Mathematical Economics

Subject ECON30020 (2016)

Note: This is an archived Handbook entry from 2016.

Credit Points: 12.5
Level: 3 (Undergraduate)
Dates & Locations:

This subject has the following teaching availabilities in 2016:

Semester 2, Parkville - Taught on campus.
Pre-teaching Period Start not applicable
Teaching Period 25-Jul-2016 to 23-Oct-2016
Assessment Period End 18-Nov-2016
Last date to Self-Enrol 05-Aug-2016
Census Date 31-Aug-2016
Last date to Withdraw without fail 23-Sep-2016

Timetable can be viewed here. For information about these dates, click here.
Time Commitment: Contact Hours: Two hours of lectures and a 1-hour tutorial per week
Total Time Commitment: Not available

One of the following:

Study Period Commencement:
Credit Points:
Summer Term, Semester 1


Recommended Background Knowledge:

Please refer to Prerequisites and Corequisites.

Non Allowed Subjects:

Students who have completed ECON40001 Advanced Microeconomics are not able to take ECON30020 Mathematical Economics.

Core Participation Requirements:

For the purposes of considering request for Reasonable Adjustments under the Disability Standards for Education (Cwth 2005), and Student Support and Engagement Policy, academic requirements for this subject are articulated in the Subject Overview, Learning Outcomes, Assessment and Generic Skills sections of this entry.

It is University policy to take all reasonable steps to minimise the impact of disability upon academic study, and reasonable adjustments will be made to enhance a student's participation in the University's programs. Students who feel their disability may impact on meeting the requirements of this subject are encouraged to discuss this matter with a Faculty Student Adviser and Student Equity and Disability Support:


Assoc Prof Roberto Raimondo


Subject Overview:

Set theory, univariate calculus and optimisation are reviewed and applied to the theory of the firm and the theory of consumer demand. Linear algebra concepts including matrix operations, vector spaces and quadratic forms are introduced and applied to problems in economics and econometrics. Applications of multivariate calculus including constrained optimisation, the envelope theorem and Kuhn-Tucker conditions are covered.

Learning Outcomes:
  • Recognise and set up standard economic problems (the consumption decision, the production decision, cost minimization, simple multi-period decision making) as optimization problems
  • Solve specific optimization problems such as those involving utility and profit maximization and cost minimization
  • Solve market equilibrium problems
  • Explain the geometry of constrained optimization, the geometry of Lagrange multipliers;
  • Explain the difference between necessary and sufficient conditions, and their application at both interior and corner points;
  • Solve matrix algebra problems including those involving quadratic forms and eigenvalues and vectors, and explain the connection between positive definite forms and convexity;
  • Solve problems in multivariate calculus, including the calculation of gradients and tangents, and differentiating a function along a curve;
  • Set up and solve Khun Tucker problems;
  • Explain and interpret Lagrange multipliers as shadow prices;
  • Solve problems involving simple comparative statics, both for optimization and equilibrium problems, using the univariate implicit function theorem, single crossing conditions and envelope methods.

One 2-hour end-of-semester exam (60%) and problem sets not exceeding 4000 words (40%).

Prescribed Texts:

Mathematics for Economics, (2nd edn)(M Hoy, J Livernois, C McKenna, R Rees and T Stengos 2001), MIT Press, 2001, ISBN 0262082942 (hard cover) 0262582074 (paperback)

Breadth Options:

This subject potentially can be taken as a breadth subject component for the following courses:

You should visit learn more about breadth subjects and read the breadth requirements for your degree, and should discuss your choice with your student adviser, before deciding on your subjects.

Fees Information: Subject EFTSL, Level, Discipline & Census Date
Generic Skills:
  • High level of development: problem solving; interpretation and analysis; critical thinking.

  • Moderate level of development: oral communication; written communication; collaborative learning; team work; statistical reasoning; application of theory to practice; receptiveness to alternative ideas.

  • Some level of development: synthesis of data and other information; evaluation of data and other information; use of computer software; accessing data and other information from a range of sources.

Related Course(s): Master of Commerce (Finance)
Related Majors/Minors/Specialisations: Master of Economics electives

Download PDF version.