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COURSE PLAN

2011 Microeconomics
Facilitator: Dr. Sunil Ashra, Office: Room No. B16, Faculty Block, x - 178

MICROECONOMICS 2011
Microeconomics analysis aim at clarifying interrelationships between prices, costs, production and markets, in an integrated manner, generally considered separate from each other.

help the executives in determination of

1.best (or optimal) prices, 2.minimum costs and 3.optimal level of production
- introduces the optimal behaviour of the firm in different type of market setup. the issue of regulation, especially in the context of public utilities like electricity, telecommunications, transport etc.

PADAGOGY: STRUCTURE, & REQUIREMENT


a discussion based course concerning the theory & analysis of microeconomics empirical applications using econometrics, applied problems and case studies. Certain aspects of each prescribed chapter will be considered in class discussions, the chapter content should be regarded as requisite background preparation besides the Handout Full preparation is needed before each class.

Course Outline

Part 1.1: Nature & Scope of Microeconomics


Introduction to microeconomics; its relationship with other management disciplines

Theory of the firm, objectives of the firm Methods of expressing economic relationshipsequations, tables and graphs; total, marginal and average relationships, Opportunity Cost, Economic Cost & Profit Elementary demand and supply theory.

Part 1.2: Optimization Techniques


- Optimization analysis- profit maximization; use of differential calculus in optimisation; multivariate optimisation and constrained optimisation;

New management tools - benchmarking, TQM, re-engineering, learning organisation etc.

Part 2: Demand Analysis


2.1 Demand Functions: Individual & market demand, specification of the demand function, factors affecting demand. 2.2 Elasticity of Demand - Different concepts & their measurement; Relationship between price elasticity, total revenue and marginal revenue; using elasticities in managerial decision-making.

2.3 Utility Theory and Indifference Curve: MRS, PCC, Income CC, Substitution and Income Effects, Engel curves, 2.4 Consumer and Producer Surplus: Incidence of tax

Part 2: . Demand Estimation & Forecasting (contd..)


2.5 Demand Estimation different methods of demand estimation; use of econometric methods (& regression analysis) in demand estimation. 2.6 Demand Forecasting- qualitative methods; quantitative methods.

Part 3: Theory of Production, Cost Concepts, Cost Functions and Estimation


Production Theory Production function SR production function, - Law of returns to scale and factor;

Production function and isoquants, optimal combination of inputs for minimising cost;
Long run production function and returns to scale; Estimation of production functions.

Part 3: Theory of Production, Cost Concepts, Cost Functions and Estimation (contd..)
Cost Theory - Types of costs, short-run cost, long run costs functions Marginal cost, average cost, fixed cost, variable cost - Estimation of cost functions.

Mid-Term Examination
August 2011

Part 4: Market Structure


- Pricing under perfect competition: Assumptions, short-run equilibrium of the firm and market; long-run equilibrium, determination of price, profit maximization - Pricing under Monopoly: Pure and discriminating monopoly; Monopsony - Pricing under Oligopoly: Duopoly, - Game theory and strategic behaviour - Pricing under Monopolistic Competition

Part 5: Pricing Practices


- Pricing practices and Role of Government in pricing:
Peak load pricing, Pricing of joint products Transfer Pricing Tying & Bundling Two part tariff

Regulatory issues.
Natural Monopoly, Average Cost pricing (Cost-plus pricing), Marginal Cost pricing,

Case Study Assignments


Everyone will be supposed to present and write an assignment based on the CASE STUDY given. DEADLINES Deadlines should be strictly followed for all the assignments. Any late submission will result in negative marking.

GRADING
Weight

Assignments 10% Case Study 10% Mid-Term Exam 30% In class Quizzes 20%
1. economic principles 2. problem solving 3. interpret analytical and empirical results.

End-Term Exam 30%

Requirements and Preparation for Course Some calculus Text and class discussion will present alternative treatments of most course material. Exams will use some calculus.

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