Course Catalogue

Module Title: Microeconomics II

Programme: BA Economics +, BA (Hon) Economics

Module Code: MIC 102

Credit Value: 12

Module Tutor: Sonam Cheki

General Objectives:

The academic aim of this module along with the microeconomics I (offered in the 1^st semester) is to provide an intermediate analysis of markets and the optimizing behaviour of households and firms. The emphasis is on the development and application of techniques of microeconomic analysis. It covers general equilibrium and welfare, imperfect markets and topics under information economics.

Learning Outcomes

At the end of this module, the students are expected to be able to:

Demonstrate an understanding of microeconomic theory that will enable students to take advanced units

· Utilize game theory to analyze business decision making

Analyze the impact of market power on the amount of labor hired.
Explain how interest rates are determined
Explain the efficiency of competitive markets.
Analyze a market in which buyers and sellers have different information about the good
Demonstrate various methods to correct market failures.

Learning and teaching approach:

Lectures (60 hours in 15 weeks)

Tutorials (15 hours in 15 weeks)

Discussions (10 hours in 15 weeks)

Assignments (20 hours in 15 weeks)

Assessment:

Semester end examination (60%)

Assessments (2 x 15%)

Presentation (10%)

Pre-requisite: Microeconomics I

Subject Matter

1. General Equilibrium - two interdependent markets, moving to general equilibrium, reaching general equilibrium. (10 hours)

2. Efficiency in Exchange – Advantage of the trade, Edgeworth box diagram, efficient allocation, the contract curve, consumer equilibrium in competitive market, economic efficiency of competitive market. Equity and efficiency, efficiency in production (10 hours)

3. Market Structure: Monopolistic competition-equilibrium in short run and long run and economic efficiency. Oligopoly-equilibrium in oligopolistic market, the Cournotmodel, linear demand curve, Stackelberg model, price competition with homogenous products (the Bertrand model). (10 hours)

4. Game Theory- gaming and strategic decision, dominant strategy, Nash equilibrium, repeated games, extensive of game, the advantage of moving first. (5 hours)

5. Market Failure: Externalities (positive and negative), public goods and markets with asymmetric information. Ways of correcting market failure-externalities and property right, bargaining and economic efficiency, legal solution-suing for damages. (15 hours)

6. Choice involving risk-describing risk, probability, expected value, variability, decision making, vzInter-temporal choice and choice under uncertainty; Choice with endowments; Labour-Supply and Inter-temporal choice; Choice under Uncertainty; Von-Neuman Morgenstern utility function; Risk aversion and risk preference. (15 hours)

Reading list

Essential Reading:

1. Pindyck, R.S., & Rubinfeld, D. (2012). Microeconomics, 8^th edition, Prentice Hall.

2. Hal, R. V. (2010). Intermediate Microeconomics: A Modern Approach. (8^t^hedition). WW. Norton and Company/Affiliated East-West Press (India).

Suggested reading:

1. Katz, M. & Rosen H.S. (2007). Microeconomics. (4^thedn.). McGraw Hill,

2. Georgiev, P. G., & Pardalos, P. M. (2011). Generalized nash equilibrium problems for lower semi-continuous strategy maps. Journal of Global Optimization, 50(1), 119-125.

3. Li, W., Beresford, M., & Song, G. (2011). Market failure or governmental failure? A study of china's water abstraction policies. The China Quarterly, 208, 951-969.

4. Cowell, F.A. (2006) Microeconomics: Principles and analysis, Oxford University Press, Oxford.

5. http://economics.about.com/od/economics-basics/u/Microeconomics-101.htm#s10

6. http://www.ibscdc.org/economics_case_studies.asp

7. http://www.lse.ac.uk/resources/calendar/courseGuides/EC/2012_EC202.htm

(Updated June, 2013)

Module Title: Macroeconomics I

Programme: BA Economics +, BA (Hon) Economics

Module Code: MAC 101

Credit Value: 12

Module Tutor: Miss Sonam Cheki

General Objectives:

The aim of the module is to familiarize the student with the tools of macroeconomic analysis and show how these tools can be applied in macro-policy issues and provide Foundation for the next module on Macro Economics in the later semester.

Learning Outcomes

At the end of this module, the students are expected to be able to:

· Apply analytical reasoning

· Evaluate critically alternative macroeconomic policies

· Formulate arguments in the realm of introductory macroeconomics and related policy issues

· Present material in a graphical and mathematical form using economic terminology in a clear and concise manner

· Use these forms and way of thinking to solve economic problems

· Demonstrate and understand the key concepts and principles of economics

· Explain the demand for money

Learning and teaching approach:

Lectures (60 hours in 15 weeks)

Tutorials (15 hours in 15 weeks)

Discussions (10 hours in 15 weeks)

Assignments (20 hours in 15 weeks)

Video and IT for modeling (5 hours in 15 weeks)

Assessment:

Semester end examination (60%)

Assignments (20%)

Project work (20%)

Subject Matter

1. Introduction (5 hours)

Circular flow of income, National Income Accounting, Production boundary concept, Domestic and national product, National product at market price and at factor cost. Flow of funds account, national wealth and balance sheet.

2. Income and Spending (35 hours)

Keynesian Model: Aggregate Demand and Equilibrium Income. Consumption and Aggregate Demand. The Multiplier. Government Sector and Budget. Money Interest and Income: Goods Market and IS Curve. Money Market and LM Curve. Simultaneous Equilibrium. Efficacy of Monetary and Fiscal Policy and Policy Mix. Derivation of Aggregate demand Schedule. Aggregate Demand and Aggregate Supply Analysis, Multiplier using Aggregate Supply and Aggregate demand.

3. Behavioral Functions: (20 hours)

Consumption and Saving, Investment and demand for Money. Long Term theories of Consumption: Fisher’s Inter-temporal consumption Decision model, Life Cycle and Permanent Income Theory. Consumption under Uncertainty and liquidity Constraint. Investment Spending: Capital Stock Adjustment Model and Accelerator Principle. Tobin’s q theory. Discounted Cash Flow Model. Residential and Inventory Investment. Demand for Money: Components of Money Stock. Quantity theory of Money. Functions of Money. Demand for Money, Income Velocity of Money. Money Multiplier. Instruments of Monetary policy.

Reading list

Essential Reading:

1. Dornbusch, R., Fischer, S. and Startz, R. (2010); Macroeconomics. (11^th Edition), Tata McGraw Hills Publication.

2. Dequech, D. (1997). Post keynesian economics: Debt, distribution and the macro economy. Journal of Economic Issues, 31(3), 872-875.