University of Cambridge: Economics

Quantitative Methods in Economics

Paper Content

Although this paper has two components (Mathematics and Statistics) the unifying principle is

the application of simple analytical techniques to a range of empirical and theoretical problems in Economics. The paper outline sets out the lecture courses for the two components of the paper separately. Candidates are required to cover both components of the paper: they will not be able to pass by concentrating exclusively either on Mathematics or on Statistics. The three-hour written examination for the paper (which carries 80% of the marks for the course) will contain separate sections on Mathematics and Statistics, each carrying 40% of the mark for the whole course: candidates will be required to answer questions from all sections of the paper. In addition there will be a ‘take-home’ Statistics project early in the Easter Term, which will carry 20% of the mark for the whole course. This project will test students’ ability to compile their own data from published sources, and to apply economic reasoning and simple quantitative techniques to draw conclusions about economic phenomena.

Mathematics - Aims

Mathematical techniques are an indispensable tool of economics. Using mathematics, an economist can formalise and solve problems that cannot be addressed in other ways. The aim of this component of the paper is to cover the key areas of mathematical economics needed to allow candidates to tackle the compulsory papers of the Economics Tripos successfully. The general level of the mathematics concerned is roughly equivalent to A level, but some of the techniques, and almost all the applications to economics, are new for the majority of students.

Mathematics - Objectives

By the end of the paper, students should have a good understanding of key mathematical concepts and techniques and be able to apply these to economic problems. It is not expected that students will be able to carry out rigorous mathematical derivations.

Mathematics - Content

The mathematics teaching for the paper will assume that candidates are familiar with the basic material set out below (which is basically the content of the Core Mathematics modules of a standard A-Level Mathematics course). Candidates who took mathematics qualifications other than A-level (for example, IB or European qualifications) should check that they have covered all of these topics: if they have not, they should contact their Director of Studies for further information and advice on reading.

Module C1

definition of integers, rationals and real numbers indices

pairs of simultaneous linear equations

quadratic equations

graphs of linear and quadratic equations, and simple coordinate geometry

differentiation of polynomial functions

simple integration

Module C2

sum of geometric progression

unconstrained optimisation of a function of one variable

definite integrals

Module C3

definition of function, domain, range and inverse function

natural logarithm and exponential function

differentiation of ln x and ex

product, quotient and chain rules for differentiation

Module C4

rates of change

integration of x^-1 and e^x

simple integration by substitution and by parts

vectors – addition, subtraction and scalar product

Students may find it helpful to bring their A-Level (or equivalent) notes, and any textbooks, with them to

Cambridge.