School of Economics

# L11121 Mathematical Economics

Credits: 15

 Dr Matthias Dahm t: +44 (0)115 95 15470 e: matthias.dahm@nottingham.ac.uk

## Module description & content

The module is an introduction to the mathematical methods most commonly used in analysing economic problems. The core topics of the module are univariate calculus, linear algebra, multivariate calculus, static optimisation (unconstrained and constrained) and comparative statics. Economic applications from microeconomics and macroeconomics will be discussed for each mathematical topic.

1. Introduction to Mathematical Economics; Single variable calculus; Differentiation; Integration
Applications: Elasticity; Consumer and producer surplus

2. Single variable optimisation; Comparative statics
Applications: Profit, production, revenue maximisation; Cost minimisation

3. Linear Algebra. Matrices. Systems of linear equations
Applications: Macroeconomic output-consumption-investment models; Multiple markets; Input-output models

4. Multivariate Calculus. Functions of several variables
Applications: Production and utility functions

5. Tools for Comparative Statics
Applications: Supply and demand; Macroeconomic models

6. Multivariable optimisation
Applications: Consumer choice, Cost minimisation, Profit maximisation

## Aims and objectives

The aim of the module is to provide students with the mathematical tools required for economic analysis at undergraduate level. Emphasis will be placed in developing ability in translating economic problems that students will encounter in their economics modules, into mathematical models, and on solving these models.

Learning Outcomes:

At the end of the course students should be able to:

• Exhibit a sound understanding of mathematical techniques discussed
• Formulate economic problems in mathematical terms
• Apply the relevant tools for analysing economic problems.

Programme Specific Learning Outcomes that apply are:

Show understanding of relevant mathematical and statistical techniques
Work with abstract concepts and in a context of generality
Reason logically and work analytically
Perform with high levels of accuracy
Select and apply appropriate techniques to solve problems
Apply mathematical, statistical and graphical techniques in an appropriate manner
Analyse and solve complex problems accurately.

Lecture slides and other material for this module can be found on Moodle at http://moodle.nottingham.ac.uk/ - restricted to registered students only.

## Lectures and tutorials

Economics lecture timetables are available online in Moodle.

There will be 30 one-hour lectures in which main points of the material will be presented.

There will also be 5 tutorials, on which exercises on lecture matieral will be discussed. Students are expected to attempt to solve these exercises before coming to tutorials. Tutorial times and places and sign-up for them will be available on Moodle.

Students are also expected to work on their own through lecture material and textbook exercises. Lectures and tutorials can cover only a limited amount of material, and it will be helpful for students to undertake further study.

## Module Assessment

Students will be evaluated (100%) through a final written examination, in which they will be required to answer four questions out of four in two hours.

Previous Examination Papers and Feedback for all modules can be viewed online in Moodle but are restricted to registered students only. A password may be required to access this material.

## Module Texts

Main Text:

• Sydsaeter, K., Hammond, P. J. and Strom, A. (2012) Essential Mathematics for Economic Analysis, 4th edition, Pearson.

(Previous editions of the book are also OK, as most of the section and exercise numbers are the same).
This is the main textbook. The material is arranged to allow progressive learning of mathematical topics and its applications in economics. Students will find useful revising mathematical concepts discussed in the introductory chapters as well as practising solving problems (answers are provided in the book). Most lecture material will be based on this book. The book's companion website has multiple choice tests to check on your progress through the book.

Other useful texts:

• Dowling, E.T. (2001) Schaum's Outline of Introduction to Mathematical Economics, 3rd edition, McGraw Hill.
This text provides a collection of solved problems related to most of the material covered in the module. Useful for revising introductory mathematical concepts as well as for practice in solving exercises related to the main topics discussed in class.
• Hoy, M., Livernois, J., McKenna, C., Rees, R., Stengos, T. (2001) Mathematics for Economics, 2nd edition, MIT Press
The book is more advanced that the other two. It covers the same material but also goes further for the interested reader. It can be used as a  reference book for further study.

There are many other Mathematical Economics textbooks that cover the same material, and any of them can be used to learn and revise it.

## Further information

If you have any questions regarding this module please feel free to contact the lecturer. At the end of this semester, we would welcome your views on the organisation and content of this module.