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Principles of Microeconomics

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Course Type Course Code No. Of Credits
Discipline Core NSUS1EC101 4

Course Coordinator and Team:                   SES Faculty 

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

Pre-requisites:                                               No

Course Description: 

The course is a foundational course for an undergraduate student of economics. In this course students will be introduced to the foundational microeconomic concepts like supply and demand, resource allocation, consumer’s choice, producer’s objectives, market structures, and impact of government interventions under different conditions.

Course Objectives:

  • To develop a basic understanding of how the economic forces operate and interact with each other.
  • To understand how a consumer may address their choice problem.
  • To understand how a producer may take decisions regarding production of goods and services.
  • To understand how different forms of market operate.
  • To understand the role of government in an economy
  • To understand some basic ideas of trade.

Course Outcomes: 

  • Apply the basic rules that govern an economy to predict an outcome,
  • Demonstrate how elasticity of demand and supply curves make an impact,
  • Demonstrate the effects of government interventions in a market using the supply demand diagram,
  • Identify different kinds of market structures,
  • Demonstrate effects of changing market conditions on price and quantity trades of a commodity or a service using a supply demand diagram,
  • Demonstrate the usefulness of trade using the theories they learn in the course.

Brief description of the modules: 

Module 1: Introductory ideas about demand, supply and equilibrium: The module will introduce Economics with focus on- Concepts of scarcity, Resource allocation, Normative and Positive economics, Opportunity cost, Principles of Demand, Supply and Market Equilibrium, Price elasticity of demand, Price elasticity of supply, Taxes, Consumer and producer surplus, Effect of price ceilings and price floors. How price elasticity and income elasticity impact demand and Impact of government intervention.

Module II: Consumer’s problem and producer’s problem: The module will introduce Consumer’s choice: utility functions, and the consumer’s budget & Optimal choice. The Introduction to Production will focus on: production functions, average, marginal and total product, Stages of production. The module also discusses the concept of short-run and long-run cost curves and Firm’s economic behaviour pertaining to the optimization of profits and costs. Supply curve.

Module III: Different kinds of market structures: This module examines the characteristics and outcomes of various market structures, ranging from perfect competition to different forms of imperfect competition such as monopoly, monopolistic competition, and oligopoly. It analyzes how pricing, output decisions, and efficiency vary across these structures. The focus is on understanding firm behavior and market performance in different competitive environments.

Module IV: Market failures: This module explores situations where markets fail to allocate resources efficiently, focusing on externalities and public goods. It explains how positive and negative externalities lead to over- or under-production and discusses the unique characteristics of public goods such as non-rivalry and non-excludability. The module also introduces policy tools to correct these failures.

Module V: Gains from trade:  This module introduces the concept of absolute and comparative advantage. It demonstrates how specialization and exchange, leads to increased overall welfare. Students will learn to apply these concepts to real-world trade patterns and evaluate arguments for and against free trade.
Assessment Plan  

S.No

Assessment

Weightage

1

Class Test

30%

2

Assignment

30%

3

End Term

40%

References:

  • Greenlaw & Shapiro Principles of Microeconomics 2e
  • Samuelson & Nordhaus Microeconomics 19e
  • Rittenberg, L. (2008). Principles of microeconomics. Flat World Knowledge.
  • Cowell, F. A. (2018). Microeconomics: principles and analysis. Oxford University Press.
  • McConnell, C. R., Brue, S. L., & Flynn, S. M. (2018). Microeconomics: principles, problems, and policies. McGraw-Hill
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