American International University – Bangladesh (AIUB)

Faculty of Business (BBA)

Microeconomics

COURSE OUTLINE

Title: Microeconomics
Nature (Core/Major/Elective): Core Course
Academic Term: Spring 2014-2015
Credit: 3 Credit Hours
Campus and Room: Campus7, Room#7072

Course Objective:
 

The purpose of this course is to help students learn the fundamental lessons of
microeconomics and to show students how those lessons can be applied to the world in
which they live. It is an important field to understand the context of business and
government policies, and analyze their effects.

Course Description:
 
The course is an introduction to the market system. It is designed to provide a strong basic
foundation of microeconomic principles. The course will cover scarcity and choices, basic
demand and supply analysis, theory of consumer choice, elasticity of demand and supply,
short and long run cost curve, price and output determination under different market
structures.
At the end of the course, the students should be able to:

 Define and illustrate economic problems and their probable solutions;

 Use Demand/Supply analysis to determine equilibrium market price and
output;
 Define, calculate, and interpret the price elasticity of demand;
 Explain the concept of utility maximization and its importance to individual
behavior;
  Explain the concept of profit maximization and its importance to firm
behavior;
 Determine market price and output under various forms of market structure
including Perfect competition, Monopoly, and Oligopoly.

Pre Requisites:
 
Business Math 1

Text Book:

•Principle of Microeconomics, 6th th Edition, Gregory Mankiw, Ronald Kneebone, Kenneth

Mckenzie, Nicholas Rowe; The Dyren Press.

References:

Economics, 17th edition, P.A. Samuelson and W.D. Nordhaus

Teaching procedure:

A number of different teaching techniques, viz. lectures, class discussions, case studies, in
class exercises and handouts will be combined to create a stimulating atmosphere in the
class. Student participation at all levels is encouraged and valued. Try to understand all
materials, if you face any problem understanding the materials covered in my class feel free
to ask me and come to my office.

Evaluation Policy
Mid Term Exam Final Exam
1. Attendance/
Class Participation 10% 10%
2. Quizzes 20% 20%
3. Assignments 20% 20%
4. Exam 50% 50%

Total 100% 100%

Final Grading: 40% (of Mid Term) + 60% (of Final Term)

Grading System:
 
Letter Grades will be given according to the AIUB standard.

Examination:
 

The examinations will consist of multiple choices, short answers, problem solving, and
open-ended essay questions. The examinations will test your comprehension of the
concepts discussed in the class, and your ability to apply the concepts to solve real-life
economic problems. Creativity will also be tested.

Quizzes and Assignments:

 

Assignments or cases will be given periodically. Completion of the cases/ assignments will
enable students to grasp the concepts effectively. Tests will be given on instructor’s
discretion. No make up tests will be administered or late submissions of assignments/ cases
are not permissible except for conflicts with official university business or extreme
emergencies.

Attendance:
 

Regular attendance is extremely important to understand all materials.

Topics to be covered

TOPICS Specific Time Suggested Teaching

Objective(s) Frame Activities Strategy(s)

Introduction to To show what st The students Each class

the course and Microeconomics is 1 & 2 nd
must turn off lecture will be
economic all about week their mobile of 90 minutes
concepts during the class. duration,
totaling 28
The basics of Learn the nature of rd Arriving late and lectures.
Demand and a competitive 3 week leaving early is
Supply market strongly Any unsolved
discouraged. problem/quarry
Elasticity of Understand the during the class
Demand and meaning of 4th week Students are hours will be
Supply elasticity encouraged to sorted out in the
work in groups office hours.
Consumers, To understand the for the course as
Producers and the concept of 6th week a whole. All class
Efficiency of consumer and materials will
Markets producer surplus Participation in be distributed
the class through the
discussion is course website
7th week strongly or AIUB
Review recommended. photocopy
centre.

Midterm 8th week Quizzes and

exams will
Quality of consist of
participation is multiple choice,
Theory of Study how considered in the short-answer
Consumer Choice consumers allocate 9th & 10 assessment of and problem-
their incomes week final grade. solving type
across goods questions.
Students are
expected to read Assignments
all assigned turned in late
material before it will not be
Theory of is scheduled for accepted.
Production and Examines the 11th discussion in the
Costs behavior of week class. No extra or
producers make up exams
Analyze the link will be arranged
between a firm’s for any missing
production process quiz.
and its total costs

12th
Perfect Learn what week
Competition characteristics
make a market
competitive

Monopoly To learn why some 13th

markets have only week
one seller
Oligopoly and
what 14
th
Monopolistic Examines
Competition outcomes are week
possible when a
market is an
oligopoly. Analyze
 competition among
firms that sell
differentiated
products

Review 15th
week

Final Exam 16th

week
 *The topics might be needed to modify, as needed depending on time and
class performance
Sl. Expected No. of Lecture(s) Topics/Subtopics
1 4 Introduction to Microeconomics
A. Ten Principles
B. Definition of Economics
C. Scarcity and efficiency
D. Opportunity Cost
E. Circular flow diagram
F. Production Possibilities Frontier (PPF)

2 4 Supply and Demand: How Markets Work

A. Demand Curves and Demand Shifters
B. Supply Curves and Supply Shifters
C. Equilibrium of Supply and Demand
D. Comparative Static Analysis

3 4 Elasticity and its Application

A. Price elasticity of Demand and Supply
B. Determinants of Price Elasticity
(Demand and Supply)
C. Other Elasticity’s: Income, Cross-Price
Elasticity.

4 2 Consumers, Producers and the Efficiency of

Markets
A. Consumer Surplus
B. Producer Surplus
C. Market Efficiency and its influence on
market equilibrium

8th week Mid Term Exam

5 4 The Theory of Consumer Choice
A. Consumer’s Objective and Constraints
B. The Budget Constraint: How to construct
budget line, shifts, and pivots.
C. Utility Theory (more specification to law
of diminishing marginal utility and equi-
marginal utility)
D. Indifference Curves: Definition and
properties, shapes (with specification to
substitutes , complementary, and, normal
commodity)

6 2 Cost and Production

A. Firm’s Objective and Constraints
B. Fixed and Variable Resources
C. Production Function
D. Law of Diminishing Marginal Returns
E. Costs in the Short Run and Long Run.
F. Shapes of the Cost Curves
E. Technological change and returns to
scale with specification to short run and
long run.
7 2 Market Structures: Perfect Competition
A. Characteristics of a Competitive
Market
B. Profit Maximization (Both
diagrammatic and mathematical
approach)
C. The Firm’s Short Run and Long Run
Decision to entry and exit
8 2 Monopoly
A. Characteristic of a Monopoly Market
B. Profit Maximization of a Monopoly Firm
C. Welfare cost/loss of monopoly
9 2 Monopolistic Competition
A. Characteristics of a Monopolistic
Market
B. Product Differentiation
C. Short Run and Long Run
Equilibrium
D. Excess Capacity and Markup
 10 2 Oligopoly
A. Characteristics of a Oligopoly Market
B. Choosing a Strategy in Oligopoly
C. Quantity and Price Leadership in
Oligopoly
16th week Final Exam

Grading System
The following grading system will be strictly followed in this class.
Letter Grade Point Numerical %
A+ 4.00 94-100
A 3.75 90-93.99
A- 3.50 86-89.99
B+ 3.25 82-85.99
B 3.00 78-81.99
B- 2.75 74-77.99
C+ 2.50 70-73.99
C 2.25 66-69.99
C- 2.00 62-65.99
D+ 1.75 58-61.99
D 1.50 54-57.99
D- 1.00 50-53.99
F 0.00 <50(Failed)

Course Teacher: Farhana Rafiq

Email: farhana_r@aiub.edu

Mission: AMERICAN INTERNATIONAL UNIVERSITY (AIUB) envisions to promote and

create a learning environment through state-of-the-art facilities and tools; highly competent
faculties and stuff; expand frontier of research based knowledge; and international standards
supportive of the new horizons in the diverse fields of disciplines and the enunciated development
perspectives of the country.
Vision: AMERICAN INTERNATIONAL UNIVERSITY (AIUB) is committed to provide quality
and excellent computer-based academic programs responsive to the emerging challenges of the
rapid technological advancements. The AIUB is dedicated to nurture and develop world class
professionals imbued with strong sense of ethical values and competence ready to face the
competitive world of business, service and employment

Good Luck