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ECO402 : Microeconomics

Course Overview

Course Synopsis

This course explains and introduces the science of economics to the students. It also assists in developing an understanding of MICROECONOMICS terms and concepts relative to the consumer’s behavior, theory of the firm, distribution of output and income, and the market structure and pricing.

Course Learning Outcomes

At the end of the course, you should be able to:

  • Explain basic economic concepts pertaining to the market system and demonstrate the ability to comprehend terminology used in news media, national debates over issues, and daily conversation.
  • Describe the functioning of market forces, i.e. demand and supply in competitive market system.
  • Give reasoning, evaluation of the national and international economic issues in and out of the classroom.
  • Apply the basic principles of economics in your own life.

Course Calendar

Microeconomics and Macroeconomics1Handouts1
Themes of Microeconomics1Handouts1
Positive Vs. Normative Economics1Handouts1
What is a Market?1Handouts2
Economic Systems2Handouts3
Choices of Society2Handouts3
Factors of Production2Handouts3
The Production Possibilty Frontier (PPF)2Handouts3
Real versus Nominal Prices3Handouts5
Supply and Demand3Handouts6
Supply curve and Demand curve3Handouts6
The Market Mechanism3Handouts7
Changes in Market Equilibrium4Handouts9
Shifts in Demand and Supply4Handouts11
Elasticities of Supply and Demand5Handouts16
Income Elasticity of Demand5Handouts16
Cross Price Elasticity of Demand5Handouts16
Short-Run Vs. Long-Run Elasticities5Handouts18
Consumer Preferences5Handouts22
The Indifference Curve6Handouts22
Marginal Rate of Substitution6Handouts24
Perfect Substitutes and Perfect Compliments6Handouts24
QUIZ # 01
Ordinal versus Cardinal Utility7Handouts27
Budget Constraints7Handouts27
The Budget Line7Handouts27
The Effects of Changes in Income and Prices7Handouts28
Consumer Choice7Handouts29
Decision Making and Public Policy7Handouts31
Corner Solution7Handouts33
Revealed Preference Theory8Handouts34
Marginal Utility and Consumer Choice9Handouts36
Total Utility9Handouts36
Law of Diminishing Marginal Utility9Handouts36
Marginal Utility and Indifference Curve9Handouts37
Laspeyers and Pasches Index Number9Handouts38
Individual Demand10Handouts41
Effect of a Price Change10Handouts42
Effects of Income Changes10Handouts43
Engel Curve10Handouts44
Substitutes and Compliments10Handouts45
Income and Substitution Effect11Handouts46
Market Demand11Handouts47
Giffen Goods11Handouts47
Price Elasicity and Consumer Expenditure11Handouts49
Point and Arc Elasticity of Demand11Handouts49
Consumer Surplus12Handouts51
Network Externalities12Handouts52
The Bandwagon Effect12Handouts53
The Snob Effect12Handouts54
Describing Risk13Handouts56
Interpreting Probability13Handouts56
Expected Value13Handouts56
Preferences Toward Risk14Handouts60
The Expected Utility14Handouts60
Risk Premium14Handouts62
Reducing Risk15Handouts64
Law of Large Numbers15Handouts65
Expected Vs. Actual Returns15Handouts66
The Demand for Risky Assets15Handouts66
Choosing Between Risk and Return15Handouts67
The Short Run Vs. Long Run16Handouts69
The Law Of Diminishing Marginal Returns16Handouts71
Labor Productivity and the Standard Of Living16Handouts72
Production with Two Variable Inputs17Handouts73
The Shape of Isoquants17Handouts73
Marginal Rate of Technical Substitution17Handouts73
Isoquants for Perfectly Substitutable and Perfect Compliments17Handouts74
Returns to Scale17Handouts75
Measuring Cost: Which Cost Matter18Handouts78
Cost In the Short Run18Handouts79
The Users Costs of Capital19Handouts82
The Isocosts Line19Handouts82
Choosing Inputs19Handouts82
Cost in the Long-Run20Handouts85
A Firm’s Expansion Path20Handouts85
Long-Run versus Short-Run Cost Curves20Handouts85
Economies and Diseconomies of Scale20Handouts86
QUIZ # 02
Production with Two Outputs- Economies of Scope21Handouts89
Economies of Scope – The Learning Curve21Handouts90
Economies of Scale versus Learning21Handouts91
Characteristics of Perfectly Competitive Markets22Handouts93
Marginal Revenue, Marginal Cost and Profit Maximization22Handouts93
Demand and Marginal Revenue Faced by a Competitive Firm22Handouts96
Choosing Output in Short Run23Handouts97
A Competitive Firm’s Short-Run Supply Curve23Handouts98
The Short Run Market Supply Curve23Handouts99
Producer Surplus24Handouts101
Choosing Output in Long-Run24Handouts102
Accounting Profit and Economic Profit24Handouts103
Long-Run Competitive Equilibrium25Handouts104
Economic Rent25Handouts104
The Industry’s Long-Run Supply Curve26Handouts106
Effect of an Output Tax on a Competitive Firm’s Output26Handouts107
Evaluating the Gains and Losses from Government Policies26Handouts108
Effects of Price Controls when Demand is Inelastic26Handouts109
The Analysis of Competitive Markets27Handouts110
Consumer Surplus27Handouts107
Producer Surplus27Handouts107
Minimium Wage27Handouts111
QUIZ # 03
Price Support28Handouts113
Production Quota28Handouts113
The Impact of Tax and Subsidy29Handouts118
Maximizing Profit when Marginal Revenue equals Marginal Cost30Handouts121
A Rule of Thumb For Pricing31Handouts124
A Monopolists Pricing31Handouts125
Effect of Excise Tax on Monopolists31Handouts126
Graded Discussion Board
Multiplant Firm32Handouts127
Monopoly Power32Handouts128
Lerner index of Monopoly Power32Handouts129
Sources of Monopoly Power32Handouts130
The Social Costs of Monopoly Power33Handouts131
Regulating the Price of a Natural Monopoly33Handouts131
Rent Seeking33Handouts131
Monopsony Power34Handouts135
Pricing with Market Power: Capturing Consumer Surplus34Handouts136
First and Second Degree Price Discrimination34Handouts137
QUIZ # 04
Second and Third Degree Price Discrimination35Handouts139
The Economies of Coupons and Rebates35Handouts140
Intertemporal Price Discrimination and Peak-load Pricing36Handouts142
Peak Load Pricing36Handouts143
The Two Part Tariff36Handouts143
Types of Bundling38Handouts149
Monopolistic Competition39Handouts154
A Monopolistically Competitive Firm in the Short and Long Run39Handouts154
Monopolistically Competitive Vs. Perfectly Competitive Equilibrium39Handouts155
Equilibrium in an Oligopolistic Model40Handouts156
Nash Equilibrium in Prices40Handouts156
Prisoners Dilemma41Handouts161
The Kinked Demand Curve41Handouts162
Competitive Factor Market42Handouts166
Markets for Factor Inputs43Handouts169
Back-ward bending Supply of Labor43Handouts170
Competitive Factor Market44Handouts172
Factor Market with Monopoly Power45Handouts175
Bilateral Monopoly45Handouts176
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