Module

Optimization Techniques for Economists

Module description

Summary:

Optimising decision behaviour is at the core of most economic analysis. Whether we ask how a consumer should behave, how firms should compete in a market or how governments should decide on their monetary policy, the ability to solve optimisation problems is key to finding an answer. This module provides a thorough introduction to the techniques involved in unconstrained and constrained optimisation. It expands on the optimisation techniques introduced in the microeconomics and macroeconomics courses in the first term and lays the foundation for many advanced economic option courses in the second term.

Additional Information: Internationalisation

Microeconomics is relevant across countries as it is based on mathematical models.

Sustainability

All of the resources for this module are available on the ELE (Exeter learning Environment).

Employability

This module equips students with logical thinking, numeracy and writing skills, as well as an understanding and theoretical knowledge of economic issues. These help students think like economists, a quality highly valued by employers.

 

[PLEASE NOTE THIS MODULE IS NOT AVAILABLE TO MATHS STUDENTS]

Full module specification

Module title:Optimization Techniques for Economists
Module code:BEEM103
Module level:M
Academic year:2020/1
Module lecturers:
  • Dr Szabolcs Deak - Lecturer
Module credit:15
ECTS value:

7.5

Pre-requisites:

This module is not available to Maths students.

Co-requisites:

None

Duration of module: Duration (weeks) - term 1:

11

Module aims

Economic problems are often expressed using mathematical models which are to be formulated, analysed and to be confronted with real-world data. The module aims to make you familiar with those mathematical tools and methods which are used frequently in most economic models and to demonstrate how they are applied.

ILO: Module-specific skills

  • 1. demonstrate the skill to differentiate functions in several variables
  • 2. solve economic optimisation problems

ILO: Discipline-specific skills

  • 3. explain the important role of mathematical tools in economics and related disciplines in a global setting
  • 4. apply essential skills to analyse models from microeconomics and macroeconomics
  • 5. demonstrate familiarity with concepts of linear algebra that are essential for econometrics

ILO: Personal and key skills

  • 6. demonstrate numeracy and the ability to handle logical and structured problem analysis
  • 7. present written and quantitative data effectively
  • 8. demonstrate independent learning and time management
  • 9. demonstrate inductive and deductive reasoning

Learning activities and teaching methods (given in hours of study time)

Scheduled Learning and Teaching ActivitiesGuided independent studyPlacement / study abroad
331170

Details of learning activities and teaching methods

CategoryHours of study timeDescription
Scheduled learning and teaching activities22Lectures
Scheduled learning and teaching activities11Tutorials
Guided independent study117 Reading, preparation for classes and assessments.

Formative assessment

Form of assessmentSize of the assessment (eg length / duration)ILOs assessedFeedback method
Tutorial exercisesVarious1-9Verbal
Bi-weekly problem sets (homework)4 problem sets with 3 questions each1-9ELE

Summative assessment (% of credit)

CourseworkWritten examsPractical exams
30700

Details of summative assessment

Form of assessment% of creditSize of the assessment (eg length / duration)ILOs assessedFeedback method
Examination702 hours1-9Written
Average of bi-weekly problem sets304 problem sets with 3 questions each1-9ELE

Details of re-assessment (where required by referral or deferral)

Original form of assessmentForm of re-assessmentILOs re-assessedTimescale for re-assessment
Examination and problem setsExamination (100%) 2 hours1-9Aug/Sep

Syllabus plan

Introduction


Univariate functions and their properties, differentiation of univariate functions, unconstrained univariate optimization

Multivariate functions and their properties, differentiation of multivariate functions, unconstrained multivariate optimization and applications

Constrained optimization and applications, the Lagrange multiplier method, the Kuhn-Tucker theorem

Infinite horizon constrained optimization problems

Indicative learning resources - Basic reading

Essential reading:

  • Knut Sydsæter, Peter Hammond, Arne Størm, and Andrés Carvajal (2016): Essential Mathematics for Economic Analysis, 5th edition, Pearson

Optional reading:

Alternative textbooks covering the same topics. You may find some more accessible than our main textbook:

  • Carl P. Simon and Lawrence Blume (2010): Mathematics for Economists, International student edition, W. W. Norton
  • Ian Jacques (2015): Mathematics for Economics and Business, 8th edition, Pearson
  • Teresa Bradley (2013) Essential Mathematics for Economics and Business, 4th edition, Wiley.
  • Kevin Wainwright and Alpha C. Chiang (2005): Fundamental Methods of Mathematical Economics, 4th edition, McGraw-Hill

More advanced textbooks for the interested reader:

  • Knut Sydsaeter, Peter Hammond, Atle Seierstad, and Arne Strøm (2008): Further Mathematics for Economic Analysis, 2nd edition, Pearson
  • Avinash K. Dixit (1990) Optimization in Economic Theory, 2nd edition, Oxford University Press. A superb text on optimization, but out of print and it has always been very expensive.
  • Daniel Leonard and Ngo van Long (1991): Optimal Control Theory and Static Optimization in Economics, Cambridge University Press

Module has an active ELE page?

Yes

Origin date

17/07/2014

Last revision date

13/08/2020