Course Name: Microeconomics Course Code: BBA133

Total number of hours: 60 Hours Credits: 4

Course Description:

This common core course helps students to think in the economic way of establishing a connection
between unlimited wants and limited resources available to an individual, firm and the society. It
deals with the application of economic analysis in formulation of business decisions. In this
context, the course deals with demand, supply, pricing, theory of consumer choice, theories of
production and market structures.

Course Objectives: This course aims to help students to:

● Describe how economic trade-offs and social values impact business decisions.
● Understand the causes and consequences of different market conditions.
● Explain the theory of consumer choice using the utility concepts.
● Make use of the concept of market equilibrium in business decisions.
● Analyse cost of production and revenue of business operations.
● Evaluate the market outcome(s) under different market structure.
Course Learning Outcomes: On having completed this course student should be able to:

CLO1 Describe how economic trade-offs and social values impact business decisions.

CLO2 Understand the causes and consequences of different market conditions

CLO3 Explain the theory of consumer choice using the utility concepts.

CLO4 Make use of the concept of market equilibrium in business decisions.

CLO5 Analyse cost of production and revenue of business operations

CLO6 Evaluate the market outcome(s) under different market structure

Pedagogy: This course uses multiple pedagogies like interactive lecture, students’ discussions and
PPTs, case studies, role plays, and form of experiential learning.

Unit I Basic Concepts 6 Hrs

Level of Knowledge: Conceptual

Ten Principles of Economics: How People Make Decisions - How people Interact - How the
Economy as a Whole Works; Thinking Like an Economist - Role of Observations, Theory and
Assumptions in Economics; Role of Economic models - The Circular Flow Diagram - Production
Possibility Frontier - Opportunity Cost; Central Problems of an Economy; Microeconomics and
Macroeconomics.

Unit II The Basics of Supply and Demand 10 Hrs

Level of Knowledge: Conceptual

Markets and Competition; Demand - Law of Demand, Exceptions to the Law - Market Demand -
Changes in Demand; Supply - Law of Supply, Exceptions to the Law - Market Supply - Changes in
Supply; Equilibrium – Steps - Changes in Equilibrium.

Unit III Elasticity and its Application 7 Hrs

Level of Knowledge: Conceptual

Elasticity of Demand - Price Elasticity and Its Determinants - Methods of Measurement - Degrees
of Price Elasticity - Total Revenue and Price elasticity; Income Elasticity Demand; Cross Elasticity
Demand; Elasticity of Supply-Determinants - Measurement and Degrees.

Unit IV Theory of Consumer Behaviour 10 Hrs

Utility - Characteristics and Types - Cardinal and ordinal Utility analysis – Law of Diminishing
Marginal utility; Budget Constraint; Indifference curves - Properties, Consumer’s equilibrium -
Price Effect - Income Effect and Substitution Effect.

Unit V Market Efficiency and Externalities 5 Hrs

Level of Knowledge: Conceptual

Consumers, Producers and the Efficiency of the Markets: Consumers surplus (Marshall) - Producer
surplus and Market efficiency; Externalities and Market Inefficiency - Negative and Positive.

Unit VI Theory of Production and Cost 10 Hrs

Level of Knowledge: Conceptual

Production Function; Law of Variable Proportions; Law of returns, Economies of Scale; Iso-quants
and Iso-cost lines. Cost Function - Important Cost Concepts; Short Run and Long Run Cost
Analysis (traditional theory) - Modern theory of cost; Long Run and short Run Revenue analysis.

Unit VII Market Structure and Competitive Strategy 12 Hrs

Level of Knowledge: Conceptual

Market structure - Perfect Competition - Price and Output Determination - Role of Time Element
in Market Price Determination; Monopoly - Price and output determination, Price Discrimination;
Monopolistic Competition - Price and Output Determination-Selling Costs - Product
Differentiation – Oligopoly - Duopoly Example - Price Determination (Collusive Pricing, Price
Leadership).

Essential Reading:

Gregory Mankiw, N. (2019), Principles of Economics, 8th Edition, Cengage Learning India.

Recommended Reading

1. Robert S Pindyck and Daniel L Rubinfeld (2013), Microeconomics, 8th Edition, New York:
Pearson.
2. Salvatore, D. (2011). Managerial Economics in a Global Economy (7thed.). Oxford: Oxford
University Press.
3. Sen, Anindy (2006). Microeconomics: Theory and application (2nded.). Oxford: Oxford
 University Press.
4. Salvatore, D. (2019). Microeconomics Theory and Applications (5thed.). Oxford: Oxford
University Press.
5. Lipsey, R. G., & Chrystal, K. A. (1999). Principles of Economics (9thed.). Oxford:
Oxford University Press.
6. Samuelson, P. A., & Nordhaus, W.D. (2010). Economics (19thed.). New Delhi:
McGraw-Hill Companies.