Strategy and Game Theory
Basic Concepts; Prisoners’ Dilemma; Mixed Strategies; Continuum of Actions; Sequential Games; Repeated Games; Signaling Games.
Nicholson and Snyder: Chapter 8
28 April / Strategy and Game Theory continued
10 / 5 May / Economics of Information
Asymmetric Information; Principal-Agent Model; Hidden Actions; Moral Hazard;
Nicholson Chapter 18 and lecture notes
11 / 12 May / Economics of Information continued
Nonlinear Pricing; Adverse Selection; Market Signaling.
Nicholson and Snyder: Chapter 18, and the Extensions
12 / 20 May / Maximization With Inequality and Nonnegativity Constraints
Nonnegativity, inequality constraints, Kuhn-Tucker conditions, saddle point theorem, nonlinear programming.
Silberberg and Suen: Chapter 14
13 / 26 May / General Equilibrium: Linear Models
Fixed-coefficient technology, linear activity analysis model, the Rybczinski theorem,
Silberberg and Suen: Chapter 17
14 / 2 June / General Equilibrium: Linear Models, continued
The Stolper-Samuelson theorem, the dual problem, the simplex algorithm.
Silberberg and Suen: Chapter 17
15 / 25 June / General Equilibrium
16 / 9July / FINAL EXAMINATION

Notice: Depending on our collective progress, supplementary course hours might be scheduled.

COURSE ASSESSMENT:

Assignments: / 10%
Quiz: / 10%
Mid-term Exam : / 35%
Final Exam : / 45%

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.