Microeconomics Theory Course Outline

COURSE OUTLINE
BEC 1101: MICROECONOMICS THEORY

PURPOSE: The purpose of this course unit is to introduce students to economics and its
relationship with management
Course objectives:
This course provides the student with an introduction element of economic.
It will involve both microeconomics and macroeconomics analysis.
By the end of this unit the student should understand the economic systems, demonstrate the
allocation of resources in the economy, explain theories relating the producers and analyze the
market share situation in the economy.
COURSE ASSESMENT:
Examination 70%, Two CATS and assignment 30%
COURSE OUTLINE
TOPIC 1
INTRODUCTION TO ECONOMICS
 Introduction
 Economics as a science
 Economics as an Art
 Microeconomics
 Macroeconomics
 Approaches to Economics
 Basic economic problems
 Basic Terms and Concepts Used in Economics
UNIT 2
DEMAND OF GOOD AND SERVICES ANALYSIS
 Introduction
 The law of Demand
 Movements along a Demand Curve
 Exceptions to the Laws of Demand (Abnormal Demand)
 Supply Of Goods And Services Analysis
 Determinants Or Supply
 Shifts In A Supply Curve (Changes In Supply)
UNIT 3
MARKET EQUILIBRIUM
 Introduction
 Unstable Equilibrium
 Demand And Supply Inter-Relationships
 Effect Of A Decrease In Demand Supply Remaining Const
 Effect Of An Increase In Supply Demand Remaining Constant (Effect Of
A Subsidy)
 Effect Of A Decrease In Supply, Demand Remaining Constant
 Effect Of A Simultaneous Increase In Demand And A Decrease In Supply.
 Effect Of A Simultaneous Decrease In Demand And An Increase In Supply
 Price Mechanism
 Price Controls
UNIT 4
ELASTICITY
 Introduction
 1.Point elasticity
 Different Kinds Of Elasticities
 Income Elasticity Of Demand (Ey)
 Cross Elasticity Of Demand (Ec)
 Factors Influencing Elasticity
 Importance Of Elasticity In Economic Decision Making
 Elasticity Of Supply
 Factors Influencing Elasticity Of Supply
UNIT 5
THE THEORY OF CONSUMER BEHAVIOUR
 Introduction
 Cardinal utility
 Marginal utility
 Assumptions (Axiom) Made Under Cardinal Approach
 Derivation Of The Demand Curve For The Consumer
 Ordinal Utility (Indifference Curve Analysis)
 Properties Of Indifference Curves
 The Budget Constarint (Line) Of The Consumer
 Consumer Equilibrium
 Derivation Of Demand Curve Using The Indifference Curve Approach
 Income And Substitution Effect Of A Price Change
 Substitution Effect
 Income Effect
 The Consumer Surplus
 Importance Of Indiffernce Curve Analysis
UNIT 6
THEORY OF PRODUCTION
 Introduction
 Factors Of Production
 1. Land
 2. Labour
 3. Capital
 4. Entrepreneurship
 Types Of Production Curves
 Relationship Between Tp & Mp
 Important Relationship Between MPP L∧ APP L
 The Three Stages Of Production
 Shapes Of Isoquants
 Characteristics Of Isoquants
 The Law Of Return To Scale
 Equilibrium Of The Firm
 Equilibrium Of The Firm
 The Theory Of Costs
 Average Total Cost Curve
 The Optimum Size Of A Firm
 The Relationship Between The Average Cost Curves
 Long Run Cost
 The Optimal Point Of A Firm
 Decision Rule
UNIT 7
MARKET STRUCTURES
 Introduction
 Profit Maximisation
 Short-Run Equilibrium Of Firm Under Perfect Competition.
 Longrun Equilibrium Of The Firm
 Monopoly
 Types Of Price Discrimination
 Conditions For Discrimination
 Demand And Revenue Curves For Monopolist
 Graphical Presentation
 Short Run Equilibrium Under The Monopoly
 Oligopoly
 Equilibrium In Oligopolistic Firm
 Monopolistic Competition
 Short-Run And Long-Run Equilibrium Under Monopolistic
Competition.
REFERENCES
Branson .W.H (2002), Microeconomic Theory and Policy, 4th edition new York Harper and
Row Publishing
Cencini. A. (2005) Macroeconomic Foundations of Macroeconomics, London and New
York: Routledge,
Koutsoyiannis.A.(2004), Modern Microeconomics ,12th Edition, Macmillan
Mankiw.N.G,(2004), Essentials Of Economics,3rd Edition, South Western, Thomson
Mudida.R.(2009) modern economics 2nd Edition, English press, Nairobi
Varian, H.( 2003) Intermediate Economics: A Modern Approach, McGraw Hill
Publishing ,New
York.

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COURSE OUTLINE

BEC 1101: MICROECONOMICS THEORY

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