Course Description: 

Microeconomics is the branch of Economics which studies how consumers and producers make ideal choices and how real market outcomes are influenced by these choices.

The course primarily reveals how product market functions, and how firms make decision related to production, product pricing, market placement, etc. It also covers how producers and consumers interact in the marketplace and how demand and supply mutually determine the market prices.

Students who would study Microeconomics would be clear about the concept of market conditions like perfect competition, monopoly and oligopoly, and how firms’ strategies and decision making process differ across these market types.  

Course Objectives: 
  • To monitor how individual spends on day to day items.
  • Examine behavior of consumers and their effect on product market.
  • Be able to understand how demand and supply are influenced by the interaction of consumers and producers in the market.
  • Take correct business decisions related to production, pricing and placement of goods and services.
  • Analyze the impact of tax on level of consumption and production.
  • Understand the nature of competition in marketplace.
  • Be able to analyze markets to determine production inputs such as labor, capital, etc.
  • Understand prospective roles of government in economy and be able to scrutinize outcomes of government intervention into markets.
Course Syllabus: 

Microeconomics and Basic Concepts

  • Introduction to Microeconomics
  • Basic Issues in Economics: Scarcity, Efficiency and Alternatives
  • Basic Division/Classification of Economic Studies
  • Scope and Purpose of Microeconomics and Its Significance in Business Decision Making
  • Microeconomics and Macroeconomics - Basic Differences
  • Need for Economic Model, Assumptions, Theories, Laws and Hypothesis in Microeconomics

Theory of Demand and Supply

  • Demand Function
    • Concept of Demand Function and Its Types
    • Movement Along a Demand Curve and Shifts in Demand Curve
  • Supply Function
    • Concept of Supply Function and Its Type
    • Movement Along a Supply Curve and Shifts in Supply Curve
  • Concept of Elasticity of Demand and Supply
    • Price Elasticity of Demand: Degrees, Measurement (Percentage, Total Outlay, Point and Arc Methods), Uses in Business Decision Making
    • Income Elasticity of Demand: Degrees, Measurement (Percentage, Arc and Point Methods)
    • Cross Elasticity of Demand: Types, Measurement (Percentage and Arc Methods)
    • Price Elasticity of Supply: Degrees, Measurement (Percentage, Point and Arc Methods)
    • Producer Surplus
    • Consumer Surplus
    • Effects of Government Intervention
    • Effects of Price Ceiling and Price Floor and Dead Weight Loss
    • Concept of Externalities

Consumer Behavior

  • Concepts of Utility: Cardinal and Ordinal
  • Basic Understanding of the Law of Diminishing Marginal Utility
  • Indifference Curves Analysis: Concept, Assumptions and Properties
  • Principle of MRS
  • Consumer's Equilibrium: Interplay of the Budget Line and Indifference Curves
  • Price Effect: Derivation of PCC and Demand Curves for Natural Goods (Substitutes and Complements)
  • Income Effect: Derivation of ICC and Engel Curves for Normal Goods and Inferior Goods
  • Substitution Effect: Hicksian Approach
  • Decomposition of Price Effect into Income and Substitution Effect
  • Effect of Changes in Income and Prices

Theory of Production

  • Introduction to Production
  • Introduction to Production Functions and Its Types (Short-run, Long-run and Cobb Douglas)
  • Factors of Production
  • Law of Variable Proportions: Isoquants (Meaning, assumptions and properties) (Principle of marginal rate of technical substitution) (Optimal employment of two inputs or least cost combination of two inputs)
  • Concepts of Total, Average and Marginal Products
  • Introduction to the Laws of Returns to Scale

Costs and Revenue Curves

  • Concepts of Costs: Opportunity Cost, Explicit and Implicit Costs, Economic and Accounting Costs, Sunk Costs
  • Short-run Costs
    • Behavior of Short-run Total Costs
    • Behavior of Average and Marginal Cost Curves
    • Relation Between AC and MC, TVC and MC and AC and AFC and AVC
  • Long-run Costs
    • Meaning
    • Derivation of U-shaped and L-shaped LAC with Reasons
  • Revenue
    • Concepts of Revenues: Total, Average and Marginal Revenues Under Condition of Perfect and Imperfect Competition
    • Relationship of Revenues (TR, AR and MR) with Price Elasticity of Demand
    • Economies and Diseconomies of Scale
    • Concept of and Conditions for Profit Maximization by Firms

Market Firms and Product Pricing

  • Concept of Markets and Introduction to Market Forms
  • Important Features of Different Market Forms
  • Basic Concept of Degrees of Market Power Exercised
  • TR-TC Approach
  • MR-MC Approach
  • Perfect Competition
    • Features of Perfect Competition
    • Pricing and Production Decisions in the Short and Long-run Time Periods
  • Monopoly
    • Features
    • Pricing and Production Decisions in the Short and Long-run Time Periods
    • Social Costs of Monopoly
    • Sources of Monopoly Power
    • Monopoly and Consumer's Surplus
    • First, Second and Third Degree Price Discrimination
  • Oligopoly
    • Meaning and Features
    • Basic Distinction from Monopolistic Competition

Markets for Factor Inputs and Factor Pricing

  • Concept of Factor Markets: Demand for and Supply of Factors of Production
  • Preliminary Notion of the Determination of Rent, Wages, Interest and Profit
  • Concept of Economic Rent and Its Determination: Modern Theory of Rent
  • Marginal Productivity Theory of Wages
  • Loanable Funds Theory of Interest
  • Liquidity Preference Theory of Interest
  • Dynamic Theory of Profits
  • Innovation Theory of Profits