BIT Economics
bitsemester 2
Economics
Subject Code: ECO155
Course Title: Economics
Course No: ECO155
Nature of Course: Theory & Practical
Full Marks: 100
Pass Marks: 40
Credit Hours: 3
Course Description
This course covers the basic concepts of microeconomics and macroeconomics. It encompasses basic economic problems, demand, supply, market equilibrium, elasticity of demand and supply, consumer choice, production, cost, revenue, market structure, concept of national product and income and its measurement, monetary and fiscal policies.
Course Objective
The main objective of this course is to make students familiar with the basic concepts of economics.
Course Contents
| Unit | Content | LHS |
|---|---|---|
| Unit 1 | Economic Issues and Concepts | 4 |
| Introduction of economics — Alfred Marshall (Lipsey, and Lionel Robbins' definitions) | 1 | |
| Concept of microeconomics and its scope | 1 | |
| Main characteristics of free market, centrally planned and mixed economic systems (with examples) | 1 | |
| Society's production possibility curve/frontier and choice, scarcity and opportunity cost | 1 | |
| Unit 2 | Demand, Supply and Price | 10 |
| Meaning of demand, Law of demand | 1 | |
| Individual and market demand, movement along and shift of a demand (with schedule and graph/curve) | 1 | |
| Meaning of supply, law of supply | 1 | |
| Individual and market demand, movement along and shift of a demand (with schedule and graph/curve) | 1 | |
| Market equilibrium: the interplay of demand and supply; change in market equilibrium due to factors shifting the demand and supply curves | 1 | |
| Defining elasticity of demand (price, income and cross), price elasticity and its measurement (percentage, arc/midpoint) | 1 | |
| Income and cross elasticity of demand and its types and measurement | 1 | |
| Concepts of Elasticity of supply, concept of consumer and producer surpluses; Government intervention in the market through price floor, price ceiling and tax and effect | 1 | |
| Numerical Examples | 1 | |
| Presentation, Debate and Discussion | 1 | |
| Unit 3 | Consumer Choice: Indifference Theory | 6 |
| Concept of utility, total utility and marginal utility; Law of diminishing marginal utility | 1 | |
| Indifference curve analysis: Meaning and assumptions of indifference curve analysis; Derivation | 1 | |
| Marginal rate of substitution (MRS); basic properties of indifference curves; right-angled (L-shaped) and linear (straight line) indifference curves | 1 | |
| Consumer's budget line; consumer's equilibrium | 1 | |
| Income consumption curve (ICC) and price consumption curve (PCC) for normal, inferior, and Giffen goods (Demand curve) | 1 | |
| Discussion | 1 | |
| Unit 4 | Production | 6 |
| Meaning of production, Cobb-Douglas production function | 1 | |
| Production with one variable input: the law of diminishing marginal productivity/returns | 1 | |
| Production with two variable inputs: concept of isoquant; Property of isoquants; right-angled (L-shaped) and linear (straight line) isoquants | 1 | |
| Concept of iso-cost curve (meaning, equation, slope); producer's equilibrium | 1 | |
| Condition for optimum employment of one, two and many inputs/factors of production | 1 | |
| Production in the long run: Concepts of returns to scale with possible causes of each | 1 | |
| Unit 5 | Costs and Revenue | 5 |
| Concept of economic cost as a sum of explicit and implicit costs; short run total costs (fixed and variable) and unit costs (average fixed, average variable, average total, and marginal) and their curves | 1 | |
| Relation between average variable, average total and marginal costs (graphical) | 1 | |
| Costs in the long run: average and marginal costs; causes of U-shaped and L-shaped long run average cost curves | 1 | |
| Concepts of total, average and marginal revenues and their curves in the perfect competition and imperfect competition markets | 1 | |
| Numerical Examples | 1 | |
| Unit 6 | Market Structure | 8 |
| Perfect competition: characteristics | 1 | |
| Price and output determination in the short and long run using the total and marginal approaches | 1 | |
| Monopoly market: Characteristics, sources of monopoly | 1 | |
| Price and output determination in the short and long run using the total and marginal approaches | 1 | |
| Monopolistic competition: Features and price–output determination using total and marginal approaches | 1 | |
| Oligopoly market: Basic features/characteristics | 1 | |
| Meaning of cartel; Centralized cartel | 1 | |
| Numerical Problem | 1 | |
| Unit 7 | National Product and its Measurement | 4 |
| Concept of macroeconomics and its scope | 1 | |
| Concepts of gross domestic product (GDP), gross national income (GNI), net national product (NNP), national income (NI), personal income (PI), disposable personal income (DPI) | 1 | |
| Measurement of national income and output by expenditure, income (cost of production) and value-added approaches | 1 | |
| Numerical Examples | 1 | |
| Unit 8 | Macroeconomic Policies | 2 |
| Concept of expansionary and contractionary fiscal and monetary policies | 1 | |
| Tools of fiscal and monetary policies | 1 |
Text Books
- Lipsey, R.G., & Chrystal, K.A. (2008). Economics, 11th ed., (Indian Edition). New Delhi: Oxford University Press.
- Samuelson, P.A. & Nordhaus, W.D. (2005). Economics, 18th ed. New Delhi: Tata McGraw-Hill Publishing Company Ltd.