Principles of Economics

Unit I : Introduction
a) Demand and supply : Determinants of demand, movements vs, shift in demand curve,
determinants of supply,
b) Elasticity of Demand and Supply
c) Application of demand and supply

Unit II : Consumer Theory
Ordinal Utility Theory: (Indifference Curve Approach); Consumer’s preferences, Budget Line,
Consumer’s equilibrium, Income and Substitution effects, Price consumption curve, Derivation of
the demand curve for a commodity, Criticism of the law of demand

Unit III : Production and Cost
Production: Firm as an agent of production, Concept of Production Function, Law of Variable
proportions, Isoquants, Return to scale, Economies and Diseconomies of Scale.
Costs:, long run and short run costs of production. Profit maximisation and cost minimisation,
Equilibrium of the firm, Technology Change in the very long run

Unit IV : Market Structure
(a) Perfect Competition : Assumptions. Theory of the firm under perfect competition, Demand
and revenue, Equilibrium of the firm in the short and long runs .
(b) Monopoly: Short run and long run equilibrium of monopoly firm. Price discrimination.
(c) Imperfect Competition: Difference between Perfect Competition ,Monopoly and Imperfect
competition, Monopolistic Competition: Assumption, Short run equilibrium, Long run
equilibrium, Oligopoly: Cause for the existence of oligopolistic firms in the market rather than
perfect competition, Co-operative vs. Non co-operative behaviour and dilemma of oligopolistic
firms.

Unit V : Income Distribution and Factor Pricing
Demand for factors, Supply of factor, Backward bending supply curve for labour concepts of
economic rent, Functional distribution of income