MICRO ECONOMICS

MICRO ECONOMICS
AREA OF STUDY:
BAC 121

Year: 1
Semester: 2

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* Continuous
** Duration: 3 hours

Objectives:
The students shall be able to comprehend concepts, types, importance etc. of microeconomics. They shall study consumer behavior, demand function, supply function, theories of production, product pricing, etc.
Course Contents
Unit 1: Micro Economics L. H. 5
Concept, Types, Interdependence with macroeconomics, Importance, Limitations, Distinction between micro and macro economics.
Unit 2: Consumer Behavior L. H. 8
Introduction of cardinal utility analysis and its limitations. Ordinal utility analysis, Indifference curves, (concept and properties), Marginal rate of substitution, Consumers equilibrium, Income, Price and substitution effect. Decomposing price effect into income and substitution effects, ICC and PCC in Giffen Goods.
Unit 3: Demand Function L. H. 10
Concept, Determinants, Elasticity of demand (Price, Income, Cross), Measurement of price elasticity of demand (percentage; total outlay, point and are methods). Importance of elasticity of demand. Marginal rate of Technical Substitution of labour for capital (MRTS LK)
Unit 4: Theory of Production L. H. 7
Production function, Law of variable proportion, Iso-quant curves (concept and properties), Iso-cost line, Producer's equilibrium, Maximization of output subject to given cost and minimization of cost subject to given output, Returns of scale.
Unit 5: Cost and Revenue L. H. 5
Concept, Cost concepts, Relationship between AC and MC, Derivation of LAC, Different types of revenue concepts, AR and MR in different market conditions and their relations.
Unit 6: Supply Function L. H. 5
Concept, Derivation of supply curves, Elasticity of supply, Measurement and importance.
Unit 7: Theory of Product Pricing L. H. 8
• Types of Market
• Perfect competition: Concept, Price and output determination, Equilibrium of firm and industry
• Monopoly: Concept, Price & output determination (LR&SR), Price discrimination & its methods.
• Monopolistic Competition: Concept, Price and output determination (LR & SR).
• Concept and Characteristics of Oligopoly
Unit 8: Theory of Factor Pricing L. H. 6
• Rent: Concept, Modern Theory of Rent, Quasi Rent
• Wage: Concept, Marginal Productivity Theory
• Interest: Concept, Liquidity Preference Theory
• Profit: Concept, Innovation and Uncertainty Theories of Profit
Suggested Readings:
1. Koutsoyianuis A., "Modern Micro Economics, " MacMillan Press
2. Jhingan, M. L., "Micro Economic Theory," Konark Publishers.
3. Chopra, P. N., "Advanced Micro Economics. "Kalyani Publication."
4. Dwivedi, D. N