Caucasus University

Syllabus for Quantitative Methods for Decision Making

2012/13 year Spring Semester
Lecturer/teacher Telephone e-mail Prof. Avtandil GAGNIDZE 231 55 04 , 5 77 56 59 99 gagnidzeavto@yahoo.com agagnidze@cu.edu.ge

Course description and objectives

This is a graduate course to Quantitative Economical Models and Methods for Managers. It aims to get across the essential and most important elements of Comparative Statics and Dynamics that are used in modern treatments of the subject. More significantly, it aims to do this through the means of different examples, that are very important for managers to prepare and make decisions. Some of these examples are purely algebraic. But many of them consider basic and advanced economic models: both microeconomic and macroeconomic. The goal of this course is to give students the skills necessary to apply Quantitative Economical methods mainly to applied problems addressed by managers. We will cover several specific mathematical and computational techniques and solve many problems. In addition to become adept at those techniques and problems, you should become sufficiently confident and sophisticated to be able to learn and utilize other techniques you may encounter in your career. The course program consists of lectures, classes and regular students' work without assistance. The latter means thinking over lectures' material, their extension and doing of assignments given by the teacher. During the term there will be four Quizzes, a Mini-Project, a Midterm Exam, and the Final exam.

The methods
The following methods and forms of study are used in the course:

lectures and classes self study written homework assignments tests

Reading
1. M. Wisnievsky. Quantitative Methods for Decision Makers 2. J.O.Bennett, W.L.Briggs. Using and Understanding Mathematics: A Quantitative Reasoning Approach 3. R. Shone. An Introduction to Economic Dynamics 4. A. Gagnidze. Applied Linear Algebra

Grade Determination and Policy Current control of students' knowledge consists of weekly assessments of Quizzes and marks for Midterm Exam. Quizzes will count as 40% of students individual course grade. It isnt possible to overtake Quizzes, except in the case of an excused absence. Course Project will count as 10% of students individual course grade. It isnt possible to overtake the Mid-term Exam, except in the case of an excused absence. Quizzes Midterm Exam Course Project Final Exam 40% 20% 10% 30%

Course Outline. Part I Statics

Linear Systems and Matrices Notion of Linear Systems Matrices. Matrix Operations Systems of Equations in Matrix Form The Identity Matrix. The Transpose. Symmetric Matrices Gaussian Elimination The Inverse of a Matrix Using of Inverse Matrix Finding of Inverse Cramers Rule Applications Input-Output Analysis Examples of Input-Output Models Structure of an Input-Output Model Technological Matrix. The Leontief Inverse The Open Leontief Model How to Solve The Input-Output Problems

Quiz 1
Matrix Games Introduction to Matrix Games Basic Notions of Game Theory Basic Theorems and Results 2 x N Matrix Games Reducing of Game Size Linear Programming Geometric Approach Introduction to Linear Programming Feasible Sets and Solutions. Optimal Solution The Canonical Problem Unbounded Feasible Sets Geometric Method of Solving Linear Programming The Simplex Method Geometric Introduction to The Simplex Method Pivots, Slack Variables Basic Variables and Basic Feasible Solutions Simplex Tables. Initial Simplex Table General Simplex Algorithm

Quiz 2 Midterm Exam

Course Outline. Part II - Dynamics

Introduction Definition and Concepts Dynamic Models, Deterministic Models Difference Equations, Attractors and Reppelors Nonlinear Dynamical Systems Continuous Models, Differential Equations

Dynamical Systems in Excel Demand and Supply Dynamics The Linear Cobweb Model The Goodwin Model of Expectations Nonlinear Cobwebs Ceilings and Floors Cobwebs in Interrelated Markets Cobwebs in Excel Analysis and Preparing Decisions

Quiz 3
National Income Dynamics

The Keynesian-cross Diagram Simple Dynamics The Dynamic Multiplier Dynamic Model with Taxes The Multiplier-Accelerator Model by Samuelson National Income Models in Excel

Analysis and Preparing Decisions Dynamics of the Firm

Monopoly and Advertising Diffusion Models Static Theory of Oligopoly Dynamic Model with Output Adjusting Dynamic Oligopoly Models Dynamic Oligopoly Models in Excel Analysis and Preparing Decisions

Quiz 4
Fiscal Dynamics (Optional, if time allows) Budgetary Concepts Budget Dynamics Budget Criteria and the Maastricht Treaty Budget Dynamics in Excel Analysis and Preparing Decisions

Course Project 4

Final Exam