COMM-507 Business Economics

Course Objectives:

This is a basic course covering both microeconomics and macroeconomics. It introduces

analytical techniques employed by economists in understanding and explaining the behavior of
markets, consumers and firms at the micro level; and employment, inflation, interest rates and
the balance of payments and growth at the macro level.
16 Weeks plan
Week Topic

Definitions:
 Nature, scope and importance (economics),
 definitions of economics,
1
 concept of scarcity, choice and
 wealth in economics,
 economic & non-economic goods.

Consumer Behavior:
 Definition, meaning,
 marginal utility,
2
 cardinal approach (law of diminishing marginal utility & equi-marginal
utility law),
 ordinal approach (indifference curve analysis).

Concepts of Demand and Law of Demand:

3  Changes in demand (shift versus movement in demand),
 Determinants of elasticity of demand.

Consumer‘s surplus:
 Elasticity of demand and its measurements,
4
 price, income and cross price elasticity,
 application / practical importance of concept of elastic for managers.

 Concept of Supply & Stock: Law of supply.

 Changes in supply (shift and movement of supply curve),
5
 producer‘s surplus,
 elasticity of supply and its measurement.

Price and Market Equilibrium:

 Effects of changes in market forces of demand and supply on market
6
equilibrium,
 market price and normal price,
Week Topic

Production:
 Law of variable proportions,
 concept of factor of production,
7
 land, labour,
 capital & entrepreneur,
 laws of returns and their application.

Costs over time period:

 Fixed,
 variable,
8
 average,
 short run and long run,
 opportunity costs.

9 Midterm Exam

Perfect and imperfect competition:

10  Price and output determination.
 Revenue curves and their determination.

Competitive Markets:
 Monopoly,
11  monopolistic competition,
 oligopoly,
 price control.

National Income:
 Concepts of national income-GNP,
 NNP, GDP, NI, PI,
 personal disposable income,
12  transfer payments,
 circular flow of national income,
 measurement of national income,
 national income at market price, at factor cost;
 Measurement of national product in current price and in constant prices.

Trade Cycle:
 Phases,
13
 causes & remedies,
 theory of trade cycles (Keynes theory)

14 Employment and unemployment:

 Week Topic

 Employment and
 theories of unemployment.

Consumption:
 Keynesian psychological law of consumption,
 consumption function, saving function,
15
 investment multiplier,
 inflationary and deflationary gaps under Keynesian theory,
 inflation kinds, causes, & remedies.

Value of Money:
 Quantity theory of money,
 liquidity preference theory and motives to save (Money demand of Keynes),
16  money multiplier, concepts of M1 and M2 (money supply).
Production Possibility Curve:
 Factor pricing,
 rent, wages, interest.
FINAL TERM EXAMS

Textbooks and material

Text books
 Perloff, J. M. (2016). Microeconomics.(7th Ed). London: Pearson.
 Samuelson, P. A., & Nordhaus, W. D. (2010). Macroeconomics.(19th Ed). Boston:
McGraw-Hill Irwin.
 Pindyck, R. S., & Rubinfeld, D. L. (2009). Microeconomics.(7TH Ed). Upper Saddle
River, N.J: Pearson/Prentice Hall.