Business Economics

Program BBA (2016-19)

Academic Year 2016-19

Semester 1

Credits 3

No. of Sessions and time of each 48 sessions of 50 minutes each

session

Name of the faculty

Room No

Email id

Course Objectives:

 To acquire conceptual knowledge of business economics;

 To understand the tools of business economics and their applications;
 To develop the ability to evolve business strategy using economic reasoning;
 To appreciate the new challenges to business management in the internet age
 To appreciate the linkages between economics and the functional areas of business.

Learning Outcomes:

At the end of the course, the student will be able to:

 evaluate economic behavior, response to incentives, utility, satisfying and maximizing
traits in consumers,
 understand and appreciate the production dynamics – including cost, revenue and profit
considerations,
 learn the optimization functions for both consumer and producer equilibrium,
 evaluate and compare the various types of market structures and use them when
planning price policy in industry and
 demonstrate the use of micro concepts like elasticity and opportunity cost in strategic
planning

Syllabus

I. Introduction to Business Economics: Definition of Economics- Classification of

Economics- Significance of Partial Equilibrium and General Equilibrium Analysis-
Fundamental Problems of an economy- Economic theory, and its relationship with
decision sciences and functional areas of management-The nature of business
decisions.

II. Demand Theory : Law of Demand- Movement Along the demand curve- Shift in the
 Demand curve- Demand functions-individual- firm’s - the market- Exceptions to law
of demand-The concept of elasticity of demand - Degrees of Elasticity of Demand—
Price Elasticity of Demand, income Elasticity of Demand –Cross- price Elasticity of
Demand _ Promotional Elasticity of Demand – Significance of the concept of elasticity
of demand in business decision making- Importance of theory of demand in relation
to Electronic commerce

III. Theory of Supply- Law of Supply- Concept of Movement Supply- Shift in Supply-
Supply function- Individual - Firms – market- Concept of Elasticity of Supply.
Determination of Equilibrium price and output- Market Intervention- Price ceiling and
Price floor.

IV. Consumer Behavior: Concept of Utility- Approaches to Measurement of Utility-

Cardinal Utility- Law of diminishing Marginal utility- Law of Equi Marginal Utility-
Concept of Consumer Surplus- Ordinal Utility - Indifference curves- Features of
Indifference curves- Budget- Consumer Equilibrium

V. Theory of Production: Meaning of production function-Organizing production – Short

run Production function (Law of variable Proportions) - Long run production function
(Returns to scale).

VI. Cost Theory: Nature of costs- Relationship between production function and cost
function- Short-run cost function- Long-run cost functions- Economies of scale-
Diseconomies of Scale

VII. Market Structures, Perfect Competition, Monopoly and Monopolistic Competition:

Market structures - Degree of competition- Features of Perfect competition-
Determination of price and Output in the short run- Determination of price and
output in the Long run- Features of Monopoly- Sources of Monopoly power- Short-
run Price and output determination - Long-run price and output determination-
comparison with perfect competition- Features of Monopolistic competition-Short-
run price and output determination- Long-run price and output determination.

VIII. Oligopoly: Features of Oligopoly – Classification of Oligopoly- Oligopoly models-Non-

Collusive model- kinked demand curve - Implication of Price rigidity- Collusive
models-Cartels arrangements- Price leadership models

IX. Regulation and Anti-Trust; the Role of Government in the Economy: Government
regulations; externalities and regulation; public utilities and regulation; anti-trust
government regulation of market structures and conduct; regulation of international
competition; effect of taxation on business decisions

Text Book:

Micro Econ- Principles of Microeconomics- by William A McEachern and Simrit Kaur,

CENGAGE Publishers, 2016

Reference Books:
1. Managerial Economics, 7/e: Salvatore and Srivastava, Oxford University Press
2. Principles of Microeconomics, Gregory Mankiw, Cengage Publishers
 Teaching Pedagogy:
 Classroom lectures, discussions, etc.
 Learner centered practice sessions involving solving problems
 Continuous assessment through assignments and class tests

Session Plan

Number Teaching objectives Learning Outcome

of
S.N Chapte sessions
Topics to be covered Remarks
o. r Title (date of
sessions
)
Definition of Economics -  To introduce the After reading this chapter, Chap. 1,2
Classification of Economics (micro & subject matter of students should be able to
1
macro economics; normative and economics understand
positive  To discuss the  Definition of
Economics) branches of economics
Introd The concept of Partial economics  Micro and
uction Equilibrium and General 1  To explain the scope macroeconomics
to Equilibrium Analysis- and importance of  The scope of micro
I Busine Fundamental Problems microeconomics in economics.
ss of an economy-_ managerial decision  Implications of partial
Econo Economic theory, and its making and general
mics relationship with equilibrium in real
2
decision sciences and  To introduce partial world environment.
functional areas of and general  Having an idea about
management-The nature equilibrium concepts the business decision
of business decisions making process within
business environment.
Law of Demand- After reading this chapter,
Movement Along the students should be able to
demand curve- Shift in 2  To introduce the understand
the Demand curve, basics of demand  The law of demand, its
Deman theory exceptions and its Chap. 4 &
II d  To explain the types of applications in real 5
Theory Demand functions- elasticity of demand world.
individual- firm’s - the and its applications in  The types and role of
market demand - 2 business decisions demand elasticity’s
Exceptions to law of and its applications in
demand different business
 The concept of elasticity decisions makings.
of demand - Degrees of
Elasticity of Demand—
Price Elasticity of
Demand, income
Elasticity of Demand –
Cross- price Elasticity of
Demand _ Promotional
3
Elasticity of Demand –
Significance of the
concept of elasticity of
demand in business
decision making-
Importance of theory of
demand in relation to
Electronic commerce

PRE-MID TERM TEST

Law of Supply- Concept After reading this chapter,

of Movement Supply- 1  To introduce the students should be able to
Shift in Supply- Supply basics of theory of understand
function supply  The law of supply and
Individual - Firms –  To explain the its applications in real
market.- Concept of application of world.
Theory
Elasticity of Supply. 2 elasticity of supply in  The role of supply Chap
III of
Determination of managerial decision elasticity’s and its . 4 & 5
Supply
Equilibrium price and making. applications in
output different business
Market Intervention- decisions makings.
Price ceiling and Price 1  Understand the need
floor. of market
interventions
Concept of Utility- 2  To introduce basics of After reading this chapter, Chap. 6
Approaches to consumer behavior students should be able to
Measurement of Utility  To explain the understand
Cardinal Utility- Law of application of utility in  Various utility
diminishing Marginal consumer decision concepts
utility- Law of Equi making  To understand the
Consu Marginal Utility- Concept application of utility in
mer of Consumer Surplus- consumer decision
IV
Behavi Ordinal Utility - 3 making.
or Indifference curves-
Features of Indifference
curves- Budget line -
Consumer Equilibrium
 Meaning of production
function-Organizing
production – Short run
Production function (Law
Theory of variable Proportions) -
of
V
Produc
tion
REVISION SESSION-1
2  To explain the input- After reading this chapter, Chap. 7
output relations in students should be able to
short run and long run understand
 To explain how to  To understand the
decide optimum level short- and long run
of output. relationship between
input and output in
the production
function.
To know how firm
achieves the optimum
level of output.

MID-TERM EXAMINATIONS

1
Long run production
function (Returns to
scale).

Isoquants-features of 1
Isoquants; Isocost line-
Least cost combination
Different cost  To explain various cost After reading this chapter,
concepts(eg., economic concepts students should be able to
and accounting cost,  To discuss the understand
2
historical cost/sunk advantages of large  Understand the
cost); Nature of costs- scale production. different costs,
Short-run and long-run  To explain the concept and their
cost functions application of cost relevance.
VI
Cost Plant size and economies concepts in  To understand the
Chap. 7
Theory of scale and scope, 2 managerial decision advantages of large
learning curves; Break making scale production.
even analysis  The application of cost
The relationships concepts in business
between total, average, decisions
1
and marginal cost and
their relevance in
economics;
Marke Market structure and  To explain the After reading this chapter,
2
VII t degree of competition; features of various students should be able to Chap.9
Structu Perfect competition; types of markets. understand
 res Competition in the global  To explain the price  To understand the
economy and output nature of different
determination in kinds of market.
various markets.  How the optimum
 price and output are
determined in
different market
structure?

Monopoly: Short-run and

long-run price and
2
output determination; Chap. 10
Comparison with perfect
competition

POST-MID TERM TEST

Monopolistic
competition: Meaning
and importance; Short- 2
run and long-run price
and output
Marke
determination
t
VII Oligopoly and market Chap.11
Structu 2
concentration:
res
Oligopoly models:
Cournot model, Kinked
3
demand curve, Cartel
arrangements, Price
leadership
Government regulations; After reading this chapter,
Regula externalities and  To explain the need students should be able to
tion regulation; public utilities for government understand
and and regulation; anti-trust regulation  To understand the
Antitru government regulation need to regulations
st: The of market structures and and its role in curing
Chap.17,
VIII Role of conduct; regulation of 3 the market failure.
18, 19
Gover international
nment competition; effect of
in the taxation on business
Econo decisions
my

REVISION SESSION-2
REVISION SESSION-3
Total Teaching Sessions 46
NCP (assessments) 2
Assessments and Evaluations:
 Pre-midterm assessments
 Mid-term examination
 Post-midterm assessments
 End Semester Comprehensive Examinations
20%(including 5% class participation(CP)
20%
20%(including 5% class participation(CP)
40% (3 hour examination)

Instructions to Students:
a. Students must report to the respective sessions on time. Latecomers will not be permitted
to join the class after the scheduled time. If late, the attendance for that session will be
marked as absent.
b. Read the Case Study / material well prior to the class discussion. He/she is also expected to
read the chapter indicated in the course plan as the faculty directs.
c. In the class discussion student is expected to participate actively and contribute to individual
and group learning. Evaluation is based on active participation.
d. Evaluation is a continuous process at IBS. Every student needs to be aware of the timelines
given in the section below. Absence from these evaluations will mean non-awarding of
marks in that particular component.
e. Wherever applicable, group assignments require each student to contribute to the group
effort. This enhances group effectiveness and leads to greater appreciation of working in
groups.
f. Formal dressing is suggested for all students. Do not roam in the academic area/ attend
classes in chappals / shorts / informal t-shirts.
g. Students are expected to show high regard and appreciation for in class discipline and desist
from using mobile phones.
h. Each faculty has been given a scheduled consultation hour. Utilize this time to meet the
faculty and clarify doubts if any, seek explanations and get mentored if needed.
i. Attendance is compulsory in all sessions. However refer to guidelines in your academic
handbook for exceptions.

Brief profile of the Faculty Member