Microeconomic Theory - I

Paper Code: 
24ECO 121
Credits: 
4
Contact Hours: 
60.00
Max. Marks: 
100.00
Objective: 
  1. To acquaint the students with the optimization behaviour of consumers, particularly under risk and uncertainty and asymmetric information.
  2. To help students understand optimizing behaviour of a firm and acquaint them with the use of the concepts of economies of scale, economies of scope and learning curve.
  3. To help students explain the determination of price and output under perfect competition and the effects of various taxes under perfect competition.

 

 

Course Outcomes: 

Course

Learning outcome (at course level)

Learning and teaching strategies

Assessment Strategies 

Course Code

Course Title

 

24ECO 121

 Microeconomic Theory –I

(Theory)

Students will

CO1: comprehend the cardinal and ordinal utility analysis and various related concepts

CO2: examine various aspects of consumer behavior like network externalities, consumer surplus, revealed preference, behavioural economics etc.

CO3: examine various aspects of theory of production

CO4: examine various aspects related to the theory of costs

CO5: analyze the long run and short run equilibrium conditions of firms and factors affecting it, under perfect competition

CO6: contribute effectively in course-specific interaction.

Approach in teaching: Interactive Lectures, Discussion, Case studies.

 

Learning activities for the students:

Presentations, Assignments and Group discussions.

Class activity, Assignments, Quiz and Semester end examinations.

 

12.00
Unit I: 
Theory of Consumer Behaviour-I
  • Cardinal Utility Analysis;
  •  Indifference Curve Analysis: Goods, Bads and Neutrals,
  • Consumer’s Equilibrium: Corner Solution
  •  Slutsky Equation-Price, Income and Substitution Effects (Normal, Inferior and Giffen goods), ICC Curve, PCC Curve
  • Demand Curve- Ordinary and Compensated
  • Engel Curve
  •  Elasticity of demand.

 

12.00
Unit II: 
Theory of Consumer Behaviour-II
  • Network Externalities- Bandwagon, Snob and Veblen effects
  •  Consumer Surplus- Marshall’s Measurement
  • Measurement of Consumer Surplus through Indifference Curve
  •  Revealed Preference Hypothesis
  • Analysis of consumer behavior under risk and uncertainty
  •  Asymmetric information
  • Behavioral Economics.

 

12.00
Unit III: 
Theory of Production
  • Production function – short run and long run
  • Law of variable proportions
  • Isoquants and Isocostlines;  Optimum Factor Combination, Expansion Path, Ridge Lines
  •  Returns to scale
  • Cobb-Douglasproduction function
  • Elasticity of Substitution,
  • Euler's theorem
  • Technical Progress-Capital Deepening and Labour Deepening.

 

12.00
Unit IV: 
Theory of Cost
  • Cost Concepts: Short run and long run cost curves
  •  Modern Theory of Cost,
  •  Economies of scale
  •  Economies of Scope and Learning curve analysis.

 

12.00
Unit V: 
Price and Output Determination under Perfect Competition
  • Short run and long run equilibrium of the firm and industry
  •  Increasing, decreasing and constant cost industry,
  •  Effects of taxes under perfect competition.                                                     

           

 

Essential Readings: 
  1. Koutsoyiannis, A., Modern Microeconomics, Macmillan,  2ndEdition, 2008. .
  1. Pindyck, Robert S., Rubinfeld, Daniel L. and Mehta, Prem L., Microeconomics, Pearson Education, 2009.
  1. Varian, Hal R.,Intermediate Microeconomics – A Modern Approach, W.W. Norton, 8th ed., 2014.
  1. Salvatore, Dominick, Microeconomics: Theory and Application, Oxford University Press, 2008.

 

References: 

Suggested Readings:

   1. Green, H., Consumer Theory, Penguin, 1972.

   2.Shephard, R. W., Cost and Production Functions, Princeton University Press, 1953.

   3. Marshall, A., Principles of Economics, Macmillan, 1926. 

  4.Knight, Frank H., Risk, Uncertainty aand Profit, London School Reprints of Scarce,       Works, No. 16, 1933.

5.Samuelson, P. A., Foundations of Economic Analysis, Harvard University Press.

6.Green, H. (1972), Consumer Theory, Penguin, 1947.

E-Resources:

  •  Bishop, R. L. (1952), Elasticities, Cross-Elasticities and Market Relationships, American Economic Review, 898-924.
  • Ferguson, C. E. (1958),’ An Essay on cardinal Utility,’ Southern Economic Journal.
  • Samuelson, P.(1948), ‘ Consumption Theory in terms of Revealed Preference,’ Economics, pp. 243-253.
  • Cobb, C. W. and Douglas, P. H. (1928),’ A Theory of Production,’ American economic Review (supplement), pp. 139-165.
  • Moore, F. T. (1959), ‘Economies of Scale: Some Statistical Evidence,’ Quarterly Journal of  Economics.
  • Stigler, G. J. (1957), ‘Perfect Competition, Historically Contemplated,’ Journal of Political Economy, pp. 1-17.

Journals:

  • American Economic Journal: Microeconomics
  • American Economic Journal: Applied Economics
  • Studies in Micreconomics, SAGE.

 

 

 

Academic Session: 
2024-25
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