This is the first part of the two part course, and is designed to expose students to the basic principles of economics. This course has the objective of equipping the students in a rigorous and comprehensive manner with the various aspects of demand analysis, consumer behaviour, production theory, cost analysis and market structure.
Unit-1 Consumer theory
Nature and Scope of Economics, Methodology of Economics, Demand and supply function; Law of
demand, Elasticity of demand – price, income and cross elasticities, and their measurements; Elasticity of
supply; Price determination.
Theory of consumer behaviour: Cardinal and ordinal Utility analysis and Consumer’s equilibrium.
Indifference curve and its properties, the consumer-– price consumption curve and income consumption curve, - price effect, income effect and substitution effect (Hicks and Slutsky methods), inferior goods and giffen goods, derivation of demand curve.
Unit-2 Production, Costs & Revenue
Production decisions; Production function; law of variable proportions; returns to scale; characteristics of Isoquants, Factor substitution; Ridge lines; least cost combination of factors, Internal and external economies and diseconomies.
Cost function: different concepts of costs, short run cost analysis and long run cost Analysis- relation
between the expansion path and cost function. Concepts of revenue; total, average and marginal revenue and their relationships, Break-even-analysis & its uses.
Unit-3 Market Structure
Perfect and imperfect markets, Pure competition, Equilibrium of the firm and industry under perfect
competition, Role of time element in the determination of value, supply curve under perfect competition, Equilibrium of the firm under monopoly, Discriminating monopoly, Conditions of equilibrium under price discrimination, Degree of monopoly power.
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