BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, Pilani

Pilani Campus
AUGS/ AGSR Division

FIRST SEMESTER 2019-20

COURSE HANDOUT
Date: 02.08.2019
In addition to part I (General Handout for all courses appended to the Time table) this portion gives further
specific details regarding the course.
Course No : ECON F211
Course Title : PRINCIPLES OF ECONOMICS
Instructor-in-Charge : Dr. Geetilaxmi Mohapatra
Instructor(s) : Dr. Geetilaxmi Mohapatra
1. Course Description: Principles of Economics is a foundation course that introduces the fundamental
concepts and tools necessary to acquire an understanding of the economic decision making of market
participants such as individual households, firms, and the government. The course coverage primarily
encompasses the two major areas of economics namely Microeconomics and Macroeconomics.
2. Scope and Objective of the Course: The elementary discussion concerns scarcity and allocation of
resources, benefits of trade, the supply and demand model and the individual behavior concerning their utility
maximization. Further, the study of the behavior of profit-maximizing firms is undertaken to establish a
relationship between the cost of production and the models of supply. A brief discussion on the imperfect
market such as monopoly and its variants follows to illuminate the dangers of uncontrolled market power
resulting from a complete monopoly. The last part of the course focuses on the study of macroeconomics, i.e.
variables at the aggregate level. Discussion on key macroeconomic variables such as the Gross Domestic
Product, National Income, Inflation, Interest rate, and Money Supply etc. is primarily motivated to enable
students to understand the relevance of these variables in the context of the global economy.

3. Text Books: Case Karl. E.; Fair Ray C. and Oster, Sharon E., “Principles of Economics”, Pearson Education
Limited, 12th Edition, 2017

4. Reference Books:
R1. Case, Karl. E.; Fair, Ray C. and Oster, Sharon E., “Principles of Economics”, Pearson Education Limited,
8th Edition, 2007
R2. Samuelson, P. A. & Nordhaus, W. D., “Economics”, Tata McGraw-Hill 19th Edition, 2007
R3. Lipsey, R. G. & Chrystal, K. A., “Economics”, Oxford University Press, 11th Edition, 2007
R4. N. Gregory Mankiw “Principles of Economics”, South Western/Cengage Learning India, 6th Edition, 2012
5. Course Plan:
Module Lecture Session Reference Learning Outcome
No: (TB)
Module I: L1.1: Introduction to Economics Ch.1 Why study Economics?
and
Introducti
Appendix
on,
L2.1: Scarcity, choice and opportunity cost To introduce the concepts of
Demand
Supply, L2.2: Concept of absolute and comparative scarcity, choice, constant and
Market cost advantage Ch.2 increasing opportunity cost in
L2.3: The Production Possibility Frontier and economics, PPF
equilibriu
m and various concepts related to it
consumer L3.1: Basic decision making units, the circular To analyze the basic decision
behavior flow making units, concept of
L3.2: Demand and its determinants, shift in Ch.3 demand, supply, determinants of
demand it, factors causing shift it and
L3.3: Supply and its determinants, shift in it market equilibrium
and market equilibrium

1
 BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, Pilani
Pilani Campus
AUGS/ AGSR Division
L4.1: Price Rationing
L4.2: Supply, Demand and Market Efficiency
L5.1: Price elasticity of demand, types, and
formula for calculating it
L5.2: Determinants of demand elasticity and
other types of elasticity of demand
L6.1: Budget constraint, utility and law of
diminishing marginal utility
L6.2: Utility maximizing rule
L6.3: Income and Substitution effect, labor
supply decision
L7.1: The behavior of profit maximizing firms
and law of diminishing returns
L7.2: Production function with two variable
factors of production
L8.1: Various types of costs in the Short run
and their shapes
Module II: L8.2: Relationship between different types of
cost
Production L8.3:Determination of profit maximizing level
theory, of output in the by comparing costs and
cost revenue
analysis, L9.1: How short-run conditions affect a firm’s
output short-run and long run behavior
prices in L9.2: Long run adjustments to short run
conditions and derivation of long run industry
short run supply curve
and long L10.1: Basic concepts of input market,
run and conditions that affect supply and demand in
input L10.2: Input demand curves and the firm’s
pricing profit maximizing condition in Input Markets
L11.1: Capital, investment, depreciation,
demand for new capital
L 11.2: Investment decision, calculating
present value
L13.1: Concept of imperfect competition, price
and output decisions in monopoly
L13.2: Comparison between perfectly
competitive market and monopoly and Dead
Module weight loss
III: L13.3: Price discrimination
Imperfect L14.1: Market structure in an oligopoly and
Competiti the competitive forces
on L14.2: Models of oligopoly
L14.3: Game theory
L15.1: Characteristics and price and output
determination in Monopolistic competition
2
To understand how price floors
Ch.4 and price ceilings work in the
market place
To understand how demand
Ch.5 responds to change in price,
income and other factors,
relationship between elasticity
and total revenue
To analyze the household
Ch.6 and behavior and consumer choice in
Appendix product and input market
To have an clear understanding
Ch.7 and of the behavior of profit
Appendix maximizing firms in both short
run and long run
To analyze the impact of costs
and revenue on profit or loss and
Ch.8 to determine the profit
maximizing/loss minimizing
level of output in the short run
To discuss long-run adjustments
to short run profits and losses,
Ch.9 and how external economies and
diseconomies impact the slope of
long-run industry supply curve
To define the basic concept of
input markets and describe the
Ch.10 relationship between supply and
demand in land and labor
markets
Analyzing the concepts of
Ch.11 and capital, investment, depreciation
Appendix and explain the process of
investment decision
To discuss the price and output
decisions in Monopoly, social
Ch.13 cost of monopoly and the
instances in which a monopoly
charges different prices
To describe the structure and
characteristics of oligopolistic
Ch. 14 industries, and to explain the
principles and strategies of game
theory
Ch.15 To discuss the price and output
determination in Monopolistic
 BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, Pilani
Pilani Campus
AUGS/ AGSR Division

competition,
L16.1: Externalities and types of it To understand the market failure
L16.2: Public Goods and its characteristics Ch.16 associated with externalities and
the possible solutions to this set
of issues
L19.1: Role of Public Sector, meaning of To discuss the fundamentals of
taxation Ch.19 taxation
L19.2: Tax burden, incidence and shifting
L20.1: Macroeconomic concerns and its To analyze the primary concerns
Module elements Ch.20 and the various elements of
IV: macroeconomics
Introducti L23.1: Keynesian theory of consumption Explain the principles of
on to L23.2: Determination of equilibrium level of Ch. 23 Keynesian theory of
Macroeco output consumption
nomics L.25.1:Define money and its functions Ch. 25 To define money, role of money,
L.25.2: Credit creation by the banks (TB) and banking and credit creation by
CH 23 the Central Bank
(R1)/notes

6. Evaluation Scheme:
Component Duration Weightage Date & Time Nature of component
(%) (Close Book/ Open
Book)
Mid-Semester Test 90 Min. 30% Closed Book
Surprise test 30% Continuous Closed Book
Comprehensive 3h 40% 04/12 FN Partly Open Book
Examination

7. Chamber Consultation Hour: Tuesday 4PM (6165-M)

8. Notices: All notices pertaining to this course shall be displayed on the Department of Economics and Finance
notice board (6165-NAB) and Nalanda. Students must regularly check their BITS e-mail account for course-
related announcements/notices.
9. Make-up Policy: No make-up shall be granted for the surprise test and students will get one buffer in
surprise test.
Make-up for the mid-semester test and the comprehensive examination shall be granted only in genuine cases.
The students must avail prior permission or intimate I/C before the exam is held to qualify for the make-up. In
any case, original proofs justifying the absence will have to be furnished.
10. Note (if any): Students must write correct ID numbers, Section Number in all the evaluative components,
failing which their answer sheets will not be evaluated.
Instructor-in-charge
Course No. ECON F211