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Book - Mankiw

SYLLABUS

References 1. Bernheim, B., and Whinston, M. (2009). Microeconomics. Tata McGraw-Hill. Hereafter Bernheim and Whinston (2009). 2. Mankiw, N. (2007). Economics: Principles and applications, 4th ed. Cengage Learning. Hereafter Mankiv (2007) Unit-wise details of the readings are as follows:

Unit 1: Introduction

What is microeconomics? Scope and method of economics; the economic problem: scarcity and choice; the concept of opportunity cost; the question of what to produce, how to produce and how to distribute output; science of economics; institutions for allocating resources; the basic competitive model; prices, property rights and profits; incentives and information; rationing; positive versus normative analysis. The scientific method; the role of assumptions; models and mathematics; why economists sometimes disagree Interdependence and gains from trade; specialization and trade; absolute advantage; comparative advantage and trade Reference: Mankiw (2007) Chapter 1, 2 and 3.

Unit 2 : Supply and Demand

How markets work, markets and welfare Markets and competition; determinants of individual demand/supply; demand/supply schedule and demand/supply curve; market versus individual demand/supply; shifts in the demand/supply curve, demand and supply together; how prices allocate resources; elasticity and its application; controls on prices; taxes and the costs of taxation; consumer surplus; producer surplus and the efficiency of the markets. Application to international trade; comparison of equilibria with and without trade, the winners and losers from trade; effects of tariffs and quotas; benefits of international trade; some arguments for restricting trade Reference: Mankiw (2007); Chapter 4,5,6,7,8 and 9

Bernheim and Whinston (2009); Chapter 2

Unit 3 : The Households

The consumption decision - budget constraint, consumption and income/price changes, demand for all other goods and price changes; description of preferences (representing preferences with indifference curves); properties of indifference curves; consumer‘s optimum choice; income and substitution effects; labour supply and savings decision; choice between leisure and consumption Reference: Mankiw (2007): Chapter 21. Bernheim and Whinston (2009): Chapter-4 Topic S: Goods Vs Bads, pp 105-107; Ch-6, Topic: Labor Supply and Demand for leisure, pp 185-189

Unit 4 : The firm and perfect market structure

Behaviour of profit maximizing firms and the production process; short-run costs and output decisions; costs and output in the long-run

Reference: Mankiw (2007); Chapter 13, 14

Unit 5: Imperfect Market Structure Imperfect

Market Structure Monopoly and anti-trust policy; government policies towards competition; imperfect competition

Reference: Mankiw (2007); Chapter 15

Unit 6 : Input market Labour and land markets

Basic concepts (derived demand, productivity of an input, marginal productivity of labour, marginal revenue product); demand for labour; input demand curves; shifts in input demand curves; competitive labour markets; labour markets and public policy

Reference: Mankiw (2007); Chapter 18