Simple Capital Theory (UMAP)

This module applies multivariable calculus to economics. Some of the models which economists have developed to show how economic principles determine the length of time which assets like trees and wine are held until they are marketed are analyzed. It discusses how the same principles can be used to determine the durability of machinery. Students become familiar with: 1) optimization, the implicit function theorem; 2) basic concepts of capital theory, discounting; and 3) comparative statics -- that is, the effects of parameter changes on economic choice variables.

Table of Contents:

INTRODUCTION

1. DISCOUNTING

2. THE SIMPLEST MODEL

3. ANOTHER SIMPLE MODEL

4. A HARDER PROBLEM

5. A CLASSICAL MODEL IN CAPITAL THEORY

6. PROBLEMS

7. REFERENCES

8. MODEL EXAM

9. ANSWERS TO PROBLEMS

10. ANSWERS TO EXAM