The nature of economic problems and their sources. Economic goals of a society. Alternative economic systems.
Circular flow of income.
Demand and Supply Theory
Supply, demand and market elementary theory of supply and demand relationship between goods and factor markets.
Demand and supply elasticity - Measurement, importance and applications.
Consumer behavior and market demand
Utility approach vs. the indifference user approach Individual and market demand curves - the consumers surplus, application.
Production and Costs Theory
The production function- technical efficiency - short run and long run - choice of inputs in the short and the long run total fixed and variable costs average and managerial costs
The perfectly competitive market and its characteristics
Conditions of profit maximization - A firms short run optimal output level firms short run supply curve - the short run industry supply interaction of market demand and industry supply - the equilibrium price - The long run industry supply curve.
Imperfectly competitive markets
Monopoly optimal price output combination - inefficiency of monopoly-Price discrimination- natural monopoly - important features of monopolistic competitive and oligopoly cartels in oligopoly.
Basic principles of factor pricing
Derived demand for an input income distribution - factor price differentials causes and implications - economic rents.
Resource allocation and the market
Concepts of equity and efficiency - strength and weakness of the market mechanism in terms of equity and efficiency - the need for government intervention tools of intervention regulation - public ownership and taxation.
Gains from international specialization - free trade vs. protection the World Trade Organization (WTO) and globalization - regional economic integration SAARC, EU.
Non Renewable resources
Pricing and optimal rate of extraction.
Key macroeconomics phenomena
Output - employment- inflation - exchange rates - growth etc. major macroeconomics ills unemployment inflation - slow growth.
National output concepts and measurements - interpretation of national income measures inter temporal and international comparisons the pitfall.
Aggregate expenditure and equilibrium national income a simple model. Changes in autonomous expenditures and national income the multiplier. Government spending and taxes. Net exports a more comprehensive measure of aggregate expenditure equilibrium income in this context.
Aggregate demand and aggregate supply short run and long run. Determination of national income and the price level. Demand and supply stocks. Fiscal and monetary policies Government budget controlling deficits various proposals.
The trade off between inflation and unemployment stagflation, short run and the long run Philips curves.
Balance of payments and the exchange rates
Policy changes to correct dis-equilibrium in the balance of payments.