Microeconomics I

Course Type	Course Code	No. Of Credits
Discipline Core	NSUS1EC105	4

Course Coordinator and Team: SES Faculty

Email of course coordinator: pcbabed@aud.ac.in

Pre-requisites: No

Course Description:

The two courses, Microeconomics I and 2 together will help students learn the fundamental theories of microeconomics. In this course the students are introduced to the utilitarian and non- utilitarian analysis of consumer behaviour in the economy. Further, the course introduces the theory of firm and the technological relationship that is embodied in production and cost functions.

Course Objectives:

To develop an understanding about the functioning of market mechanism through forces of demand and supply.
To develop analytical perspective about market equilibrium and analyse comparative statics on account of changes in market conditions.
To describe and illustrate the basic concepts fundamental to economic decision making in the case of consumers.
To explain the basic production and cost concepts in relation to the time period.
To develop insights for the application of micro-economic analyses to economic and social problems.

Course Outcomes: At the end of the course students should be able to:

Provide a rational explanation of behaviour of the individuals consumers.
Provide a rational explanation of the behaviour of the firms that interact in an economy.
Calculate equilibrium price and quantity in a market by analysis demand and supply functions.
Describe the mechanism behind different forms of market.
Use mathematics in formalizing and analyzing an economic problem.
Develop and sustain an argument using the concepts that arc commonly used by economists.
Discuss the limitations and the domain of application of standard economic theories.

Brief description of the modules: \

Module I: Principles of Demand, Supply and Market Equilibrium

This module introduces students to the fundamental concepts of microeconomics, focusing on how markets function through the interaction of demand and supply. It explores the laws of demand and supply, determinants that cause shifts in these curves, and the concept of market equilibrium where the quantity demanded equals the quantity supplied. Students will learn how prices act as signals in resource allocation and analyze real-world phenomena such as shortages, surpluses, price controls (ceilings and floors), and the effects of government policies like taxation and subsidies. Graphical and numerical tools are used to understand how equilibrium is established and altered in competitive markets.

Module II: Theory of Consumer Behaviour

This module delves into the microeconomic foundations of consumer decision-making. It covers utility analysis (both cardinal and ordinal approaches), the concept of marginal utility, and the law of diminishing marginal utility. Students will study indifference curves and budget constraints to understand how rational consumers make choices to maximize their satisfaction given income and prices. The module also introduces the derivation of demand curves from consumer preferences and discusses income and substitution effects through tools such as the Slutsky approaches. By the end of this module, learners will be equipped with the analytical tools to model and predict consumer behaviour under various conditions

Module III: Theory of Production

This module examines how firms transform inputs into outputs through the production process. It introduces the concept of the production function and explores the short-run and long-run dimensions of production. Key principles such as the law of variable proportions and returns to scale are discussed to explain the relationship between input usage and output levels. The module provides insight into the technological and economic choices firms make, laying the groundwork for understanding firm behavior and supply-side decisions in markets.

Module IV: Theory of Cost

The final module focuses on the economic costs associated with production and how they influence firm decisions. It distinguishes between different types of costs—fixed, variable, total, average, and marginal—and explains their behavior in the short run and long run. Cost curves are analyzed to understand how they shape supply decisions, economies of scale, and the structure of industry. The module also explores the derivation of long-run cost curves from short-run cost data and highlights the importance of opportunity cost in economic analysis. Through graphical and algebraic methods, students gain the tools to evaluate the cost-efficiency of firms in various market environments.

Assessment Plan

S.No	Assessment	Weightage
1	Class Test	30%
2	Assignment	30%
3	End Term	40%

References

[HRV] Hall R.Varian (2014) intermediate microeconomics with Calculus, 1^st ed. W. W. Norton & Co.
R. Pindyck, D. Rubinfeld (2013) Microeconomics, 8^th ed, Pearson.
Arredondo, F. Garcia (2020) Intermediate Microeconomic Theory - Tools and Step-by-Step Examples, MIT Press.
Snyder, C., Nicholson, W. (2008). Microeconomic Theory, 10^th ed. Cengage Learning.