The Introductory Microeconomics course introduces the students to the first course in economics from the perspective of individual decision-making as consumers and producers. The students learn some basic principles of microeconomics, interactions of supply and demand, and characteristics of perfect and imperfect markets.
Course Modules:
Introduction to Markets:
Problem of scarcity and choice: scarcity, choice and opportunity cost; production possibility frontier; economic systems. Demand and supply: law of demand, determinants of demand, shifts of demand versus movements along a demand curve, market demand, law of supply, determinants of supply, shifts of supply versus movements along a supply curve, market supply, market equilibrium. Applications of demand and supply: price rationing, price floors, consumer surplus, producer surplus. Elasticity: price elasticity of demand, calculating elasticity, determinants of price elasticity, and other elasticities.
Consumer Theory:
Budget constraints, concept of utility, diminishing marginal utility, income and substitution effects; consumer choice: indifference curves, derivation of demand curve from indifference curve and budget constraints
Production and Cost Theory:
Production: behavior of profit-maximizing firms, production process, production functions, the law of variable proportions, choice of technology, isoquant and isocost lines, cost-minimizing equilibrium condition. Costs: costs in the short run, costs in the long run, revenue and profit maximization, minimizing losses, short-run industry supply curve, economies and diseconomies of scale, and long-run adjustments.
Perfectly Competitive Markets:
Assumptions: theory of a firm under perfect competition, demand, and revenue; equilibrium of the firm in the short run and long run; long-run industry supply curve: increasing, decreasing, and constant cost industries. Welfare: allocative efficiency under perfect competition.
Imperfect Competition:
(a) Theory of a Monopoly Firm: Concept of imperfect competition; short-run and long-run price and output decisions of a monopoly firm; concept of a supply curve under monopoly; comparison of perfect competition and monopoly, social cost of monopoly, price discrimination; remedies for monopoly: Antitrust laws, natural monopoly. (b) Imperfect Competition: Monopolistic competition: Assumptions, SR & LR price and output determinations under monopolistic competition, economic efficiency, and resource allocation; oligopoly: assumptions, oligopoly models, game theory, contestable markets, the role of government.
Income Distribution and Factor Pricing:
Input markets: demand for inputs; labor markets, land markets, profit maximization condition in input markets, input demand curves, distribution of Income.
Basic Theory of International Trade: Introductory Microeconomics
Absolute advantage, comparative advantage, terms of trade, sources of comparative advantage, trade barriers, free trade/ protectionism.
NOTE: The above modules give a rough idea about the topics covered in our Introductory Macroeconomics course. Students will be given modules as per their respective Universities’ outlines after prior discussion. dseonline
