SYLLABUS PART– A: INTRODUCTORY MICROECONOMICS UNIT1: INTRODUCTION 11 PERIODS Meaning of Micro-economics & Macro-economics. What is an economyy? Central problems of an economy-what,how and for whom to produce:concepts of production possibility frontier and opportunitycost. UNIT2: CONSUMER EQUILIBRIUM AND DEMAND 34 PERIODS Consumer’s equilibrium–meaning of utility, marginal utility, law of diminishing marginal utility, conditions of consumer’sequilibrium using marginal utility analysis. Indifference analysis of Consumer’s equilibrium–the consumer’s budget (budget set and budget line), preference of consumer (indifference curve, indifference map) and conditions of Consumer’s equilibrium Demand,market demand,determinants of demand,demand schedule,demandcurve and its slope, movement along and shifts in the demand curve; price elasticityof demand– factors affecting price elasticity of demand;measurement of price elasticity of demand–(a)percentage change method and (b)geometric method (linear demand curve);relationship between price elasticity of demand and total expenditure. UNIT3: PRODUCER BEHAVIOUR AND SUPPLY 34 PERIODS Production function Short run & Long Run: Total Product, Average Product and Marginal Product, .Returns to a Factor and Returns to Scale. Cost and run costs–total cost,total fixed cost,total variable cost;Averagefixed cost,average variable cost and marginalcost– meaning and their relationship. Revenue – total, average and marginal revenue. Producer’s equilibrium–meaning and its conditions in terms of marginal revenue–marginal cost approach. Supply,market supply,determinants of supply,supply schedule, supply curve and its slope, movements along and shifting supplycurve,price elasticity of supply;measurement of price elasticityof supply– (a) percentage method and (b) geometric methods. UNIT 4: FORMS OF MARKET AND PRICE DETERMINATION 31PERIODS UNDER PERFECT COMPETITION WITH SIMPLE APPLICATIONS. Perfect Competition Features: Determination of market equilibrium and effects of shift in demand and supply Other market forms: Monopoly, monopolistic competition, oligopoly Market– their meaning and features.
P P1 E1 E O M1 Mkt.D&Sup.X When supply increases more than Demand falls from OP to OP1 and quantity demand increases from OM to OM1. Decrease in price is less than increase in quantity. iii)When demand and supply increasese equally then equilibriumprice remain same. D D1 S S1 P E1 E D X O Q Q1 MktD&Sup When increase in demand is equal to increase in supply price remains unchanged a tOP.Quantity exchanged increases from OQto OQ1. With the help of demand and supply schedule explain th emeaning of excess demand and its effects on price ofa commodity. Ans:- Demand and supply schedule kg.) kg.) 10 10 50 9 20 40 8 30 30 7 40 20 6 50 10 The above schedule shows market demand and market supply of th ecommodity at different prices.At the price of 7 and 6 the market demand is greater than market supply.This is the situation of excess demand.There will be competition among the buyers resulting in a rise in price.Rise in price will result in fall in market demand and rise in market supply.This reduces the excess demand.These changes continue till the price rises to Rs.8 at which excess demand is zero. The excess demand results in a rise in price of thecommodity. Market for a good is in equilibrium.There is increase in demand for the goods.Explain the chain effect of this change. Ans:- Y D1 D S P1
P E X M M1 O Mkt.D&Sup. Increase in demand shift the demand curve from D to D1 to right leading to excess demand EE1 at the given price OP. will be competition among buyers leading to rise in price. As pric erise supply starts rising(alongS) demand starts falling. These changes continues till D=S at a new equilibrium a tE1 The quantity rises from OM to OM1 and price rises OP to OP1 FREQUENTLY ASKED QUESTIONS– CBSE BOARD EXAMINATION One Mark Questions (1M) In which market form can a firm not influence the price of the product? What is equilibrium price? Under which market form a firm is a price taker? Defin emarket equilibrium. Define Monopoly. Stat eone featureof Oligopoly. Three Marks Questions(3M) Why is the number of firms small in an Oligopoly Market?Explain. Explain three features of Monopoly. How is equilibrium priceof acommodity affected by a decrease in demand? Why is the demand more elastic under monopolistic competition than under monopoly? Explain. Explain the feature‘differentiated product’ of a market with monopolistic competition. Explain the effect of ‘large number of buyers and sellers’in a perfectly competitive firm. Four Marks Questions (4 M) Distinguish between Monopoly and Perfect Competition. Draw the Average Revenue Curve of a firm undera) Monopoly and b) PerfectCompetition. Explain the difference in these curves, if any. Show with the help of a diagram the effects of anincrease in demand for acommodityon its equilibriumprice andquantity. Explain with the help of a diagram the determination of price of a commodity unde rperfect competition. 5).Explain the concept of equilibrium price with the help of market demand an dsupply schedules. Six Marks Questions (6 M) the market equilibrium of a good.What are the effects of Simultaneous increase in both demand and supply of that good on its equilibrium price and quantity? Distinguish between perfect competition and monopoly.Why is the demand curve facing a firm under perfect competition is perfectlyelastic? Explain brieflythe feature of perfect competition. Explain the of effects on demand, supply and price of a commodity