Semester-I

Core Course 1 (CC 1) BA/BSc (General) / Generic Elective Course I (GE -1) for BA/BSc Honours students [other than students having Economics (Honours)]/BA (General) Generic Elective Course I (GE-I) for students not having Economics as Core Course

Name of the Course: Introductory Microeconomics

ECO-G-CC-1-1-TH/ ECO--GE-1-1-TH /ECO-G-GE-1-1-TH

1. Exploring the subject matter of Economics

• • Why study economics? Scope and method of economics; the economic problem: scarcity and choice; the question of what to produce, how to produce and how to distribute output; science of economics; the basic competitive model; prices, property rights and profits; incentives and information; rationing; opportunity sets; economic systems; reading and working with graphs.

2. Supply and Demand: How Markets Work, Markets and Welfare

• • Markets and competition; determinants of individual demand/supply; demand/supply schedule and demand/supply curve; law of demand and law of supply; market versus individual demand/supply; shifts in the demand/supply curve, demand and supply together; how prices allocate resources; elasticity of demand - own price, cross price and income elasticity of demand-total revenue, average revenue, marginal revenue and price elasticity of demand; elasticity and its application; controls on prices; taxes and the costs of taxation; consumer surplus; producer surplus and the efficiency of the markets.

3. The Households

• • Utility maximization-the cardinal approach. Total utility and marginal utility-law of diminishing marginal utility-relation between law of demand and law of diminishing marginal utility

  • Utility maximization-the ordinal approach. Consumption decision and the budget constraint, consumption and income/price changes, description of preferences (representing preferences with indifference curves); properties of indifference curves; consumer‗s optimum choice; the price consumption curve and the income consumption curve; derivation of the demand curve from price consumption curve; income and substitution effects.

4. The Firm and Perfect Market Structure

• • Production function of a firm; total product, average product and marginal product; concept of isoquant ; returns to scale; behaviour of profit maximizing firms and the production process; the cost function, short run costs and output decisions; costs and output in the long run.

  • Features of a perfectly competitive market. Short run equilibrium under perfect competition. Supply curve of a firm. Long run equilibrium under perfect competition.

5. Imperfect Market Structure

• • Monopoly equilibrium- differences with perfect competition. Basic ideas of price-discriminating monopolist .

6. Input Markets

• • The labour market - basic concepts - derived demand, productivity of an input; marginal productivity of labour, marginal revenue product); the land market- concepts of rent and quasi rent.