Intermediate Microeconomics, ECN-222

International Institute of Islamic Economics, International Islamic University

Islamabad, Pakistan

Instructor: Muhammad Akram (muhammad.akram@iiu.edu.pk)

Office Hours: Tuesday 10:00 to 11:30 and Wednesday 11:30-1:00 or by appointment,
Room D-011

Course Objectives

This course will provide students with fundamental skills and knowledge to carry outresearch
in any field of the knowledge particularly to conduct research in social sciences. This course
provides guidelines start to till the end of a research project. Particularly, we focus on the
following item in this course.

 Helping students to understand and learn the techniques to formulate a research

topicand develop a research proposal.

 Assisting students to learn the techniques regarding sample selection and data
collection so that they select a true representative sample and use an appropriate
technique to collect data from the sample

 The course also enables student to learn how to process and analyze the data in order
get meaningful results and to interpret the results in more eloquent way.

 Finely, student learn how to write a research report in more comprehensive and a
presentable manner.

Assessment

There will be two exams and 30 marks MID TERM exam and 60 marks worth Final Exam
and assignments and quizzes carries 10 marks

 Mid-term------------------------------- 30 %
 Assignments and Quizzes …………….10%
 Final ------------------------------------ 60%

Course outlines

This is a TENTATIVE outline and minor adjustments may occur as the course progresses. I’ll
indicate in class if we’re skipping some subsections within the chapters. Any changes will be
announced in class, according to the pace as we proceed. All students are responsible of
keeping abreast of any changes at all times.

Lecture 1: Demand and Supply

 Law of Demand and Law of Supply

 Demand and Supply Curves
  Aggregate Demand and Supply Curves
 Market equilibrium

(Chapter 2 of Perloff)

Lecture 2: Demand and Supply

 Effects of government policies or interventions on demand,

supply and on equilibrium quantity and price
 Import quota
 Price ceiling
 Floor price
 Minimum Wage Law

(Chapter 2 of Perloff)

Lecture 3: Demand and Supply

 Elasticity of Demand
 Elasticity of Supply

(Chapter 3 of Perloff)

Lecture4: Demand and Supply

 Effects of Taxes on Prices and quantities

 Sales Tax, Specific Tax
 Incidence of Tax

(Chapter 3 of Perloff)

Lecture 5: Demand and Supply

 Consumer Surplus
 Producer Surplus

(Chapter 9 of Perloff)

Lecture 6: Consumer Theory

 Utility, Utility Function,

 Law of Diminishing Marginal Utility
 Law of Equi Marginal Utility

(Chapter 4 of Perloff)

Lecture 7: Consumer Theory

 Indifference Curve
 Marginal Rate of Substitution
 Budget Line
  Consumer Equilibrium

(Chapter 4 of Perloff)

Lecture 8: Consumer Theory

 Effect of change in prices and Income on Consumer Equilibrium

 Price effect is combination of Income effect and Substitution
effect

(Chapter 5 of Perloff)

Lecture 9: Consumer Theory

 Price effect, Substitution effect and Income Effect in case of

different goods.
 Normal goods
 Inferior goods
 Giffen goods
 Necessary goods

(Chapter 5 of Perloff)

Lecture 10: Consumer Theory

 Effects of Foods Stamps and Cash provision on the Consumer

Equilibrium
 Cost of Living Adjustments

(Chapter 5 of Perloff)

Lecture 11: Consumer Theory

 Driving Demand Curve from consumer theory

 Compensatory Variation
 Equivalent Variations

(Chapter 5 of Perloff)

Lecture 12: Consumer Theory

 Labor- Leisure Curve

 Labor Supply Curve
 Income Tax and Labor Supply Curve

(Chapter 5 of Perloff)

Lecture 13: Theory of Firm

 Production, Production Function, Relation between Marginal,

Average and Total production
  Return to Scale, Productivity and Technical Change
 Economies of Scale

(Chapter 6 of Perloff)

Lecture 14: Theory of Firm

 Cost, Nature of Cost, Kinds of Cost

 Relation Between different Costs

(Chapter 7 of Perloff)

Lecture 15: Theory of Firm

 Theories of Cost (U-shaped Cost Curves, L-Shaped Cost Curves,

Plate-Shaped Cost Curves)
 Envelop Theorem (Long run and Short run Average and
Marginal cost Curves)

(Chapter 7 of Perloff)

Lecture 16: Theory of Firm

 Firm’s Decision making and Market Structure

 Firm and profit Maximization under Perfect Competition

(Chapter 8 of Perloff)

Lecture 17: Theory of Firm

 Short run and Long run Supply Curve of Firm and Industry
Under Perfect Competition

(Chapter 8 of Perloff)

Lecture 18: Theory of Firm

 Production Decision under Monopoly

 Market Power

(Chapter 11 of Perloff)

Lecture 19: Theory of Firm

 Price Discrimination
 Comparison of Monopoly and Perfect Competition

(Chapter 11 of Perloff)

Lecture 20: Theory of Firm

  Why monopolist firm does not have Supply Curve
 Welfare under Monopoly and perfect Competition

(Chapter 11 of Perloff)

Lecture 21: Theory of Firm

 Natural Monopoly
 Causes of Natural Monopoly
 Welfare and Natural Monopoly

(Chapter 11 of Perloff)

Lecture 22: Theory of Firm

 Firm’s Behavior under Imperfect Competition,

oligopoly and Duopoly

(Chapter 12 of Perloff)

Lecture 23: Theory of Firm

 Cartel Models of Oligopoly (Co-operative and Non-

Cooperative models)

(Chapter 12 of Perloff)

Lecture 24: Theory of Firm

 Game Theory (Single period, two firms Quantity Setting Game,

Repeated Game)

(Chapter 12 of Perloff)

Lecture 25: Theory of Firm

 Nash Equilibrium
 Prisoner’s Dilemma

(Chapter 12 of Perloff)

Lecture 26: General Equilibrium

 Two goods, Two firms, Two factor Model

 Efficiency and Exchange
 Edgeworth Box and Contract Curve

(Chapter 10 of Perloff)
Lecture 27: General Equilibrium

 Welfare
 Externalities
 Public Goods

(Chapter 10 of Perloff)

Lecture 28: Uncertainty, Missing Markets and Limited Information

 Uncertainty, Degree of Risk, Expected Value

 Decision Making under Uncertainty

(Chapter 17 of Perloff)

Lecture 29: Uncertainty, Missing Markets and Limited Information

 Risk Averse, Risk Neutral and Risk Lover

 Contract and Moral Hazzard
 Principal Agent Problem

(Chapter 17 of Perloff)

Course Materials

(I) Required Readings

 Basic Text: ‘Research Methodology; Methods and

Techniques’ by C R Perloff, Second Revised edition

 Research Method for Business’ by Uma Sekaran, Fourth

edition