Subject Code: ECO 203
Course Title: Microeconomics
Course No: ECO 203
Nature of Course: Theory & Practical
Full Marks: 100
Pass Marks: 50
Credit Hours: 3
Unit 1: Fundamentals of Microeconomics (5 LHs)
Microeconomics: concept and scope; Microeconomics in business decisions: nature and uses; Basic principles of economics: how people make decisions, how people interact and
how the economy as a whole works
Unit 2: Analysis of Demand, Supply and Market Efficiency (12 LHs)
Demand function: concept and types, movement and shifts in demand curve; Supply function: concept and types, movement and shifts in supply curve; Market equilibrium;Effect of changes in demand and supply on market equilibrium; Effect of government policy (Tax, subsidy and price control) on market equilibrium; Market efficiency:concepts and measurement (by consumer's surplus and producer's surplus); Priceelasticity of demand: concept and calculation; Price elasticity of demand in demandcurve; Relationship between revenue and price elasticity ; Uses of price elasticity ofdemand in business decision making; Concept of income elasticity of demand, cross elasticity of demand, advertisement elasticity of demand and elasticity of supply.
Unit 3: Analysis of Consumer’s Behavior (4 LHs)
Cardinal approach: assumptions, consumer's equilibrium and derivation of demand curve;Ordinal approach: concept, assumptions and properties of indifference curve; Marginalrate of substitution; Price line; Consumer's equilibrium; Price effect and derivation of demand curve for normal goods.
Unit 4: Production, Cost and Profit analysis (12 LHs)
Production function: concept and types; concept of Cobb-Douglas production function;Optimal employment of one and two variable inputs; Cost function: concepts, implicit costand explicit cost, accounting cost and economic cost, opportunity cost; Short-run costs andlong run costs, fixed and variable costs; Law of variable proportion and derivation of shortcost curves; Isoquants, Iso-cost line, laws of returns to scale and derivation of long runaverage cost curve; Economies and diseconomies of scale; Relation between average costand marginal cost; Profit: business profit and economic profit
Unit 5: Firms in Market and Pricing Practices (12 LHs)
Market structure: concept and characteristics; Profit maximization goal of firm; Price andoutput determination under perfect competition: short-run and long-run equilibrium,Derivation of short run supply curve of a firm and industry; Price and outputdetermination under monopoly: short-run and long-run equilibrium; Price and outputdetermination under monopolistic competition: short-run and long-run equilibrium,selling cost and effect on equilibrium; Concept and types of cartel; Pricing under jointprofit maximization cartel; Game theory: concept, dominant strategy, Nash equilibriumand prisoner’s dilemma; Pricing practices: price discrimination, cost plus pricing, predatory pricing, skimming pricing and penetration pricing
Unit 6: Markets for Resources (3 LHs)
Demand for labor, Supply of labor; Equilibrium in the labor market; Wage differentials;Other factors of production: land and capital.
Mankiew, N.G. Microeconomics, Newyork: Latest Edition
McConnell, C.R., Brue, S.L. and Flynn, S.M. Economics: Principles, Problems and Policies,
New Delhi, McGraw Hill Education. Latest Edition
Koutsoyianis, A. Modern Microeconomics, London, Macmillan. Latest Edition
Shrestha,R.G and Adhikari,G.M. Microeconomics for Business, Kathmandu,KEC
publications. Latest Edition
Sloman, J. and Sutclife, M. Economics for Business, New Delhi, Pearson Education.
