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8/17/2019 Microeconomics Topics Covered End Term
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Page 1 of 6
LIST OF TOPICS COVERED IN MICROECONOMICS IN TERM I
• SESSIONS 1, 2, 3 AND 4
INTRODUCTION TO
MICROECONOMICS
• Distinction between Microeconomics and Macroeconomics
• Scope of Microeconomics
• Positive Economics v/s Normative Economics
Suggested
readings:
• Robert S. Pindyck, Daniel L. Rubinfeld and Prem L. Mehta (2009), “Microecononics” , 7/e
Pearson Education, Chapter 1.
• Class notes.
DEMAND AND
SUPPLY
• Concepts of Demand and Supply
• Definition of Market
• Determinants of Individual Demand
• Law of Demand
• Distinction between Individual Demand and Market Demand
• Distinction between Change in Demand and Change in Quantity Demand
•
Exceptions to the Law of Demand
• Determinants of Individual Supply
• Law of Supply
•
Distinction between
Individual
Supply
and
Market
Supply
• Distinction between Change in Supply and Change in Quantity Supplied
• Market Equilibrium
• Shifts of Demand and Supply Curves–Comparative Static Analysis
Suggested readings:
• Robert S. Pindyck, Daniel L. Rubinfeld and Prem L. Mehta (2009), “Microecononics” , 7/e
Pearson Education, Chapters 2 and 4.
• Class notes.
ELASTICITY
• Concept of Elasticity
• Price Elasticity
• Arc Elasticity
• Point Elasticity
• Measurement of Price Elasticity at a Point on the Demand Curve
• Price Elasticity and Elasticity of Demand (Elastic, Inelastic and Unitary Elastic)
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• Relation between Slope and Price Elasticity
• Price Elasticity and Variety of Demand Curves
• Expenditure Method of measuring Price Elasticity
• Short Run and Long Run Price Elasticities (Distinction between Durable and Non‐Durable
Goods)
•
Income Elasticity
• Distinction between Normal, Inferior, Luxury and Necessary Commodities using Income
Elasticity
• Cross Elasticity
• Distinction between Substitutes and Complements using Cross Elasticity
• Problems
Suggested readings:
• Robert S. Pindyck, Daniel L. Rubinfeld and Prem L. Mehta (2009), “Microecononics” , 7/e
Pearson Education, Chapters 2 and 4.
•
Class
notes.
NOTE:
Topics
covered
in
Sessions
1—4
was
captured
in
Quiz
1.
•
SESSIONS 5, 6, 7, 8 AND 9
ELASTICITY Contd.
•
Elasticity
of
Supply
• Measurement of Elasticity of Supply at a Point on the Supply Curve
• Factors influencing Elasticity of Supply
Suggested
readings:
• Robert S. Pindyck, Daniel L. Rubinfeld and Prem L. Mehta (2009), “Microecononics” , 7/e
Pearson Education, Chapter 2.
• Class notes.
CONSUMER BEHAVIOUR
• Objectives
•
Theories of Consumer Behaviour
• Hicks–Allen’s Indifference Curve Approach
• Concept of Utility
• Distinction between Total Utility and Marginal Utility
• Three Axioms of Choice (Axiom of Completeness, Axiom of Dominance/Non‐Satiety and
Axiom of Transitivity)
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• Concept of Indifference Curve
• Assumptions of Indifference Curve Approach
• Properties of Indifference Curve
• Indifference Curve: Special Cases
• Concept of Budget Line
•
Equilibrium of
the
Consumer
• Price Consumption Curve (PCC)
• Price Consumption Curve and Price Elasticity of Demand
• Income Consumption Curve (ICC)
• Income Consumption Curve and Income Elasticity of Demand (Distinction between
Normal and Inferior Commodities)
• Decomposition of the Price Effect into Substitution and Income Effects (Hicks v/s
Slutsky)
• Distinction between Compensating Variation in Income and Cost Difference (Hicks v/s
Slutsky)
•
Distinction between
Normal,
Inferior
and
Giffen
Commodities
• Engel Curve
• Corner Solution
• Derivation of the Demand Curve from PCC
• Problems
Suggested
readings:
• Robert S. Pindyck, Daniel L. Rubinfeld and Prem L. Mehta (2009), “Microecononics” , 7/e
Pearson Education, Chapters 3 and 4.
• Class notes.
NOTE:
Topics
covered
in
Sessions
5—9
was
captured
in
Quiz
2.
• SESSIONS 10, 11, 12, 13, 14 AND 15
THEORY OF PRODUCTION
•
Meaning of Production Function
• Forms of Production Function: Fixed and Variable Proportion Production Function
• Distinction between Short Run and Long Run / Variable and Fixed Factors of Production
• Concepts of Total Product, Average Product and Marginal Product
•
Concept of
Average
Return
• Concept of Output Elasticity of Labour
• Three Stages of Production
• Concept of Isoquants
• Properties of Isoquants
• Economic Zone of Production: Concept of Ridge Lines
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• Objective of the Producer
• Concept of Returns to Scale
• Distinction between IRS, CRS and DRS
• Concept of Scale Elasticity of Output
• Elasticity of Substitution
•
Cobb‐Douglas
Production
Function
• Properties of Cobb‐Douglas Production Function
• Problems
Suggested
readings:
• Robert S. Pindyck, Daniel L. Rubinfeld and Prem L. Mehta (2009), “Microecononics” , 7/e
Pearson Education, Chapters 5.
• Class notes.
THEORY OF COST
•
Meaning of
Cost
Function
• Derivation of Cost Function from Production Function
• Short Run Cost Function
• Various Short Run Cost Functions: TFC, TVC, STC; AFC, AVC, ATC; SMC
• Relation between ANY Total, Average and Marginal
• Long Run Cost Function
• Various Long Run Cost Functions: LTC, LAC and LAC
• Derivation of LTC from corresponding STCs/ Derivation of LAC from corresponding SACs:
Envelope Theorem
• Concept of Expansion Path
•
Distinction between
Short
Run
&
Long
Run
Expansion
Paths
• LTC & LAC under Cobb‐Douglas Production Function
• Expansion Path under Cobb‐Douglas Production Function
• Economies of Scope
• Learning Curve
• Learning V/s Scale
• Problems
Suggested
readings:
• Robert S. Pindyck, Daniel L. Rubinfeld and Prem L. Mehta (2009), “Microecononics” , 7/e
Pearson Education,
Chapter
6.
• Class notes.
NOTE:
Topics
covered
in
Sessions
10—15
was
captured
in
Quiz
3.
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Page 5 of 6
• SESSION 16
THEORY OF FIRM
• Concepts of Total Revenue (TR), Average Revenue (AR) and Marginal Revenue (MR)
• Relation between AR and MR through Price Elasticity of Demand
•
Profit function
• Conditions of Profit Maximization
• Classification of the Market Structure
Suggested readings:
• Robert S. Pindyck, Daniel L. Rubinfeld and Prem L. Mehta (2009), “Microecononics” , 7/e
Pearson Education, Chapter 7.
• Class notes.
SESSIONS 17 AND 18
PERFECT COMPETITION
• Assumptions of the Market
• Distinction between Pure Competition and Perfect Competition
• Equilibrium Conditions of a firm: Short Run
• Distinction between Shut Down and Break‐Even Point
• Supply Curve of a Firm (Short Run)
• Supply Curve of the Industry (Short Run)
• Equilibrium Conditions of a Firm: Long Run
• Concept of Normal Profit
•
Industry Supply
Curve
(Long
Run
• Distinction between Constant, Increasing and Decreasing Cost Industries
• Meaning of External Economies & External Diseconomies
• Problem
Suggested readings:
•
Robert S. Pindyck, Daniel L. Rubinfeld and Prem L. Mehta (2009), “Microecononics” , 7/e
Pearson Education, Chapter 7.
• Class notes.
SESSION
19
CONSUMER SURPLUS, PRODUCER SURPLUS & DEAD‐WEIGHT LOSS
• Concepts of Consumer Surplus (CS), Producer Surplus (PS) and Dead‐Weight Loss (DWL)
• Imposition of Price Ceiling and impact of CS, PS and DWL
• Imposition of Minimum Prices and impact of CS, PS and DWL
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• Imposition of Quotas and impact of CS, PS and DWL
• Problem
Suggested
readings:
• Robert S. Pindyck, Daniel L. Rubinfeld and Prem L. Mehta (2009), “Microecononics” , 7/e
Pearson Education,
Chapter
8.
• Class notes.
SESSIONS 20 AND 21
MONOPOLY
• Meaning of Monopoly
• Equilibrium Conditions of a Monopolist
• Equilibrium of a Monopolist with Profits, Losses, Normal Profits and Minimum AC
• Can the monopolist charge any price?
•
Absence of
Supply
Curve
in
Monopoly
• Concept of Monopoly Power: Lerner’s Measure
• Sources of Monopoly Power
• Social Cost of Monopoly Power
• Problem
Suggested
readings:
• Robert S. Pindyck, Daniel L. Rubinfeld and Prem L. Mehta (2009), “Microecononics” , 7/e
Pearson Education, Chapter 9.
• Class notes.
SESSION 22
PRICE DISCRIMINATION
• Meaning of Price Discrimination
• Conditions for Successful Price Discrimination
• First Degree Price Discrimination
• Second Degree Price Discrimination
• Third Degree Price Discrimination
• Problem
Suggested
readings:
• Robert S. Pindyck, Daniel L. Rubinfeld and Prem L. Mehta (2009), “Microecononics” , 7/e
Pearson Education, Chapter 10.
• Class notes.
NOTE:
Topics
covered
in
Sessions
16—22
would
be
captured
in
Quiz
4.