Course Outline
Course Title: Micro EconomicsB.Com (Term System) Term I Paper I
Course Objective
- To let the students develop good understanding of Micro Economic concepts
- To make the students aware of basic concepts that underpin all of the economic decisions
Topics / Source
(1.1)Basic economic ideas Trade –Offs, prices and market, equilibrium, theories and models, positive and normative economics / Book1(Ch.1)
Book3(Ch.2) / Section A
(1.2)What is Market?, Competitive and non competitive markets, market price, market definitions- the extent of a market / Section A
(1.3)Scarcity choice and resource allocation specialization and exchange, absolute and comparative advantage, production possibility curves, positive and normative economics / Section A
(2.1) Demand/Supply analysis Law of demand and supply, individual demand curves / Book1(ch. 2,4)
Book2(Ch1) / Section A
(2.2)Market demand curve/supply curves, factors affecting(shift of demand and supply curve) / “” / Section A
(2.3)Concept of elasticity along with its business relevance, consumer surplus / “” / Section A
(3.1).Theory of consumer behavior cardinal/utility approach, law of diminishing marginal utility, law of equi marginal utility. / Book1(ch3)
Book2(Ch.2.3.4) / Section A
(3.2)Ordinal/indifference curve approach, properties of indifference curves, consumer budget line, shift and consumer equilibrium. price, income and substitution effect. / Section A
(4.1). Theory of production The technology of production, production function, short run and long run production function, / Book3(ch5)
Book1(ch5) / Section A
(4.2)Production with one and two variable inputs, isoquants, returns to scale and scope. / Section A
(5). Cost of production measuring cost, different cost concepts, different cost curves in short run and in long run, the learning curves(a dynamic change in cost). / Book1(ch6)
Book2(ch8)
Book3(ch5) / Section B
(6.1). Market structure perfect competition( a perfectly competitive market), profit maximization, Marginal revenue, marginal cost, and profit maximization, choosing output in short run, the competitive firm’s short run supply, choosing output in long run, the industry’s long run supply curve / Book1(ch.9.10.11)
Book2(ch9 to 13) / Section B
(6.2)Monopoly, average and marginal revenues, the output decision, Monopoly power, sources of monopoly power, sources of monopoly power, the social cost of monopoly power, monopsony and monopsony power / Section B
(6.3)Monopolistic competition, the making of monopolistic competition, equilibrium in short and long run, monopolistic competition and economic efficiency / Section B
(6.4)Oligopoly, Equilibrium. in oligopolist market, price and non price competition, cartels, price leadership / Section B
(7.1).Labor market Demand for labor, labor’s marginal productivity, supply of labor, Wage rate determination, S/R and L/R supply of labor / Book1(ch13)
Book2(ch14/15) / Section B
(7.2)Monopsony power,( marginal and average expenditure), the input purchase decision of a firm, factor market with monopoly power, / Section B
(7.3)Indifference curve analysis of labor supply, the elasticity of substitution and change in the relative factor shares, monopsony when several variable inputs are used. / Section B
(8.1).General Equilibrium and Economic Efficiency General equilibrium. Analysis, Efficiency in Exchange, Equity and Efficiency / Book1(ch15) / Section B
(8.2)Efficiency in Production, (production in edgeworth box, input efficiency, producer equilibrium. in a competitive input market, the production possibility frontiers. The Gains from free trade (comparative advantage, expanded production possibility frontiers) / Section B
Recommended Text:
- Pindyck Robert S & Rubinfeld Daniel L. (2005) Micro Economics Pearson
- Gould Johan.P & Lazear P. Edward (2001) Micro Economics All India Travel Book Seller 6TH edition
- Hailstone J. Thomas & Mastrianna V. Frank (2004) Basic Economics Thomson 13th edition
Further readings:
- Bamford Colin (2002) EconomicsCambridgeUniversity Press
- H. Craig Peterson W. Cris Lewis (2004) Managerial Economics Pearson Education (4th edition)
- Salvator Dominick (2004) Micro Economic Theory and Application New Oxford University Press 4th edition
- Colander C. David (2006) Economics McGraw Hill 6th edition
MODEL PAPER FOR B.COM Term-I
MICRO ECONOMICS
Section II & III
Time Allowed = 100 minutes (1hour and 40 Minutes)
Section II SAQs- (Attempt all questions)No. of Questions =11
Marks=22
Answer Following Short Questions. (11 × 2 = 22 Marks)
a)What Micro Economics deals with?
b)What is the difference between positive and normative statements?
c)What are competitive and non competitive markets?
d)What ate the two basic phenomena upon which demand depends?
e)Why ordinal approach best explains about consumer behavior?
f)Differentiate between short run and long run production scenario?
g)What are the reasons for rising average variable cost in short run and in long run?
h)What is the difference between Monopoly and Monopolistic Competition?
i)What is marginal revenue product of labor
j)Explain the term efficiency in detail?
k)How do p0roductive efficiency differ from technical efficiency?
SECTION-III (Essay Type Questions) Marks=30
Note: Attempt ONE question from each Part.
PART-A
Q. 2)(15 Marks)
Explain in detail the problems faced by less developed countries in case of Production Possibility Frontier?
Q. 3)(15 Marks)
Explain why do Price Effect= Income Effect + Substitution Effect
PART-B
Q. 4)(15 Marks)
Write a Berief Note on Perfect Competition?
Q. 5)(15 Marks)
Wage Determination in fully competitive market differs from non competitive market, Explain?
MODEL PAPER FOR B.COM Term-I
MICRO ECONOMICS
SECTION-I (MCQ- All questions are to be attempted) Time Allowed = 23 Minutes
No. of Questions =23
Marks=23
INSTRUCTIONS TO CANDIDATES:
- Encircle the correct option only.
- Cutting, overwriting and use of ink remover is not allowed.
Q 1)Knowing that consumer has limited resources that’s why he
a)Never wants to maximize his wellbeing
b)Wants to maximize his satisfaction
c)Trade offs the purchase of more of some goods for the purchase of less of other
d)None of the above
Q 2)Production Possibility Curve never show
a)Relationship between scarcity and choice
b)Alternative goods and services to be produced
c)Opportunity cost that producer bears on producing additional of one product
d)All (a,b&c) are incorrect
Q 3)The term demand means
a)Amount of a product consumer purchases
b)Amount of a product consumer wishes to purchase
c)Amount of a product consumer are willing to buy a the price per unit changes
d)All(a,b&c) are correct
Q 4) Budget line shows
a)Spending by consumer on different goods and services
b)Opportunity cost bared by a consumer moving from one good/service to the other
c)Different combinations of goods and services purchased within given resources
d)All(a,b&c) are correct
Q 5) The concept of Diminishing Marginal Utility states
a)More we get of one thing less we could get of the other
b)Trade off between two productions w.r.t utility
c)Going to lose the utility as dropping units of the said product
d)All(a,b&c) are wrong
Q 6) Production Function Shows
a)Maximum output gained by a given set of resources
b)Extent of labor and capital being used to produce an output
c)Amount of output expected form various inputs
d)All(a,b&c) are true
Q 7) Sunk cost does not mean
a)Cost this is recovered
b)Its association with forgone alternatives
c)Both are correct
d)All(a,b&c) are false
Q 8) Monopoly does not exist when
a)There isn’t any rival
b)There are rivals and competitors
c)There is only one producer
d)All(a,b&c) are incorrect
Q 9) In oligopoly, dominant firms face a problem in
a)Setting price that never let small firms to sell their output
b)Setting price that let small firm to sell their output
c)Setting price where they could get max profit
d)Setting price that help them achieving maximum returns and letting small firms to sell their output on it.
Q 10)Perfect Competition is a market situation where
a)Firms are price takers
b)Resources are not perfectly mobile
c)Firms possess complete knowledge of the market
d)All (a,b&c) are true
Q 11)Demand for the factors does not depend on
a)Revenue of the firm
b)Supply of factors of production
c)Both are correct
d)All (a,b&c) are wrong
Q 12)Marginal revenue product curve of labor show
a)Marginal productivity of labor
b)Max firm is willing to pay to the factor input
c)If it’s higher than wage rate, firm to continue with it
d)All(a,b&c) are untrue
Q 13)It is difficult for a firm to demand factor of production as
a)Both are expressed/ traded in different market
b)Producer does not have enough knowledge about market trend
c)Change in price of the one effect the supply of the other
d)Change in price of the one effect the demand of the other
Q 14)When output/input market is perfectly competitive
a)Resources are used inefficiently
b)Difference between total benefit and total cost is minimum
c)Difference between total benefit and total cost is maximum
d)Factor of production is available at cheap price
Q 15)Comparative Advantage Theory states to
a)Concentrate on producing the product where producers are having losses
b)Concentrate on producing the product where producers are having profit
c)Concentrate on producing a product the cost of production of whom is relatively higher than cost of production of the other one
d)All (a,b&c) are false