PRINCIPLES OF ECONOMICS

Unit 1 - Introduction

The meaning and definitions of Economics: Adam Smith, Marshall, Robbins and
Samuelson. Methods of Economics : Inductive vs. Deductive methods, Micro vs.
Macro Economics, Concept of Equilibrium – Stable, unstable and Neutral
Equilibrium. Theory of consumption – Cardinal Vs Ordinal approach. Utility analysis
– Total Marginal and Average utility. Law of diminishing marginal utility and Law of
Equi – Marginal Utility.

Unit 2 - Consumer Behaviour

Indifference curve analysis, Budget line, Consumer’s
equilibrium. Price, Income and Substitution effects, PCCs and ICCs. Consumer’s
Surplus. Concept of Demand and Supply. Demand curve – Individual and Market
demand curve, derivation of demand curve. Law of demand. Movement vs. shift in
the demand curve. Elasticity of demand – Price, Income and cross elasticity, factors
affecting elasticity of demand.

Unit - 3 Production

Meaning and factors of production, concept of short-run and long-run for
a firm, Law of variable Proportions, Returns to scale. Cost of production: Explicit
and implicit cost, actual and opportunity cost, accounting and economic cost, Social
and private costs, short-run and long-run costs, Cost Curves. Concept of Revenue:
Total, Marginal and Average Revenue. Market : Perfect competition, Monopoly and
Imperfect competition – Features and Equilibrium of firms in the short and long run
period.

Unit - 4 Thoery of Distribution

Concept of Rent, wages, Interest and Profit; Theory of rent.
Theory of wages: Marginal productivity theory and Modern theory of wages,
Backward bending supply curve. Theory of Interest: Classical theory, Loanable Funds
theory and Liquidity Preference theory of Interest. Theory of Profit: Innovation
theory, Risk Bearing theory and Uncertainty bearing theory of Profits.