Economics

Course Title: Economics

Course No: ECO155

Nature of the Course: THEORY

Semester: 2

Full Marks: 80 + 20

Pass Marks: 32 + 8

Credit Hours: 3

Course Description

This course covers the basic concepts of microeconomics and macroeconomics. It encompasses basic economic problems, demand, supply, market equilibrium, elasticity of demand and supply, consumer choice, production, cost, revenue, market structure, concept of national product and income and its measurement, monetary and fiscal policies.

Course Objectives

The main objective of this course is to make students familiar with the basic concepts of economics.

Course Contents

1. Economic Issues and Concepts

4 hrs

1.1. Introduction to economics with reference to Alfred Marshall and Lionel Robbins' definitions

1.2. Concept of microeconomics and its scope

1.3. Main characteristics of free market, centrally planned and mixed economic systems

1.4. Society's production possibility curve/frontier, and choice, scarcity and opportunity cost

2. Demand, Supply and Price

10 hrs

2.1. Meaning of demand and supply

2.2. Law of demand and supply

2.3. Individual and market demand and supply (with schedule and graph/curve)

2.4. Movement along and shift of a demand and supply curves

2.5. Market equilibrium: the interplay of demand and supply

2.6. Change in market equilibrium due to factors shifting the demand and supply curves

2.7. Elasticities of demand

Price elasticity of demand and measurement by percentage and arc/mid-point methods

Income elasticity of demand and measurement by percentage and arc/mid-point methods

Cross-price elasticity of demand and measurement by percentage and arc/mid-point methods

2.8. Price elasticity of supply

2.9. Concept of consumer and producer surpluses

2.10. Government intervention in the market through price floor, price ceiling and tax and effect

3. Consumer Choice: Indifference Theory

6 hrs

3.1. Concept of utility, total utility and marginal utility

3.2. Law of diminishing marginal utility

3.3. Indifference curve analysis

Meaning and assumptions of indifference curve analysis

Basic properties of indifference curves

Right-angled (L-shaped) and linear (straight line) indifference curves

Marginal rate of substitution (MRS)

Consumer's budget line

Consumer's equilibrium

Income consumption curve (ICC) and price consumption curve (PCC) for normal, inferior, and Giffen goods

4. Production

6 hrs

4.1. Meaning of production and production function (Cobb-Douglas production function)

4.2. Production with one variable input: the law of diminishing marginal productivity/returns

4.3. Production with two variable inputs

Concept of isoquant

Property of isoquants

Right-angled (L-shaped) and linear (straight line) isoquants

Concept of isocost curve (meaning, equation, slope)

Producer's equilibrium

Condition for optimum employment of one, two and many inputs/factors of production

4.4. Production in the long run: Concepts of returns to scale with possible causes of each

5. Costs and Revenue

5 hrs

5.1. Concept of economic cost as a sum of explicit and implicit costs

5.2. Short run costs

Short run total costs (fixed and variable)

Unit costs (average fixed, average variable, average total, and marginal) and their curves

Relation between average variable, average total and marginal costs

5.3. Costs in the long run

Average and marginal costs

Causes of U-shaped and L-shaped long run average cost curves

5.4. Concepts of total, average and marginal revenues and their curves in the perfect competition and imperfect competition markets

6. Market Structure

8 hrs

6.1. Perfect competition

Characteristics

Price and output determination in the short and long run using the total and marginal approaches

6.2. Monopoly market

Characteristics

Sources of monopoly

Price and output determination in the short and long run using the total and marginal approaches

6.3. Monopolistic competition

Features

Price-output determination using total and marginal approaches

6.4. Oligopoly market

Basic features/characteristics

Centralised cartel

7. National Product and its Measurement

4 hrs

7.1. Concept of macroeconomics and its scope

7.2. Concepts of gross domestic product (GDP), gross national income (GNI), net national product (NNP), national income (NI), personal income (PI), disposable personal income (DPI)

7.3. Measurement of national income and output

Expenditure approach

Income (cost of production) approach

Value added approach

8. Macroeconomic Policies

2 hrs

8.1. Concept of expansionary and contractionary fiscal and monetary policies

8.2. Tools of fiscal and monetary policies

Text Books

1.Lipsey, R.G., & Chrystal, K.A. (2008). Economics, 11th ed., (Indian Edition). New Delhi: Oxford University Press.
2.Samuelson, P.A. & Nordhaus, W.D. (2005). Economics, 18th ed. New Delhi: Tata McGraw-Hill Publishing Company Ltd.

Notes:

This syllabus follows the official BIT curriculum of Tribhuvan University. In case of any doubt or revision, the university’s published syllabus shall be considered authoritative.

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Course Description

Course Objectives

Course Contents

Text Books

Notes: