Economics For Business Decisions MCOM Semester I Manan Prakashan

Economics For Business Decisions MCOM Part I Semester I

Economics For Business Decisions MCOM Semester I Manan Prakashan

Content:

1. Basic Principles in Business Economics (15 Lec.)

l Meaning and Scope of Business Economics – twin principles of  scarcity and efficiency; incremental and Marginal principle; profit maximisation principle; market economy and invisible hand; production possibility frontier; Opportunity cost – accounting profit and economic profit; market failure, externality, public goods and economic role of Government

2. Demand and Supply Analysis (15 Lec.)

l Determinants of demand – market demand function – theory of attributes, snob appeal, band wagon and Veblen effect and demand function. Law of supply – elasticity of supply

l Applications of elasticity of demand and supply to economic issues: Paradox of bumper harvest- tax on price and quantity – minimum floor and maximum ceilings: minimum wages controversy and Administered price control

l The theory of consumer choice – Consumer preference and budget constraint – equilibrium position of tangency  with the help of Indifference curve analysis – effect of changes in price and income on consumer equilibrium

3 Production Decisions and Cost Analysis (15 Lec.)

l Production function – short run and long run – Law of variable proportion, returns to scale, scale economies, scope economies- least cost factor combination for a given output- Expansion path and Multiproduct firm- cost reduction through experience – learning curve

l Economic analysis of Cost : Classification of costs, short run and long run cost functions

4. Market Structure Analysis (15 Lec.)

l Difference between perfectly and imperfectly competitive markets – Perfect competition and Monopoly as limiting cases of market imperfections – Sources of market power – profit maximisation of simple and discriminating monopolist – methods of measuring monopoly power – Public policy towards monopoly power

l Different forms of imperfect competition – Monopolistic competition and Oligopoly – Strategic decision making in oligopoly markets- collusive and non-collusive oligopoly- colliding oligopoly : rivalry among few, price war and kinked demand curve – collusive oligopoly models of price leadership and cartel –  basic concepts of game theory – Using Game theory to analyse strategic decisions – application of model of prisoner’s dilemma  in market decisions.

Additional Information