Unit 851: Microeconomics Fundamentals

1. Introduction to Microeconomics

1.1 Overview of Microeconomics

• Definition and scope
• Importance in understanding economic decisions

1.2 Basic Concepts

• Scarcity and choice
• Opportunity cost
• Economic agents

1.3 Microeconomics vs. Macroeconomics

• Key differences
• Interrelation between the two fields

2. Supply and Demand

2.1 Fundamental Principles

• Law of demand and law of supply
• Demand and supply schedules and curves

2.2 Factors Influencing Supply and Demand

• Income, tastes, and preferences
• Prices of related goods
• Production technology and input prices

2.3 Market Equilibrium

• Equilibrium price and quantity
• Effects of shifts in supply and demand

2.4 Price Mechanism and Market Adjustments

• Surpluses and shortages
• Role of prices in resource allocation

3. Consumer Behavior

3.1 Utility and Consumer Preferences

• Concept of utility (total and marginal)
• Indifference curves and preference ordering

3.2 Budget Constraints

• Budget line and its slope
• Consumer equilibrium

3.3 Impact of Advertising and Marketing

• Influence on preferences and demand
• Behavioral considerations

4. Production and Costs

4.1 Production Process

• Factors of production
• Short-run and long-run perspectives

4.2 Types of Costs

• Fixed, variable, and marginal costs
• Average costs and cost curves

4.3 Production-Cost Relationship

• Law of diminishing returns
• Economies and diseconomies of scale

4.4 Profit Maximization

• Revenue concepts
• Decision rules for output levels

5. Market Structures

5.1 Perfect Competition

• Characteristics
• Price-taking behavior

5.2 Monopoly

• Sources and consequences
• Price setting and output decisions

5.3 Monopolistic Competition

• Product differentiation
• Short-run vs. long-run equilibrium

5.4 Oligopoly

• Interdependence among firms
• Strategic behavior and game theory basics

6. Market Failure and Government Intervention

6.1 Causes of Market Failure

• Externalities (positive and negative)
• Public goods and free-rider problem
• Asymmetric information

6.2 Government Intervention

• Regulation and taxation
• Subsidies and provision of public goods
• Policies to improve market outcomes

7. Income Distribution and Poverty

7.1 Income Distribution

• Measures of inequality (Gini coefficient, Lorenz curve)
• Factors influencing income distribution

7.2 Poverty

• Definitions and measurement methods
• Causes and consequences

7.3 Policies to Reduce Poverty and Inequality

• Social welfare programs
• Taxation and transfers

8. International Trade

8.1 Benefits of Trade

• Gains from trade
• Specialization and efficiency

8.2 Trade Barriers

• Tariffs, quotas, and non-tariff barriers

8.3 Comparative Advantage

• Theory and application

8.4 Trade Agreements

• Multilateral and bilateral agreements

8.5 Impact on Domestic Economy

• Effects on industries and consumers
• Adjustment costs

9. Behavioral Economics

9.1 Introduction to Behavioral Economics

• Departure from traditional assumptions

9.2 Decision-making Biases

• Anchoring, loss aversion, overconfidence

9.3 Bounded Rationality

• Limits to rational decision-making

9.4 Implications for Economic Models and Policy

• Nudges and behavioral interventions