Business Economics – I

Semester I

1. Introduction (10 Lec.)
Scope and Importance of Business Economics – basic tools- Opportunity Cost principle- Incremental and Marginal Concepts. Basic economic relations – functional relations: equations- Total, Average and Marginal relations- use of Marginal analysis in decision making
The basics of market demand, market supply and equilibrium price- shifts in the demand and supply curves and equilibrium

2. Demand Analysis (15 Lec.)
Demand Function – Nature of demand curve under different markets
Meaning, significance, types and measurement of elasticity of demand (Price, income cross and promotional)- relationship between elasticity of demand and revenue concepts
Demand Estimation and Forecasting: Meaning and significance – methods of demand estimation : survey and statistical methods (numerical illustrations on trend analysis and simple linear regression)

3. Supply and Production Decisions (10 Lec.)
Production Function: Short run analysis with Law of Variable Proportions- Production function with two variable inputs- isoquants, ridge lines and least cost combination of inputs- Long run production function and Laws of Returns to Scale – expansion path – Economies and diseconomies of Scale and economies of scope

4. Cost of Production (10 Lec.)
Cost Concepts: Accounting cost and economic cost, implicit and explicit cost, social and private cost, historical cost and replacement cost, sunk cost and incremental cost -fixed and variable cost – total, average and marginal cost – Cost Output Relationship in the Short Run and Long Run (hypothetical numerical problems to be discussed)
Extensions of Cost Analysis: Cost reduction through experience – LAC and Learning Curve – Break even analysis (with business applications)

Business Economics II

Semester II

1. Market Structure : Perfect Competition and Monopoly  (10 Lec.)
Perfect competition and Monopoly models as two extreme cases – profit maximisation and the competitive firm’s supply curve – Short run and long run equilibrium of a firm and of industry – monopoly – Sources of monopoly power – short run and long- run equilibrium of a firm under Monopoly

2. Pricing and Output Decisions under Imperfect Competition  (15 Lec.)
Monopolistic Competition : Competitive and monopolistic elements of monopolistic competition – equilibrium of a firm under monopolistic competition, monopolistic competition verses perfect competition- excess capacity and inefficiency – debate over role of advertising (topics to be taught using case studies from real life examples)
Oligopolistic markets: key attributes of oligopoly – Collusive and non collusive oligopoly market – Price rigidity – Cartels and price leadership models (with practical examples)

3. Pricing Practices (10 Lec.)
Cost oriented pricing methods : Cost – plus (full cost) pricing, marginal cost pricing, Mark up pricing, discriminating pricing, multiple – product pricing – transfer pricing (case studies on how pricing methods are used in business world)

4. Evaluating Capital Projects (10 Lec.)
Meaning and importance of capital budgeting- steps in capital budgeting – + Techniques of Investment appraisal : Payback Period Method, Net Present Value Method, and Internal Rate of Return Method (with numerical examples)