BBS

Microeconomics studies individual units of an economy — consumers, households, and firms — and how they make choices under scarcity. This unit covers the scope and limitations of microeconomics, business economics, the production possibility curve, marginal analysis, and Mankiw's Ten Principles of Economics.

Demand and supply are the two forces that determine price and quantity in a free market. This unit covers the laws of demand and supply, determinants, shifts vs movements along curves, market equilibrium, the effect of government policies (tax, subsidy, price control) on equilibrium, and market efficiency measured by consumer and producer surplus.

Elasticity measures how responsive quantity is to changes in price, income, or other factors. This unit covers price, income, cross, and advertisement elasticity of demand — their formulas, degrees, and uses — as well as point elasticity, the total expenditure method, and the elasticity of supply.

Consumer behaviour theory explains how a rational consumer maximises utility subject to a budget constraint. This unit covers the cardinal (utility) and ordinal (indifference curve) approaches, the law of diminishing marginal utility, consumer equilibrium under both approaches, the properties of indifference curves, and the price, income, and substitution effects.

Production is the process of transforming inputs into outputs. This unit covers total, average, and marginal product; production functions including the Cobb-Douglas function; the law of variable proportions in the short run; isoquants and the marginal rate of technical substitution; the optimal combination of inputs; and the laws of returns to scale in the long run.

A firm plays a dual role — as a producer it minimises cost, and as a seller it maximises revenue. This unit covers the cost function, various cost concepts (explicit, implicit, fixed, variable), short-run and long-run cost curves, the relationship between AC and MC, economies and diseconomies of scale, economies of scope, revenue concepts, and the relationship between price elasticity and revenue.

Product pricing theory examines how price and output are determined under different market structures. This unit covers the characteristics of perfect competition, monopoly, monopolistic competition, and oligopoly; the equilibrium of the firm under each; cartels and joint profit maximisation; and real-world pricing practices including price discrimination, cost-plus pricing, and penetration pricing.

Factor pricing deals with the determination of prices for the four factors of production — land (rent), labour (wages), capital (interest), and entrepreneurship (profit). This unit covers the concept and types of rent including the modern theory; wages and the marginal productivity theory; interest and the loanable funds and liquidity preference theories; and profit including the dynamic and innovation theories.