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Economics 300: Methods and Tools of Economic Analysis [Syllabus]

Tuesdays and Thursdays, 11-11:50 am, Marie Mount Hall 1400, Spring 2010

The methodology of economics employs mathematical and logical tools to model and analyze markets, national economies, and other situations where people make choices. Understanding of many economic issues can be enhanced by careful application of the methodology, and this in turn requires an understanding of the various mathematical and logical techniques. This course reviews concepts and techniques usually covered in algebra, analytical geometry, and the first semester of calculus. It also introduces the components of subsequent calculus and linear algebra courses most relevant to economic analysis. The course emphasizes the reasons economists use mathematical concepts and techniques to model behavior and outcomes.

The course will meet three times a week, twice for lectures and once in discussion section conducted by a teaching assistant. Lectures will demonstrate the power of math to answer economic questions, stressing the reasons economists use math and explaining mathematical logic and techniques. Discussion sections will demonstrate solutions for problems, answer questions about material presented in the lectures or book, and focus on preparing students for exams.

Students should be prepared to devote at least 4 hours per week outside class meetings, primarily working on problem sets as well as reviewing materials and practicing. Students with weak math skills will need to spend additional time mastering techniques.

Course objectives

Each student should be able by the end of the semester to

• Recognize and use the mathematical terminology and notation typically employed by economists

• Explain how specific mathematical functions can be used to provide formal methods of describing the linkages between key economic variables

• Employ the mathematical techniques covered in the course to solve economic problems and predict economic behavior

• Explain how mathematical concepts enable economists to analyze complicated problems and generate testable hypotheses

Problem Sets, Answers (posted after due date): PS1 PS2 PS3 PS4 PS5 PS6

Mathematica Screencasts (to quickly learn how to use Mathematica) Hands on Start to Mathematica Part 1 Part 2

Mathematica Demonstrations [pdf] [all demonstrations zipped]

Lecture Notes

Date      Topic                                                                                                                                                                                    

Jan 26    01 – Mathematical Framework of Economic Analysis, Math Review, Basic Rules of Algebra, Khan Academy, The Math Page

Jan 28    02 – An Introduction to Functions, [nb], Limits

Feb 2     02 – An Introduction to Functions (continued)

Feb 4     03 – Exponential Functions, [nb], The Mating Game

Feb 5     Problem set 1 due

Feb 9     03 – Logarithmic Functions, Visual Guide to Simple, Compound, and Continuous Interest Rates

Feb 11   04 – Section 1 only - Systems of Equations and Comparative Statics, [nb]

Feb 16   05 – Basics of Differential Calculus, [nb]

Feb 18   05 – Basics of Differential Calculus (continued)

Feb 19   Problem set 2 due

Feb 23   05 – Basics of Differential Calculus (continued)

Feb 25   First Midterm [Review Sheet, Prior Midterm, Prior Answers]

Mar 2    06 – Univariate Calculus, [nb]

Mar 4    06 – Univariate Calculus - Elasticity

Mar 9    07 – Multivariate Calculus, [nb]

Mar 11  07 – Multivariate Calculus (continued)

Mar 12  Problem set 3 due

Spring Break

Mar 23  08 – Extreme Values of Univariate Functions, [nb]

Mar 24  09 – Extreme Values of Multivariate Functions, [nb]

Mar 30  09 – Extreme Values of Multivariate Functions (continued)

Apr 1     09 – Extreme Values of Multivariate Functions (continued)

Apr 2     Problem set 4 due

Apr 6     Second Midterm [Review Sheet, Prior Midterm, Prior Answers, nb]

Apr 8     10– Constrained Optimization, [nb]

Apr 13   10– Constrained Optimization (continued)

Apr 15   10– Constrained Optimization (continued)

Apr 16   Problem set 5 due

Apr 20   11 – Probability, [nb]

Apr 22   12 – Decision making under Uncertainty, [nb, Coin Flip Problem]

Apr 27   13 – Risk Theory, [nb]

Apr 29   14 – Game Theory, [nb]

Apr 30   Problem set 6 due

May 4    14 – Game Theory (continued)

May 6    14 – Game Theory (continued)

May 11  15 – Market Games

May 15  Final Exam 8:00 am – Marie Mount Hall 1400 [Final Review Sheet, Final Review Problems, Answers]