Studiewijzer Periode 2 Course manual Period 2 2011/2012

Voortgezette Wiskunde Advanced Mathematics

ECB2VWis Dr. Yolanda Grift

Dr. Yolanda Grift

Utrecht School of Economics Utrecht University November 2011

Inhoudsopgave/Table of contents
Course manual...............................................................................................................................3 Position within the curriculum ........................................................................................ 4 Contents........................................................................................................................... 4 Learning objectives ......................................................................................................... 4 Format ............................................................................................................................. 5 Work schedule: Advanced Mathematics......................................................................... 6 Study load........................................................................................................................ 6 Assessment Method......................................................................................................... 6 Effort requirements ......................................................................................................... 9 Supplementary and replacement exams ........................................................................ 10 Materials........................................................................................................................ 11 Language of instruction................................................................................................. 11 Assignments .................................................................................................................. 11 Feedback........................................................................................................................ 11 Appendix: Material for the tutorials and effort requirement......................................... 12

Mathematics

15-11-2011

Pagina

2 - 16

Course manual

Mathematics

15-11-2011

Pagina

3 - 16

Advanced Mathematics
Code: Period: Timeslot: Level: Number of ECTS: Course type: Department: Coordinator: Lecturers: Tutor: WebCT: ECB2VWis 2 A+D 2 7.5 Optional required USE/Econometrics Dr. Yolanda Grift Dr. Yolanda Grift Dr. Bastian Westbrock Najmeh Rezaei Khavas www.uu.nl\blackboard

(Y.Grift@uu.nl) (B.Westbrock@uu..nl) (N.RezaeiKhavas@uu.nl)

Students are expected to use their student e-mail (@students.uu.nl). Depending on the preference of the tutors, students may also make use of the mail facility in WebCT. Position within the curriculum Mathematics is an optinal required course that is offered in the second period of the first semester of the Bachelors Programme in Economics. It consists of 7.5 ECTS or 200 study hours (SH). Prior knowledge at the level of mathematics at the level of Mathematics (ECB1Wis) is assumed. Mathematics is vital to your study of economics and you should be sufficiently equipped in this sense from the very start. The content of Advanced Mathematics is attuned to all intermediate economics courses, in particular the ones that concern Macroeconomics, Microeconomics, Finance, Econometrics, and most of the third year courses. Contents Both Mathematics and Statistics are essential courses for economists. An economist specifies, analyses, and quantifies relationships among economic variables. Just think about the relationship between prices and quantities, or national income and consumption. In doing so, economists use verbal, graphical, mathematical, and statistical tools. And though none of these is taking precedence over the others, this course will focus on the mathematical tools. The graphical skills will first be trained at Micro-economics and institutions and Macroeconomics. Along with verbal skills, an economist should have a thorough command of these tools, which are essential in all of the follow-up courses. Moreover, mathematics helps you think in an orderly way and it allows you to formulate thoughts in a concise fashion. In the course Advance Mathematics, mathematical skills are learned within the context of economics. It is through the direct application of mathematics to economic issues that the relevance of the field of mathematics becomes clear. Because this combination is usually considered difficult, the difference between mathematical skills and their application in economics will be clearly explained in the lectures. In the course Advanced Mathematics a number of terms and techniques relevant to the fields of economics will be discussed: matrices, contrainted optimization with inequality constraints, dynamic programming, and game theory. Learning objectives At the end of the course the student is able to: understand, control, and apply elementary notions of mathematics, use mathematics to specify, analyse, and quantify relationships among economic variables,
Mathematics 15-11-2011 Pagina

4 - 16

optimize functions of several variables subject to constraints, recognise the economic significance of mathematical notions and models, describe clear and structured solutions of mathematical problems.

In Mathematics the essential skill of Problem solving is integrated into all of the learning objectives. Format Lecture Every week there is a 2-hour lecture in which we will discuss the material for that week. In the Advanced Mathematics lecture we will make a clear distinction between the mathematical technique and its economic application. The structure of the solution to a problem will also be pivotal during lectures. If relevant, the lecturer will fully work out a problem during the lecture. Students are expected to have studied the material and to have tried to find the structure themselves before the lecture. Students are also expected to use this structure in the exercises they are doing at home. For this purpose also refer to the documentation on Problem solving. Tutorials For Advanced Mathematics there will be one 2-hour tutorials later in the week (max. 30 students per group), during which students questions regarding the completed exercises are answered. Students are expected to demonstrate an active working attitude. This becomes apparent, for instance, through their questions about certain sections that they have studied that they are unable to apply to the relevant exercises. It wont do to just state that you didnt get it and then wait for a solution to be presented by your tutor. In order to stimulate all students to actively study the materials and do the exercises, each week a number of exercises need to be handed in (also see Effort Requirement elsewhere in this course manual). Every tutorial (as of the 2nd week) a maximum of 30 minutes will be spend on given specific feedback to at least 2 students on the problem solving skill. So, every student will be asked once or on several occasions to do an exercise during the tutorial on the whiteboard. This will be evaluated by the tutor on the basic skill of Problem solving. This is not part of the effort requirement. We recommend that you do the exercises in smaller sub groups, so that students will need to first explain the material to each other. For electronic conferencing a discussion box can be arranged for on the Advanced Mathematics website. The students are expected to formulate the answering of the questions such that the answers can be reproduced. This means that answers where the structure of the solution is not clear and where only the actual answer is given are not acceptable. The use of a graphical calculator is not permitted. Feedback on handed-in exercises Four times, on Friday morning, probably in two groups you can get feedback on the exercises you handed in (also see Assessment Method). During these classes you can compare your work with the (standard) answers and you may ask the lecturer about the solutions. In principle the two handed-in exercises that will be part of the assessment, will be chosen at the end of the course. And then the exercises will be corrected. That means that during these classes your work is not graded yet. Guest lectures

Mathematics

15-11-2011

Pagina

5 - 16

At least four times there will be a guest lecture on Friday morning. The exact starting time depends on the availability of the guest lecturer and will be published on WebCT. In this lecture the researcher will show how she/he does use Mathematics. The quest lectures are mandatory. Weekly workload Per day, you can expect the following workload: 1st half-day: preparing for and attending lecture 2nd half-day: students do the exercises for mathematics preferable in sub groups 3rd half-day: tutorial mathematics 4th half-day: students do the remaining exercises for mathematics - preferable in sub groups 5th half-day: guest lecture and handing in your work. Work schedule: Advanced Mathematics See next page and the appendix. Study load Available for Mathematics Attending meetings (2 hour L, 2 hours WG and 1 guest lecture per week) Exams incl. preparation Net Available for individual study per week (112/8) For: Studying the book Doing exercises, consulting with the group 14 SH 6 SH 8 SH

200 SH 48 SH 40 SH 112 SH

Assessment Method Two, randomly chosen, handed-in exercises (30% of your final grade) Essay on theoretical article (20% of your final grade) End term exam Advanced Mathematics (50% of your final grade; 3 hours). In principle the two handed-in exercises that will be part of the assessment, will be chosen at the end of the course. So, at the end of the course the exercises will be corrected. If less than 5 exercises have been handed in, it is possible that one of the missing weeks is chosen at random. That means that for those weeks the grade will be zero. The essay on a theoretical article should consist of 2-3 pages on which the relationship between the article and (one of) the techniques in the book is explained. It has to include a worked through part of the article which has not been elaborated upon in the article itself. See for instance the appendix of the Gorter et.al. article, where a reference is made to the total differential to rewrite a system of non-lineair equations in matrix notation. However, the calculation itself is not shown. That could be part of an essay on this article. The End term exam Advanced Mathematics will cover the material in the odd chapters only. In rare cases it is possible that an economie application will be used. Then it will always be a general case, that you should be familiar with, or the case is also written down in a pure mathematic form.
Mathematics 15-11-2011 Pagina

6 - 16

Table. Weekly work schedule Advanced Mathematics Week Grift 1 Material (HC en WG) Calculus, Optimization, Matrix Theory 1. An Introduction to Mathematical Economics 3. Matrix Theory 2 5. Multivariate Calculus: Theory 7. Multivariate Optimization without Constraints: Theory Constraint Optimization 9. Constrained Optimization: Theory 11. Optimization with Inequality Constraints: Theory Not: 13. Value Function and the Enveloppe Westbrock 5 6 Time 15. Introduction to Dynamics: Theory - esp. 15.3 Difference Equations 15. Introduction to Dynamics: Theory - esp. 15.4 Differential Equations 2. An introduction to Mathematical Economic Applications 4. Applications of Matrix Theory to Linear Models 6. Multivariate Calculus: Applications 8. Multivariate Optimization without Constraints: Applications 10. Constrained Optimization: Applications 12. Optimization with Inequality Constraints: Applications Not: 14. Value Function and the Envelope Theorem: Applications 16. Difference and Differential Equations: Applications 16. Difference and Differential Equations: Applications 2nd feedback session on No guest lecture week 3 and 4 Hein Roelfsema Social Exchange and Common Agency in Organizations 1st feedback session on Jan Renaud week 1 and 2 Linear programming No guest lecture Exercise to hand-in from: Feedback Guest lecturer Friday morning Friday morning Check webct for the correct date and time No guest lecture

No guest lecture

Grift 3 4

Christmas Westbrock 7 8

Game Theory 17. Static Games with Complete Information: Theory 19. Dynamic Games with Complete Information: Theory

18. Static Games with Complete Information: 3rd feedback session on Kris de Jaegher Applications week 5 and 6 20. Dynamic Games with Complete Information: Applications 4th feedback session on Hans Amman week 7 and 8 (depending on the exact date of the exam, this session can be held in week 9)

End term

Mathematics

15-11-2011

Pagina

8 - 16

If you have passed the effort requirement, the not rounded grade, based on the weighted average of the not rounded grades of both the midterm and the final, determines your rights regarding supplementary and replacement exams. The final result of Mathematics will be judged as satisfactory or unsatisfactory, to be expressed in the following mark: a grade 6 or higher is sufficient, a grade 5 or lower is unsatisfactory. Grades lower than 6 will be reported in whole numbers only. Over 6 the grade is rounded to half numbers. Table. Rounding of final grades. Not rounded final grade 0,00 - < 0,50 0,50 - < 1,50 1,50 - < 2,50 2,50 - < 3,50 3,50 - < 4,50 4,50 - < 5,50 Rounded final grade 0 1 2 3 4 5 Not rounded final grade 5,50 - < 6,25 6,25 - < 6,75 6,75 - < 7,25 7,25 - < 7,75 7,75 - < 8,25 8,25 - < 8,75 8,75 - < 9,25 9,25 - < 9,75 9,75 - 10,0 Rounded final grade 6 6,5 7 7,5 8 8,5 9 9,5 10

The tests are all closed-book exams. The use of graphical calculators is not permitted. It is also permitted to bring dictionaries, provided there is no handwriting in them. In the assessment of the assignments as well as the tests, the emphasis is not so much placed on the outcomes but on the justification of them. What is crucial to how your work is assessed is your interpretation of models, design of models, justification of the method chosen, and the steps you took in your analysis and/or structure of the solution. This could mean that even though your outcome is incorrect due to computational errors you can still score a reasonable number of points. The reverse also applies in that correct answers in terms of numbers (for example obtained via a graphical calculator) will be assessed as insufficient if the justification is absent or lacking (essential skill problem solving). Effort requirements The required effort for Mathematics consists of: - A group of students (max 3 students per group) should hand in a number of fully elaborated (handwritten) tutorial exercises before Monday 11.00 oclock of the next week, five out of eight times. Two out of five will be marked randomly (also see Assessment Method and Format: feedback on handed-in exercises). You may hand in your exercises at: - Adam Smith Bulding, Kriekenpitplein 21-22 - the lecture at Monday morning - All guest lectures are mandatory. The table below shows the material per week (again) and the date and time before which you have to hand in your exercise(s). Both on webct and at the end of this course manual you will find a schedule with the material for the tutorials as well as a schedule with the proposed

exercises in the even chapters for the effort requirement. You are allowed to choose each and every exercise of the even chapters. However, some are more challenging than others. Effort Based on the requirement material of week 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 Chapters 2&4 6&8 10 12 16 16 18 20 To be handed in: On Monday before 11.00 oclock Monday, week 2 Monday, week 3 Monday, week 4 Monday, week 5 Monday, week 6 Monday, week 7 Monday, week 8 Friday, week 8 (or Monday, week 9) Feedback class on (check webct for the date and time): Friday, week 3 Friday, week 3 Friday, week 5 Friday, week 5 Friday, week 7 Friday, week 7 Friday, week 8 Friday, week 8

Supplementary and replacement exams Fulfilling the required effort for Mathematics is necessary to apply for either a supplementary retake exam (AV) or a replacement retake exam (VV). The following rules apply, as stated in the rules laid out by the universitys board of directors: Anyone whos not rounded weighted average of the two exams is higher than 5.50 has passed Mathematics. Those who did not fulfil their effort requirements and whos not rounded weighted average over the two exams is lower than 5.50 did not pass the exam and are not allowed to do the reexam. Those who did fulfil the effort requirements and received a not rounded grade, based on the weighted average, of 5.00 or higher are allowed to do a supplementary retake exam (AV). The material to be studied can be found in the work schedules. If the mark for the supplementary retake exam is sufficient the mark for Mathematics will be 6. Those who did fulfil the effort requirement and received a not rounded grade, based on the weighted average, of 4.00 or higher are allowed to the replacement exam but are obliged to do the complete exam (includes all subjects; VV). The grade for the replacement exam is the grade for the course Mathematics. Those who did not fulfil the effort requirement and received a not rounded grade, based on the weighted average, less than (and not equal to) 4.00 are not allowed to the replacement exam. The grade for the course Mathematics can then only be passed during the next academic year. The rights to follow lectures and tutorials are then in accordance with the then applying rules for repeaters education. Those who are allowed to do the supplementary retake exam, are also allowed to redo the complete material on the exam, i.e. doing a replacement retake exam (VV).

Table. Supplementary or retake exam, if you fulfill the effort requirement. Not rounded, weighted Supplementary or Final grade Mathematics average of the grades of replacement exam the midterm and the final
Mathematics 15-11-2011 Pagina

10 - 16

0,00 - < 4,00 4,00 - < 4,99 5,00 - < 5,50

no supplementary or replacement exam Replacement exam supplementary exam,

replacement allowed

rounded final grade 0, 1, 2, 3 of 4 rounded grade replacement exam if sufficient: 6 if insufficient: rounded, weighted average grade of midterm and final rounded grade replacement exam

Materials Jeffrey Baldani, James Bradfield and Ronald W. Turner, Mathematical Economics, 2nd edition, Thomson, South-Western, 2005 (available as a custom book) Lecture material (the sheets are made available via WebCT). Course manual 2011/2012 Documentation on Problem solving Language of instruction Dutch/English. Assignments The exercises as well as the optional exercises are in the literature. Feedback See Format: feedback on handed-in exercises

Mathematics

15-11-2011

Pagina

11 - 16

Appendix: Material for the tutorials and effort requirement

Tutorial: week 1 Effort requirement: week 1 Chapter 1 General A.3 ; A.5 ; A.6 2.1 A.1 ; A.2 ; A.4 3.9 ; 3.10 ; 3.11 ; 3.12 3.3 ; 3.4 ; 3.5 ; 3.6 Chapter 2 Chapter 3 Chapter 4

Labor Unions 2.2 2.3 ; 2.5a Supply and Demand Profit maximization: a competitive firm 2.4 2.5b Profit maximization: monopoly 2.6 ; 2.7 2.8 ; 2.9 Profit maximization: duopoly 2.10 2.11 Profit maximization: oligopoly 2.12 4.4 4.1 4.2 ; 4.3

Macroeconomic model - General - Keynes 2.16 2.13 2.14 - IS-LM - AD-AS 2.15 4.5 4.6

Mathematics

15-11-2011

Pagina

12 - 16

Tutorial: week 2 Effort requirement: week 2 Chapter 5 General 5.1 ; 5.2 ; 5.3 ; 6.29 5.4: a,e,g 5.5 ; 5.6 5.7 ; 5.8 Labor Unions Labour Supply and Demand Profit maximization: a competitive firm Profit maximization: monopoly Profit maximization: duopoly 6.23 / 6.24 6.25 / 6.26 / 6.28 6.27 Profit maximization: oligopoly Macroeconomic model - General 6.37 / 6.38 6.22 - Keynes - IS-LM 6.1 / 6.2 6.4 / 6.14 6.3 / 6.5 / 6.12 / 6.13 / 6.15 6.7 / 6.8 6.6 Cosumer theory Utility functions - level curves - homogeneity Producer theory 8.1 / 8.3 8.2 / 8.4 6.31 - 6.35 6.36 8.9 / 8.10 / 8.11 / 8.12 6.30 6.39 7.2 ; 7.3 :a,d 8.5 / 8.13 7.4 ; 7.5:e 7.9 ; 7.10: a,d 7.6 : 7.7 : 7.8 8.6 / 8.7 / 8.8 Chapter 6 Chapter 7 Chapter 8

- AD-AS

Mathematics

15-11-2011

Pagina

13 - 16

Tutorial: week 3 & week 4 Effort requirement: week 3 & week 4 Chapter 9 General week 3 9.1 9.2 / 9.3 / 9.4 9.5 Chapter 10 week 3 Chapter11 week 4 11.1 a & f 11.2 a & d 11.3 / 11.4 11.5 a & c 11.6 (make a graph) Chapter 12 week 4

Labor Unions Labour Supply and Demand Profit maximization: a competitive firm Profit maximization: monopoly Profit maximization: duopoly Profit maximization: oligopoly 12.3 / 12.5 / 12.11 12.13 / 12.17

Macroeconomic model - General - Keynes - IS-LM - AD-AS Cosumer theory Utility functions - level curves - homogeneity Producer theory Production functions 10.1 / 10.2 / 10.3 / 10.7 / 10.8 12.2 / 12.7 10.4 / 10.16 / 10.17

Mathematics

15-11-2011

Pagina

14 - 16

Tutorial: week 5 en week 6 Effort requirement: week 5 en week 6 Chapter 15 General week 5 15.1, 15.2, 15.3, 15.4, 15.5 Chapter 15 week 6 15.6, 15.7: a-i, 1 extra exercise on WebCT Chapter 16 week 5 Chapter 16 week 6

Pollution & emission tax Pollution & emission permits Fisheries Supply and Demand Profit maximization: a competitive firm Profit maximization: monopoly Profit maximization: duopoly Profit maximization: oligopoly Macroeconomic model - General - Keynes - IS-LM - AD-AS - Phillipscurve / expectations

16.1 16.2 16.13

16.12

16.5

16.4

16.19 / 16.20 16.17 / 16.18

16.23 / 16.24

Mathematics

15-11-2011

Pagina

15 - 16

Tutorial: week 7 en week 8 Effort requirement: week 7 en week 8 Chapter 17 General week 7 17.2, 17.3, 17.4 17.6, 17.7 Chapter 18 week 7 Chapter 19 week 8 19.4, 19.8, (19.10) 19.11, 19.12 Chapter 20 week 8

Investment games 18.1 Oligopoly models Cournot duopoly Cournot oligopoly Bertrand oligopoly with homogenous products Bertrand oligopoly with heterogenous products Rent seeking behaviour two-players n-players Public goods 18.11, 18.12 Household time allocation 18.15 Bargaining 20.1, 20.2 Trade policy and oligopoly 20.4, 20.5, 20.6, 20.7, 20.8 Two-stage duopoly games 20.9, 20.10, 20.11,20.12 20.13 Repeated games and oligopoly 20.14, 20.15, 20.16 18.10 18.2, 18.4, 18.9, 18.14 18.5 18.7, 18.9 18.8, 18.13

Mathematics

15-11-2011

Pagina

16 - 16