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    © All Rights Reserved
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    9 views34 pages

    Eco Session 4

    Uploaded by

    Sukanya Som

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 34
    troduction to Economies, Nature of the Economie problem, Role ofthe price mechanism 2, Economics of demand and supply, law of demand, elasticity of demand, applications of elasticity 3. Demand-supply model, Shifts in the demand and supply, Price controls: 4. Theory of the firm: Economie profit and profit maximization, cost analysis, marginal and average cost, revenue analysis, marginal and average revenue 5. Market structure: perfect competition in the short and long run, Monopoly, Monopolistic competition 6. Oligopoly, introduction to game theory, price wars, price di ation 7. Economics of technology, increasing returns, network effect, lock-in effect, mult-sided platforms 8. Basle Concepts - National Income -Savings-Consumption Investment, Inflation; Unemployment; (Current Indian Context) 9, Theories of International Trade ~ Traditional and Modern Comparative Cost Theory..Heckscher-Ohlin Theory.. ‘Krugman’s Theory..Global Value Chains as the New Trade Model 10. Basic themes in Open Economy Macroeconomics ~ Balance of Payments, Exchange Rate Determination, Role of Foreign Investment 11, Basie Models of Growth and Development Classical Theories of Growth...Schumpeter’s Theory of Development, ‘Neo-Classical Growth Model (Solow)..Lewis! Model of Surplus Labour..Modern Theories of Growth — Role of Institutions, Culture and Geography. 12, Introduction to macroeconomic policies rice ceilings and price floors siness Cycles. monetary and fiscal policies © What is Economies © Factors of Production © Scarcity, Choices and Opportunity Cost © Needs and Wants (Limited and unlimited wants) © Central Problems of Economy © Economies Definition © Micro and Macro Economics © Positive and Normative Economies © Managerial Economics © Scope and nature of Managerial Economies © Definition of Demand © Types of Economy : Capitalism, Socialism and Mixed Economy © Definition of Market and types © Market and Types of of Market Things we covered in Session-1 Introduction to Economics, Nature of the Economic problem, Role of the price mechanism ° Definition of Economics- Wealth, Welfare, Scarcity, Growth and Modern Definition © Managerial Economics © Relationships of Managerial Economies with Other Disciplines © Circular Flow of Income ° Price Mechanism © Function of Price Mechanism : Signalling, Incentive and Rationing Things we covered in Session. Economics of demand and supply, law of demand, elasticity of demand, applications of elasticity Demand-supply model, Shifts in the demand and supply, Price controls: price ceilings and price floors © Utility: Cardinal and Ordinal, Marginal, Total and Average Relationship between TU and MU Necessary condition for Utility approach Law of Demand and determinants of demand (income, cross or related demand) ~ Income effect and Substitution effect ‘Shift in demand verses change in quantity demanded/movement in demand ‘Demand Schedule and Market Schedule Difference in Demand and quantity demanded Law of demand and demand function Reasons for downward sloping demand curve (Law of diminishing marginal utility) Exceptions to law of demand Law of Supply and all other above mentioned attributes related to supply Price control: Price Floor and Price Ceilings Things we covered in Sessio: Elasticity of demand, applications of elasticity Definition of Elasticity + Types of Elasticity: Price, Income and Cross Demand Elasticity + Formula for calculating elasticity of demand + Types of Elastic demand: Perfectly Elastic, Perfectly Inelastic, Unitary Elastic, Relatively Elastic, Relatively Inelastic + Examples of Elasticity of Demand + Income Elasticity of demand + Cross Elasticity of Demand: Negative, Positive, Cross Elasticity of Demand + Factors affecting Elasticity of Demand, + Importance of Elasticity of Demand + Elasticity of Supply and its Determinants, + Consumer Equilibrium + Indifference Curve and Properties of IC Marginal rate of Substitution _=1 meaning that firm must reduce price if it ‘wants to sell more, Here we find MR>0 © Atpoint A, Elasticity of Demand *E” implying that MR =0 meaning that if firm changes its price nov, its total revenue will be same. mcozm AVC or MC > ATC, AVC & ATC increase © Unit Costs e MC =AVC and ATC at minimum AVC and ATC ° Minimum AVC occurs at a lower output than minimum ATC due to FC 19 MC ATC, AVC 0 1234567891011 Oye Producing a Given Output at Minimum Cost Capital per year Ly Labor per year Profit Maximisation A manager maximizes profit | | Total profit is maximised when marginal revenue = marginal cost when the value of the last — = unit of product (marginal ~~ Lae) revenue) equals the cost of producing the last unit of production (marginal cost). a8) Maximum profit is the level of output where MC ; equals MR ' . ! ume) { i a = @ rsnemcy ea] (acetal) PROFIT MAXIMIZATI + Profit maximization occurs when MR = MC = When MR > MC, increase output — When MR

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