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Session 1 Outline & Introduction

The document outlines sessions for a microeconomics course covering topics such as supply and demand, elasticity, consumer behavior, the theory of the firm, market structures, and market failures. Key concepts to be discussed include demand and supply analysis, elasticity measures, utility maximization, cost theory, perfect competition, monopoly power, and asymmetric information. Case studies will also be incorporated to demonstrate real world applications of microeconomic principles.

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monica raju
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93 views

Session 1 Outline & Introduction

The document outlines sessions for a microeconomics course covering topics such as supply and demand, elasticity, consumer behavior, the theory of the firm, market structures, and market failures. Key concepts to be discussed include demand and supply analysis, elasticity measures, utility maximization, cost theory, perfect competition, monopoly power, and asymmetric information. Case studies will also be incorporated to demonstrate real world applications of microeconomic principles.

Uploaded by

monica raju
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Micro Economics

Swapan Chakraborty
Session 2021-22
Outline

• Session 1: Introduction
1.1 The Themes of Microeconomics
1.2 Brief Review of Important Economic Concepts
1.4 Relevance of Economics in Managerial Decision Making
Process
Case: Health Foods, inc: Situations and Solutions

• Session 2: The Basic of Supply and Demand; Market Equilibrium


2.1 Demand and Supply: The market mechanism
2.2 Change in Demand and supply: Comparative Statics
Case: The Bric Countries and Supply and Demand for Oil
Outline

• Session 3 : Elasticity of Demand


3.1 Price Elasticity: Point vs Arc Elasticity: Determinants
3.2 Income Elasticity ; Determinants
3.3 Cross-Price elasticity ; Determinants
Case: Price elasticities in Asia

• Session 4 : Application of Demand and Supply


4.1 Government Interventions in Market
4.2 Price ceiling and Price flooring
4.3 Incidence of taxes
Outline

• Session 5: Consumer Behavior and the theory of Demand


3.1 Axioms of Preference : Rationality
3.2 Utility : Cardinal and Ordinal
5.3 Budget constraint

• Session 6 : Consumer behaviour and utility maximization


6.1 Indifference curve analysis
6.2 Consumer’s equilibrium : Utility maximization subject to budget
constraint.
Case : Nudging people towards better decision(Source: McConnell, Brue
and Flynn, pp: 232-233).
Outline

• Sessions 7-11: Theory of firm & Cost


Session 7 : 7.1 Firm and It’s Goal: Trade-off
7.2 Economic and Non-Economic goal
Session 8 : 8.1 Firms and their production decision
8.2 Production with one variable input
Session 9 : 9.1 Production with two-variable inputs (K,L)
9.2 Marginal rate of substitution (MRTS)
9.3 Returns to Scale
Session 10-11: Theory of Cost
10.1 : Economic Cost vs Accounting Cost
10.2: Opportunity cost; Sunk cost; Average & Marginal cost
11.1: Short-Run vs Long-Run cost
11.2: Economies of Scale
Outline

• Session12: Market Structure; Theory of Perfect Competition


12.1Characteristics of perfect competition other market structures
12.2 Output decision in the Short-run (Profit maximization)
12.3 Short-run supply curve (shut-down, break even point)
• Session 13: Market structure with market power; Monopoly
13.1 Sources of Monopoly power
13.2 Short-run equilibrium under monopoly
Case: The Bluefin Tuna
• Session 14: Monopoly power and it’s measurement
14.1 Measurement and it’s social cost
14.2 Social cost of monopoly; the deadweight-loss
Outline

• Session 15-16: Imperfect Competition: Monopolistic competition


and Oligopoly
15.1 Characteristic of monopolistic Competition
15.2 Equilibrium of a firm under monopolistic competition
15.3 Excess Capacity
16.1 Characteristic feature of Oligopoly model
16.2 Tools of Game theory to solve Oligopoly markets
16.3 Cournot’s model of Oligopoly
Cases in Oligopoly market
• Session 17 : Price-Discrimination
17.1 Price-discrimination of First, Second and Third degree
Outline

• Session 18 : Pricing with Market Power


18.1 Two-part tariff
18.2 Bundling
18.3 Peak-load pricing
• Session 19: Market failures
19.1 Market failure under the cases of Externalities
19.2 Public goods: Market failure and the role of State
• Session 20 : Asymmetry of Information
20.1 : Lemon market (George Akerlof)
20.2 : Adverse Selection
20.3 : Signaling
Text book and References

• Text book :
• Paul G Keat, Phillip Young, Stephen Erfle, Sreejata Banerjee,
Managerial Economics, 7e, Pearson,2018
• References:
1. Robert S.Pindyck and Daniel L.Rubinfield; ‘Microeconomics’,
8th edition, Pearson Education
2. McConnell, Brue and Flynn, Economics, 19e, McGraw Hill
Education (India) Edition 2013, Tenth reprint 2019.
3. 2. Thomas Christopher, S Charles Maurice and Sumit Sarkar:
Managerial Economics, 9th edition, Tata McGraw Hill
Publication, 2010.
Introduction

1. Microeconomics vs Macroeconomics

-- ‘Microeconomics’ is the study of an individual


economic agent whereas ‘Macroeconomics’ is the study of
aggregates.

--- Aggregate variables include Gross Domestic


Product(GDP), Inflation (π), Unemployment (u) or Monetary
aggregates (M1,M2, M3
Introduction

• Foundation of Economic Science


1. Theories and Models
2. Positive versus Normative Analysis
3. Real versus Nominal
4. State vs Market
i. Ownership and production decision
ii. Efficiency versus equity arguments
iii. Provision of public goods.

4. What is Market?
Introduction

• Production decision: For ‘Whom’ to produce, ‘What’ to


produce and ‘How’ to produce governed by
1. State(Command Economy)
2. Market (Capitalistic structure)
3. Primitive Economy (Norms etc)

Mixed Economy: Both state and market exists with the


dual objectives of social responsibilities and profitability.
Market: An Introduction

• Definition: Market is a place (physical or virtual)


where exchange (of goods and services) takes place.

• Types of Market: Competitive versus Non-


competitive Market

• Market variables: Price and Quantity

• Necessary concept: Equilibrium

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