SEMESTER III CORE COURSE III PRINCIPLES OF MICRO ECONOMICS (EC3B03U) Module I Introduction to Micro Economics – Micro Economics - positive and normative Short run and long run, equilibrium and – disequilibrium analysis - Micro economic policy: Goals - efficiency and equity - micro economic models assumptions and reality maximization hypothesis - assumption – – ceteris paribus – market mechanism need for governmental intervention production possibility frontier. – – 10 hrs Module II - Demand and Supply Analysis Demand Determinants individual and market demand schedules changes and shifts in – – demand Market demand and elasticity types and degrees of price elasticity determinants – – – – Arc and point elasticity (geometric and arithmetic) Income elasticity of demand cross elasticity. – Supply supply schedule and supply curve changes and shifts in supply - elasticity of – – supply - measurement and application. Seller’s view Revenues total, average and marginal – – – revenue and price elasticity - market equilibrium and impact of changes in demand and supply - dynamic demand and supply model: Cobweb 25 hrs Module III - Theory of Consumer Behaviour Consumer preference and choice - utility total and marginal utility cardinal and – – ordinal utility. Analysis of consumer behaviour - law of diminishing marginal utility law of – equi-marginal utility consumer equilibrium under cardinal utility. Application: water – – diamond paradox and consumers surplus. Ordinal utility analysis indifference analysis properties consumer’s income and – – – price constraints: budget line - (response to changes in price and income) under ordinal utility analysis. Income effect and Engel curve, case of Giffen goods price effect and demand curve – – substitution effect splitting (decomposition) price effect into income and substitution effects: – Hicksian and Slutsky approaches measurement of consumers surplus in Hicksian approach – – criticisms of ordinal utility approach. Behaviourist approach - Revealed preference theorem of Samuelson derivation of demand curve distinction between weak and strong hrs – –
SEMESTER III CORE COURSE III PRINCIPLES OF MICRO ECONOMICS (EC3B03U) Module I – Introduction to Micro Economics Micro Economics - positive and normative – Short run and long run, equilibrium and disequilibrium analysis - Micro economic policy: Goals - efficiency and equity - micro economic models – assumptions and reality – maximization hypothesis - ceteris paribus assumption – market mechanism – need for governmental intervention – production possibility frontier. 10 hrs Module II - Demand and Supply Analysis Demand Determinants – individual and market demand schedules – changes and shifts in demand – Market demand and elasticity – types and degrees of price elasticity – determinants – Arc and point elasticity (geometric and arithmetic) Income elasticity of demand – cross elasticity. Supply – supply schedule and supply curve – changes and shifts in supply - elasticity of supply - measurement and application. Seller’s view – Revenues – total, average and marginal – revenue and price elasticity - market equilibrium and impact of changes in demand and supply - dynamic demand and supply model: Cobweb 25 hrs Module III - Theory of Consumer Behaviour Consumer preference and choice - utility – total and marginal utility – cardinal and ordinal utility. Analysis of consumer behaviour - law of diminishing marginal utility – law of equi-marginal utility – consumer equilibrium under cardinal utility. Application: water – diamond paradox and consumers surplus. Ordinal utility analysis – indifference analysis – properties – consumer’s income and price constraints: budget line - (response to changes in price and income) under ordinal utility analysis. Income effect and Engel curve, case of Giffen goods – price effect and demand curve – substitution effect – splitting (decomposition) price effect into income and substitution effects: Hicksian and Slutsky approaches – measurement of consumers surplus in Hicksian approach – criticisms of ordinal utility approach. Behaviourist approach - Revealed preference theorem of Samuelson – derivation of demand curve – distinction between weak and strong hrs
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