BAHRIA UNIVERSITY

Bahria Institute of Management & Computer Sciences

Course title: Microeconomics

Course code: ECO 110
Credit hours: 3
Semester: BBA 1st semester
Pre-requisite: none
Course Facilitator: Muhammad Asif Shamim
Email Address: ashamim2001@yahoo.com

Course objective: You are studying microeconomics at a time of enormous change and
advancement in e-commerce and technology. These technological changes have
transformed our lives – the way we work and play.
Your course in microeconomics will help you understand the powerful forces that are
shaping our economic world and help you to navigate it in your everyday life and work.
Microeconomics focuses on the behavior of the units—the firms, households, and
individuals—that make-up the economy. It is concerned with how the individual units
make decisions and what affects those decisions.

Week/Session Lecture Outline Learning Objective

(One hour)
Session: 1 GETTING STARTED
(R&M ,chap#01) The student will learn the
i. Definitions and introductory part of the course and
questions distinguish between
INTRODUCTION ii. Economics: A social microeconomics and
science macroeconomics.
iii. Unscrambling cause The students will learn how
and effect economists and social scientists
iv. Ceteris paribus work.
Session: 2 i. The economic way of Describe the five core ideas that
thinking define the economic way of
ii. Why economics is thinking.
worth studying? This part of the course will explain
the cost and benefits of studying
economics. The students will be
able to plan their career.
Session: 3 i. Interpreting graphs used The students will learn graphs
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in economic models extensively used in economics to

ii. Measurement of slope show relationships among the
iii. Relationships among variables in an economic model.
more than two variables
To graph a relationship that
involves more than two variables,
the economists use the ceteris
paribus assumption.

Session: 4&5
Pakistan Economy
(R&M,chap#02), Economic The students will be able to learn
Survey of Pakistan,EBR, : and describe the pattern and
i. What goods and changes in what, how and for
services are produced? whom goods and services are
ii. How are goods and produced in Pakistan.
services produced?
iii. For whom are goods
and services produced?
Session: 5&6 Circular flows The students will learn and use the
circular flow model to provide a
picture of how households, firms,
and governments interact to
determine what, how, and for
whom goods and services are
produced.
The Economic Problem
Session: 7 (R&M,Chap # 03): After the students have completed
i. Production possibilities this part of the study, they will be
ii. Opportunity cost able to use the PPF to illustrate the
economic problem.
Learn calculation of opportunity
cost.
Session: 8&9
iii. Using resources After learning this, the students
efficiently will learn how people gain
iv. Specialization and trade benefits from specialization and
trade.

Session: 10 Demand and Supply

(R&M,chap#04): Demand and Supply are the two
Demand: key and fundamental forces of a
i. The law of demand competitive market which help in
ii. Demand schedule and the allocation of economic
demand curve resources.
iii. Individual demand and After completing the study of this
market demand chapter, the students will be able
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iv. Changes in demand to distinguish between quantity

demanded and demand and
explain what determines demand.
Session: 11&12 Supply: The students will be able to
i. The law of supply distinguish between quantity
ii. Supply schedule and supplied and supply and explain
supply curve what determines supply.
iii. Individual supply and
market supply
iv. Changes in supply

Session: 13
Market Equilibrium:
i. Price: a market’s
automatic regulator This section of the course will
ii. Effects of changes in make the students learn how
demand demand and supply determine
iii. Effects of changes in price and quantity in a market and
supply explain the effects of changes in
iv. Changes in both demand and supply.
demand and supply

Session: 14 Elasticity of Demand and

Supply(R&M, chap #05):
A CLOSER 1. Price elasticity of demand: The students will learn about
LOOK AT i. Elastic and inelastic Elasticities which are powerful
MARKETS demand ways of describing demand and
ii. Influences on the price supply that would enable to
elasticity of demand predict the magnitudes of price
iii. Computing the price and quantity changes when either
elasticity of demand demand or supply changes.
Session: 15&16 iv. Elasticity along a linear
demand curve Define, explain the factors that
v. Total revenue and price influence, and calculate the price
elasticity of demand elasticity of demand income
vi. Application of the price elasticity of demand.
elasticity of demand
vii. Income elasticity of
demand.
Session: 17

2. Price elasticity of supply: The students would learn the

i. Elastic and inelastic extent to which the quantity of a
supply good changes when the price of
ii. Influences on the price the good changes and all other
elasticity of supply influences on seller’s plans remain
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iii. Computing the price the same.

elasticity of supply

Session: 18 3. Cross elasticity and income The students would learn about
elasticity: the other influences on the
i. Cross elasticity of elasticity and the demand of one
demand goods on the demand of the other
ii. Income elasticity of related item.
demand

Session: 19 Efficiency and Fairness of

Markets(R&M,chap#06):
1. Value, price and consumer The students would be taught
surplus: whether the markets are fair and
i. Demand and marginal do they deliver a distribution of
benefit gains from trade that benefit both
ii. Consumer surplus buyers and sellers in a fair way or
do they create injustices?
Session: 20
2. Cost, price, and producer By learning this part of the course,
surplus: the students would be able to
i. Supply and marginal distinguish cost and price and
cost define producer surplus.
ii. Producer surplus
Session: 21 3. Are markets efficient? This part of the course is very
i. Efficiency of thought provoking. Beside
competitive equilibrium learning theory, the students
ii. The invisible hand would be able to explain the
iii. Obstacles to efficiency conditions in which markets are
iv. Under production and efficient and inefficient.
overproduction
Session: 22 4. Are markets fair?
i. Utilitarianism
ii. The big tradeoff
iii. Making the poor as well As above
off as possible
iv. The unfair rules
v. Price hike in national
disaster
Session: 23
Government Influences on
Markets (R&M,chap#07):
1. Price ceilings: The students will learn the
i. A black market influences of government’s
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ii. Search activity intervention and its impact on the

iii. Are rent ceiling private economic activity
efficient and fair. They will be able to explain how a
2. Price floors rent ceiling creates a housing
3. Production quotas: shortage, inefficiency, and
i. Is production quota unfairness.
efficient or fair
Similarly they will learn how
imposition of a minimum creates
unemployment, inefficiency, and
unfairness.

Session: 24 Externalities(R&M,chap#09):
1. Externalities in our daily The environment problems are
lives: increasing and humane life is
i. Negative and positive facing a lot of hardships in terms
production externalities of health hazards.
ii. Negative and positive The students would learn and be
consumption able to explain why negative
externalities externalities lead to inefficient
overproduction and how property
rights, pollution charges, and taxes
can achieve amore efficient
outcome.
Session: 25 2. Negative externalities: The students would learn and be
Pollution: able to explain why positive
3. Positive externalities: externalities lead to inefficient
Knowledge: underproduction and how public
provision, subsidies, and patents
can achieve amore efficient
outcome.

Session: 26 Consumer Choice and

Demand (R&M,chap#11):
A CLOSER 1. Consumption possibilities: Demand for some goods is elastic
LOOK AT i. The budget line while the demand of others is
DECISION ii. Changes in prices inelastic. The students would learn
MAKERS iii. Prices and the slope of what makes demand elastic or
the budget line inelastic.
iv. A change in the budget Marginal utility theory answers
these questions. It also provides
stronger foundation for the
interpretation of the demand curve
as the willingness-to-pay curve
and marginal benefit curve.
Session: 27
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2. Marginal utility theory:

i. Total and marginal
utility
ii. Finding the demand
curve
iii. Marginal utility and The students would be able to
elasticity of demand explain marginal utility theory and
iv. The power of marginal use it to derive a consumer’s
analysis demand curve.
Session: 28 3. Efficiency, price, and value: The students would be able to use
marginal utility theory to explain
4. Indifference curves: the paradox of value: why water is
vital but cheap while diamonds are
relatively useless but expensive.

Session: 29 Production and Cost

(R&M,chap#12): This part of the course is a
1. Economic cost and profit: foundation for understanding how
i. The firm’s goal firms’ decisions in competitive
ii. Opportunity cost markets lead to the law of supply.
iii. Explicit costs andWhat the students would learn in
implicit costs this chapter will use again and
iv. Economic profit again in the next chapters; so it is
very important that they
thoroughly understand the content
of this chapter.
Session: 30 2. Short run and long run: After completing the study of this
i. Short-run production chapter the students would be able
ii. Total, marginal and to explain how economists
average product measure a firm’s cost of
production and profit.
Session: 31 3. Short-run cost: Explain the relationship between
i. Total, marginal and the firms’s output and labor
average costs. employed in the short-run. Explain
the relationship between firms’s
output and costs in the short-run.
Session: 32 4. Long-run cost: Derive and explain a firm’s long-
i. Plant size and cost run average cost curves.
ii. Economies and
diseconomies of scale
iii. The long-run av. Cost
curve
Session: 33 Perfect
Competition(R&M,chap#13): The students would learn a brief
PRICES , 1. A firm’s profit-maximizing description of different types of
PROFITS, AND choices: markets.
INDUSTRY i. Price taker What they have learnt in the
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PERFERMANCE ii. Revenue concepts preceding chapter gets its first big
iii. Profit maximizing workout in this chapter.
output The students would be able to
explain a perfectly competitive
firm’s profit maximizing choices
and derive its supply curve.
Session: 34 iv. Marginal analysis and
supply decision
v. Exit and temporary
shutdown decisions
vi. The firm’s short-run
supply curve
2. Output, price, and profit in
the short-run:
i. Market supply in the The students would be able to
short-run explain how output, price, and
ii. Short-run equilibriums profit are determined in the short-
run

Session: 35 3. Output, price, and profit in

the long-run:
i. Entry and exit Explain how output, price, and
ii. A permanent change in profit are determined in the long-
demand run
iii. External economies and
diseconomies
iv. Technological change
Session: 36 Monopoly(R&M,chap#14):
1. Monopoly and how it arises: The students would learn how
i. Monopoly price-setting monopolies arise.
strategies They would be able to distinguish
ii. Single price between single price monopoly
iii. Price discrimination and price-discrimination
monopoly.
Session: 37 2. Single-price monopoly:
i. Price and marginal
revenue The students would be able to
ii. Output and price explain how a single-price
decision monopoly determines its output
3. Monopoly and competition and price.
compared:
i. Output and price Besides compare the performance
ii. Is monopoly efficient of a single-price monopoly with
iii. Is monopoly fair? that of perfect competition.
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iv. Rent seeking

Session: 38 4. Price discrimination:

i. Price discrimination The students would learn the
and consumer surplus meaning of price discrimination
ii. Profit by price and how price discrimination
discriminating increases profit.
iii. Perfect price
discrimination
5. Monopoly policy issues:
i. Gains from monopoly
ii. Regulating natural Explain how monopoly regulation
monopoly influences output, price, economic
profit, and efficiency.
Session: 39 Monopolistic
Competition(R&M,chap#15):
1. What is monopolistic Every week consumers receive
competition: newspapers stuffed with fliers that
2. Output and price decisions: describe this week’s ‘specials’. To
i. The firm’s profit- understand fliers and competition
maximizing decision that is witnessed by the consumers
ii. Monopolistic every day in the markets, we need
competition and perfect the model of monopolistic
competition competition. This is explained in
iii. Is monopolistic this part of the course. After
competition efficient? learning this, the students would
be able to describe and identify
monopolistic competition.
Session: 40 3. Product development and
marketing:
i. Innovation and product Explain why advertising costs are
development high and why firms use brand
names in monopolistic
competition.
Session: 41 Oligopoly(R&M,chap#16):
1. What is oligopoly? The students would be able to
2. The range of oligopoly identify and explain oligopoly and
outcomes: how it arises. They would explore
i. The kinked demand the range of possible price and
curve quantity outcomes and describe
dilemma faced by firms in
oligopoly.
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Session: 42&43
Game theory The students would use game
theory to explain how price and
quantity are determined in
oligopoly.

Session: 44 Revision of the course The students would revise some of

the course topics of their choice.
Session: 45 As above As above

Students Activity: Text book:

1. Students would take class notes 1. “Foundations of Microeconomics”, second edition,
2. Solve at least 5 quizzes in the class
Robin Bade & Michael Parkin (R&M). Publishers:
3. Class assignments
4. Home assignments Pearson Addison Wesley, New York.
5. Data gathering
References:
6. Class discussion
7. Syndicate work. 1. “Economics”, third edition, Joseph E. Stiglitz & Carl
Follow-up Activity:
E. Walsh. Publishers: W.W. Norton & Co. New York.
1. Students would be informed about the
next topic to be taught before the end of 2. “Economics” 17th edition, Samuelson & Nordhaus.
each class.
Publishers: McGraw Hill Irwin, New York
2. Students would be expected to read the
topic from the suggested text before
coming to the class.

Additional study:

• Annual Reports of State Bank of Pakistan.

• Economic Surveys of the Govt. of Pakistan.
• World Development Report: 2009
• Economics and Business Review (EBR)
• UNO’s Development Reports
• UNO’s Developments Reports on the South East Asian countries.