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LW 1117: Micro Economics (Sem. 02/Paper-02)

Credits: 04: Total Class Hours: 72 (including tutorials & proctors)

Course Description:
The study of human action and interaction are two most important concept of
Microeconomics. It deals with individuals and firms that trade with one another, but its methods
and insights can be applied to nearly every aspect of purposeful activity. Microeconomics is
often defined as the study of scarce resources, prices, the demand and supply of goods and
services, production, cost, profits, externalities etc. It is best thought of as a branch of deductive
logic, models and curves which are simply manifestations of these deductive insights. The study
of Microeconomics focuses on individual units and direct consequences of rational human
choice. .

Learning Objectives:
The students can able to

1. Make the students aware about different Micro-economic concepts and their applications.
2. Interpret the condition of each Micro-economic unit of any country.
3. Learn to integrate theoretical & practical knowledge and evaluate Micro-economic policy
measures.
4. Demonstrate understanding of verbal, graphical, mathematical and econometric
representation of economic ideas, analysis & correlation among them.
5. Understand various complicated economic jargon and their meaning with use and
working.
6. Use knowledge in economics in their day-to-day life.
Teaching Method:
The teaching methodology that shall be adopted in this paper is a combination of the following
methods;
1. Lecture method: Lectures will consist of covering the theory, examples, and class
discussion. Homework assignments will focus on applying the material from lectures.
2. Problem solving , Graphical illustration & Derivation of formula
3. Class room Discussion with doubt clearing session: One class per week as ‘Tutorial’
shall be allotted for weak students and the subject teacher shall clear the doubts as well as
answer the paper related quarries of the students.
Module-1: Introduction to Economics

Introduction:
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This module covers the basic concepts related to microeconomics. It is designed to give an
overview of all important concepts associated with the subject matter of microeconomics.
Sub-Modules: (05 Hours)

1.1 . Definitions of Economics

1.2 . Micro Vs Macro Economics

1.3 . Positive Vs Normative Economics

1.4 . Subject matter of Economics

1.5 . Central problems of Economic Organization

1.6 . Production Possibility Curves and Opportunity Cost

Skill Component:
i. Conceptual and theoretical understanding.
Course Takeaway:
i. Students can easily point out the difference in between micro and macro-economics.
ii. They can justify the importance the study of microeconomics as well as explain the
concept of ‘economic imperialism’.
Number of Hours: 7 hours
Module – II: Consumer Behaviour Analysis
Introduction:
This module covers the concepts of consumer behavior analysis. It further deals with
utility analysis i.e. both cardinal as well as ordinal utility analysis and different laws associated
with it.
Sub-Modules:
2.1 Utility analysis, Cardinal Vs Ordinal utility analysis
2.2 Law of Diminishing Marginal Utility
2.3 Law of Equi-Marginal Utility
2.4 Indifference Curve analysis
2.5 The Budget line, Expansion path
2.6 Consumer’s Equilibrium
2.7 Breaking up of price effect into income effect & substitution effect
Skill Component:
i. The students can acquire efficiency in solving problems related to consumer's utility
maximization both mathematically and graphically.
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Course Takeaway:
i. It will give the learner a deep insight into consumer behavior with respect to maximization of
satisfaction with limited resources.
ii. It will also clear all the concepts related to cardinal and ordinal utility analysis.
Number of Hours: 9 hours
Module – III: Demand & Supply Analysis
Introduction:
The current module is based demand and supply analysis. It covers all basic concepts
related to price determination of goods and services. Additionally it discuss about qualitative and
quantitative interpretation of demand and supply of goods and services. It involves problem
related to elasticity of demand as well as supply and determination of equilibrium price.
Sub-Modules:

3.1 Demand: law of demand, determinants of demand, shifts of demand versus movements along
a demand curve, market demand,

3.2 Supply: law of supply, determinants of supply, shifts of supply versus movements along a
supply curve, market supply and market equilibrium.

3.3 Applications of demand and supply include price rationing, price floors,

3.4 Consumer surplus and producer surplus

3.5 Elasticity includes price elasticity of demand, calculating elasticity,

3.6 Determinants of price elasticity and other elasticity

Skill Component:
i. Use supply and demand diagrams to analyze the impact of overall changes in supply and
demand on price and quantity.
Course Takeaway:
i. The learner can able to comprehend the different concept related to demand and
supply and the technique through which price is determined in the market.
ii. Additionally they can calculate the degree of responsiveness of demand and supply to
a change in price of a product.
Number of Hours: 12 hours
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Module – IV: Production, Cost & Revenue Analysis

Introduction:
This module will give the reader a complete idea about producer behaviour, cost and
revenue analysis. This deals mainly with factors of production, production functions, laws
related to production, cost concepts and revenue analysis.
Sub-Modules:
4.1. Production: Factors of production, Production function

4.2. Production function with at least one fixed input (Law of variable proportion), Production
function with two variable inputs (Law of returns to scale),

4.3. Iso-quants, Iso-cost line & producer’s equilibrium and Optimum factor combination.

4.4. Concept of cost: Types of costs, the link between Production and Costs, the relationship
between the average and marginal cost curves, Economies and Diseconomies of scale.

4.5. Revenue analysis: Types of revenue, the relationship between the average and marginal
revenue curves in case of perfect & imperfect competition, Profit maximization, Equilibrium of
the firm and industry.

Skill Component:
i. Calculate producer and consumer surplus, solve a firm's cost minimization problem
mathematically and graphically.
Course Takeaway:
i. The apprentice can easily define various concepts and laws related to producer
behaviour analysis.
ii. They will also get to know about concepts and facts related to cost and revenue
analysis.
Number of Hours: 10 hours
Module – V: Market Structures
Introduction:
As market analysis is an important part of micro-economics therefore this module is
designed to provide a greater insight in to all the important topics, concepts, graphical illustration
etc., related to different forms of market and their working.
Sub-Modules:
5.1 Perfectly Competitive Market: Features & Price-output determination in Perfectly
Competitive Market both in Short- run & Long- run.

5.2 Imperfect Competition: Monopoly, Monopolistic & Oligopoly

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5.3 Monopoly: Features & Price-output determination in short- run & long- run Price
discrimination under monopoly & concept of dumping

5.4 Monopolistic Competition: Features & Price-output determination in short run & long run

5.5 Oligopoly: Price Leadership & Kinked demand curve

Skill Component:
i. Analyze the behavior of firms in a monopoly or oligopoly, and calculate the resulting
changes in producer or consumer surplus.
Course Takeaway:
i. The undergraduate can able to differentiate between different forms of market and
their price output determination technique.
ii. The learner can able to understand different graphical illustration of different form of
market.
Number of Hours: 15 hours
Module – VI: Markets for the Factors of Production
Introduction:
The current module contains factor pricing technique of different factors of production.
With addition to this it also covers the important topics like welfare economics, market failure
due to presence of externality, market for lemons etc.
Sub-Modules:
6.1. Factor Pricing by Marginal Productivity: Rent, Wage, Interest and profit

6.2. Theory of Wage: Marginal Productivity Theory of wages & wage fund theory; Theory of
Rent: Ricardian theory of rent & Modern theory of rent; Theory of Interest: Neo-classical theory
of interest & Keynesian theory of interest; Theory of Profit: Hawley’s Theory of profit.

6.3. Markets and Economic Efficiency: Role of Value Judgments in Welfare Economics

6.4. Notion of Pareto optimality and economic efficiency, Pareto Criterion of Social Welfare,
Social Welfare function-Compensation principle, Grand utility possibility frontier & Point of
Bliss.

6.5. Market failures, Externalities and Public goods: Monopoly as a cause of market failure,
Externality and market failure, Public goods and market failure, Free-Riders problem,
Asymmetric information and market failure, Market for lemons and The Principal-Agent
problems: in Private sector and Public sector.

Skill Component:
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i. Analyze market failures such as the tragedy of the commons and public goods
Course Takeaway:
i. This module will give the students a strong idea regarding the technique of
determination of factor price
ii. It again will add knowledge about Markets and Economic Efficiency as well as
Market failures, Externalities and Public goods.
Number of Hours: 12 hours
Text Books:

1. Principles of Microeconomics : H. L. Ahuja, S.Chand &Company;2012-19th Edition

2. Economics: P.A. Samuelson and W.D Nordhaus, Tata McGraw Hill;2007-9th Edition
3. Modern Microeconomics: A. Koutsoyiannis, Macmillan Press;2013-12th Edition

Reference Books:

1. Principles of Microeconomics: N. G. Mankiew, Cengage Learning;2013-3rd

2. EditionMicroeconomics: Theory and Applications: D. N. Dwivedi, Pearson; 2012-2nd
Edition.
3. Intermediate Microeconomics: H. L. Varian, East-west Press;2011-2nd Edition
4. Microeconomics Theory and Application: G. S. Madala and Ellen Miller, Tata
McGraw Hill;2004-4th Edition
5. A Textbook of Economic Theory: A.F. Stonier &D.C. Hague, Pearson;2012-5th Edition
6. Micro-Economic Theory: M.L.Jhingan, Vrinda Publications; 2010-12th Edition

Research Article References:

1. Goldsmith, R.E. “Current and Future Trends in Marketing and Their Implications for the
Discipline”.(October 2004). The Journal of Marketing Theory and Practice 12(4).Pp.10-
17.
2. Dilts, D.A. “Introduction to Economic Analysis” (2004).Indiana Prude University.
(7th).Pp.1-22.

Books for advanced Reading:

1. Microeconomic Theory : Henderson and Quandt

2. Principles of Microeconomics: D. Salvatore, Oxford University Press; 2003-4th
Edition.
3. Microeconomics –B.D. Bernheim and M. D. Whinston, Tata McGraw Hill; 2009-2nd
Edition
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4. Microeconomics: Market, Methods and Models- Douglas Curtis and Ian Irvine, Lyryx
Learning Team; 2017- Revision A
5. Principles of Microeconomics: Steven A. Greenlaw, University Of Mary Washington
David Shapiro, Pennsylvania State University-Based on the 2nd edition of Principles of
Economics, Economics and the Economy, 2e by Timothy Taylor, published in 2011.
6. Microeconomics: Theory Through Applications- Russell Cooper, European University
Institute Andrew John, Melbourne Business, Saylor Foundation, published in 2011.
Note: Study materials shall be provided for each module.

Skill Component:

Module Skill / Theories associated with modules

Module I Conceptual and theoretical understanding.
Module II The students can acquire efficiency in solving problems related to consumer's
utility maximization both mathematically and graphically.
Module III Use supply and demand diagrams to analyze the impact of overall changes in
supply and demand on price and quantity.
Module IV Calculate producer and consumer surplus, solve a firm's cost minimization
problem mathematically and graphically.
Module V Analyze the behavior of firms in a monopoly or oligopoly, and calculate the
resulting changes in producer or consumer surplus.
Module VI Analyze market failures such as the tragedy of the commons and public goods