Microeconomics for Business

Microeconomics: meaning, scope, uses and limitations of microeconomics; Business economics: nature and scope; Basic concepts: production possibility curve, marginal analysis, incremental analysis, static and dynamic equilibrium analysis in microeconomics; and Ten principles of economics.

Demand function: types, determinants of demand, movement and shift in demand curve; Supply function: types, determinants of supply, movement and shift in supply curve; Market equilibrium; Effect of changes in demand and supply on market equilibrium; Effect of government policy (Tax, subsidy and price control) in market equilibrium; Concept of market efficiency; and Measuring market efficiency by consumer's surplus and producer's surplus.

Price elasticity of demand: concept, degree and calculation (percentage/proportionate and averagemethod); Point price elasticity of demand; Price elasticity and total expenditure; Income elasticity of demand: concept, degree and calculation (percentage/proportionate and average method); Cross elasticity of demand: concept, degree and calculation (percentage/proportionate and average method);; Concept of advertisement elasticity of demand; and Uses of price, income, cross and advertisement elasticity of demand; and Price elasticity of supply: concept, degree and calculation (percentage/proportionate and average method)

Cardinal approach: assumptions, consumer's equilibrium, criticisms and derivation of demand curve; Ordinal approach: assumptions and properties of Indifference curve; Marginal rate of substitution; Price line; Consumer's equilibrium; Price effect and derivation of price consumption curve (normal goods and Giffen goods); Income effect and derivation of income consumption curve (normal and inferior goods); Substitution effect; Decomposition of price effect into income and substitution effect; and Derivation of demand curve for normal goods.

Production function: Short-run and Long run production functions; concept of Cobb-Douglas production function; Law of variable proportions; Isoquant: assumptions, marginal rate of technical substitution and properties; Iso-cost curve; Optimal employment of inputs; and Laws of return to scale.

Cost function; Concept of costs: Implicit cost and explicit cost, accounting cost and economic cost, historical cost and replacement cost, separable cost and common cost, opportunity cost; Short-run costs: cost-output relationship; derivation of short run total cost curves and their relationship; derivation of short-run average and marginal cost curves and their relationship; Reason for the U-shaped of short run average cost curve; Relationship between AC and MC curves; Long-run costs: derivation of long run average and marginal cost curves; Reason for the U- shaped, L- shaped and continuously falling long run average cost curve; Economies of scale; and Concept of economies of scope. Revenue: revenue function; Revenue curves under perfect and imperfect competition market; Relation between average and marginal revenue curves; and Relationship between price elasticity of demand and revenue.

Market structure: concept and characteristics; Profit maximization goal of firm; Price and output determination under perfect competition: short-run and long-run equilibrium; Derivation of short run supply curve of a firm and industry; Price and output determination under monopoly: short-run and long-run equilibrium; economic effects of monopoly. Price and output determination under monopolistic competition: short-run and long-run equilibrium, monopolistic firm's equilibrium under product variation and selling expenses. Concept and types of cartel; Pricing under joint profit maximization cartel; and Pricing practices: price discrimination, cost plus pricing, incremental cost pricing, administered pricing, export pricing, predatory pricing, skimming pricing and penetration pricing.

Rent: modern theory of rent; Wages: marginal productivity theory of wages; Concept of collective bargaining; Minimum wages fixation; Wage differentials; Interest: Nominal and real interest rates; interest rate differentials; Theories of interest: loanable funds theory of interest and liquidity preference theory of interest; Profit: economic profit and business profit; and Theories of profit: dynamic theory of profit and innovation theory of profit.