We have the BBS 1st year Microeconomics Syllabus.
BBS 1st year Microeconomics Syllabus
Following are the BBS 1st year Microeconomics Syllabus.
Course Objectives
This course aims to enhance the understanding of microeconomic theories and their practical applications by developing students’ skills in the application of theories in business decision-making.
Course Description
This course comprises an introduction to microeconomics, market equilibrium and efficiency, elasticity of demand and supply, analysis of consumer behaviour, theory of production, cost and revenue curves, product pricing theories and practices, and factor pricing.
Learning Outcomes
By the completion of the course, students will be able to:
- Explain the nature and scope of microeconomics and business economics.
- Explain the concept of market equilibrium and efficiency, and analyze the effect of a change in market demand and market supply on the market equilibrium and efficiency.
- Define and measure elasticity of demand and supply, their applications, and uses in business decision-making.
- Analyze the consumer’s behaviour, derivation of the demand curve for normal goods by using both cardinal and ordinal approaches.
- Explain the single variable and the multi-variable production functions and the determination of the optimal combination of two inputs.
- Acquire the knowledge about the concept and nature of cost and revenue, and derive costs and revenue curves.
- Explain the pricing of the products and the inputs under different market structures.
Unit 1: Introduction 15LHs
Contents
- Microeconomics: meaning, scope, uses, and limitations of microeconomics.
- Business economics: nature and scope.
- Basic concepts: production possibility curve, marginal analysis, incremental analysis, static and dynamic equilibrium analysis in microeconomics, and the ten principles of economics.
Unit 2: Market Equilibrium and Efficiency 20 LHs
Contents
- Demand function: types, determinants of demand, movement, and shift in the demand curve.
- Supply function: types, determinants of supply, movement, and shift in supply curve; Market equilibrium; Effect of changes in demand and supply on market equilibrium.
- Effect of government policy (Tax, subsidy, and price control) in market equilibrium.
- Concept of market efficiency, and measuring market efficiency by consumer surplus and producer’s surplus.
Unit 3: Elasticity of Demand and Supply 20 LHs
Contents
- Price elasticity of demand: concept, degree, and calculation (percentage/proportionate and average method).
- Point price elasticity of demand.
- Price elasticity and total expenditure.
- Income elasticity of demand: concept, degree, and calculation (percentage/proportionate and average method).
- Cross elasticity of demand: concept, degree, and calculation (percentage/proportionate and average method).
- Concept of advertisement elasticity of demand, and Uses of price, income, cross, and advertisement elasticity of demand; and Price elasticity of supply.
- concept, degree, and calculation (percentage/proportionate and average method)
Unit 4: Analysis of Consumer’s Behavior 20 LHs
Contents:
- Cardinal approach: assumptions, consumer’s equilibrium, criticisms, and derivation of the demand curve;
- Ordinal approach: assumptions and properties of the indifference curve.
- Marginal rate of substitution; Price line; Consumer’s equilibrium
- Price effect and derivation of the price consumption curve (normal goods and Giffen goods).
- Income effect and derivation of the income consumption curve (normal and inferior goods).
- Substitution effect; Decomposition of price effect into income and substitution effect.
- Derivation of the demand curve for normal goods.
Unit 5: Theory of Production15 LHs
Contents:
- Production function: Short-run and long-run production functions.
- Concept of Cobb-Douglas production function; Law of variable proportions; Isoquant.
- Assumptions, marginal rate of technical substitution, and properties; Iso-cost curve.
- Optimal employment of inputs, and Laws of return to scale.
Unit 6: Cost and Revenue Curves 20 LHs
Contents
- Cost function; Concept of costs: Implicit cost and explicit cost, accounting cost and economic cost, historical cost and replacement cost, separable cost and common cost, opportunity cost.
- Short-run costs: cost-output relationship; derivation of short-run total cost curves and their relationship; derivation of short-run average and marginal cost curves and their relationship; Reason for the U shaped of short run average cost curve.
- Relationship between AC and MC curves; Long-run costs: derivation of long-run average and marginal cost curves.
- Reason for the U- shaped, L- shaped and continuously falling long-run average cost curve.
- Economies of scale and the concept of economies of scope. Revenue: revenue function.
- Revenue curves under perfect and imperfect competition markets.
- The relation between average and marginal revenue curves, and the relationship between price elasticity of demand and revenue.
Unit 7: Product Pricing Theories and Practices 25 LHs
Contents:
- Market structure: concept and characteristics.
- Profit maximization goal of a firm; Price and output determination under perfect competition: short-run and long-run equilibrium.
- Derivation of the short-run supply curve of a firm and industry.
- Price and output determination under monopoly: short-run and long-run equilibrium; economic effects of monopoly.
- Price and output determination under monopolistic competition: short-run and long-run equilibrium, the monopolistic firm’s equilibrium under product variation, and selling expenses.
- Concept and types of cartel; Pricing under joint profit maximization cartel; and Pricing practices: price discrimination, cost plus pricing, incremental cost pricing, administered pricing, export pricing, predatory pricing, skimming pricing, and penetration pricing.
Unit 8: Theory of Factor Pricing 15 LHs
- Rent: modern theory of rent; Wages: marginal productivity theory of wages.
- Concept of collective bargaining; Minimum wages fixation.
- Wage differentials; Interest: Nominal and real interest rates.
- Interest rate differentials; Theories of interest: loanable funds theory of interest and liquidity preference theory of interest.
- Profit: economic profit and business profit; and Theories of profit: the dynamic theory of profit and the innovation theory of profit.
Basic Books
- Salvatore, D., Principles of Microeconomics. New Delhi: Oxford University Press.
- Pindyck, R. S. & Daniel, R., Microeconomics. New Delhi: Prentice Hall of India,
- Mankiw, N. G., Principles of Microeconomics, New Delhi: Centage Learning India Private Limited.
- Gilespi, A., Business Economics, New Delhi: Oxford University Press, Koutsoyianis, A., Modern Microeconomics. Hong Kong: ELBS
Reference Books
- Joshi, S., Business Economics. Kathmandu: Taleju Prakashan
- Dwibedi, D.N., Microeconomic Theory and Application, New Delhi: Tata McGraw-Hill Publishing Company Limited, Ahuja, H.L., Advanced Economic Theory. New Delhi: S. Chand and Company,
- Gould, J.P. & E.P., Lazer, Microeconomic Theory. New Delhi: All India Travelers Book Sellers
- Browning, E.K. & Browning, J.M., Microeconomic Theory and Application. New Delhi: Kalyani
Hence, these are the BBS 1st year Microeconomics Syllabus.
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