Course Contents
Introduction to Business Economics
Business success and economic issues; Basic concepts of Business Economics; Allocation of resources, Opportunity cost, Marginal analysis, Fundamental principles of economics, Positive and normative analysis, Importance and use of Business Economics; Corporate decision making and public policy design.
Supply and Demand, Market and Welfare
The market force of supply and demand, Market mechanism, Elasticity of demand and supply and its application, Consumer, Producer, Government and Efficiency of market, Application; Cost of taxation, price controls and international trade, Demand forecasting – techniques and applications.
The Theory of Consumer Choice
Consumer behavior; Consumer preference and choice, Indifference curves, Marginal rate of substitution, Budget constraint, Optimization; What consumer chooses?, Applications; Price effect, income effect and substitution effect, Income and substitution effect.
The Theory of Production and Cost
Technology and production; Production function, Isoquants, Marginal rate of technical substitution, Production with one and two variable input(s), Returns to scale, Analysis of cost; short and long run, Least cost combination of inputs.
Objective of the Firm
Introduction of firm and its goal, profit maximization, Agency Theory, Managerial Theories; Sales revenue maximization, managerial utility maximization, corporate growth maximization, Behavioral theory (Cyert and March).
Pricing Theory
Classification of market - perfect and imperfect market, Pricing under different market conditions, Perfect competition, monopoly, monopolistic competition, oligopoly; price leadership model, cartel, kinked demand curve model, Pricing: Cost-plus pricing, incremental pricing, multiple product pricing, transfer pricing.
The Economics of Public Sector
Externality; positive and negative externalities of production and consumption, Inefficiency, Market failure and ways of correcting market failure, Common property resources, Public goods; public goods and market failure, Private preference of public goods.
