M.A. Applied Economics
Semester I: Paper I
1. Introduction and Basic Concepts:
Basic economic problem - choice and scarcity; deductive and inductive methods of analysis; positive and normative economics; Economic models; Characteristics of equilibrium and disequilibrium systems – static and dynamic analysis – micro and macro differences.
Elasticities (price, cross, income) of demand theoretical aspects and empirical estimation; elasticity of supply;
Theories of demand — utility; indifference curve (income and substitution effects,
Slutsky theorem, compensated demand curve) and their applications; Revealed preference theory; Revision of demand theory by Hicks; Characteristics of goods approach; consumer's choice involving risk; Indirect utility functions (duality theory); Recent developments in demand analysis (pragmatic approach and linear expenditure systems);
Consumer's surplus; Intertemporal consumption; Recent developments in demand; Elementary theory of price formation - demand and supply equilibrium; Cobweb theorem; lagged adjustment in interrelated markets.
2. Theory of Production and Costs:
Production function - short period and long period; law of variable proportions and returns to scale; Isoquants - Least cost combination of inputs; Returns to factors; Economies of scale; Multiproduct firm; Elasticity of substitution; Euler's theorem; Technical progress and production function; Cobb Douglas, CES, VES and Translog production functions and their properties; Empirical work on production functions; Traditional and modern theories of costs - Empirical evidence; Derivation of cost functions from production functions; derived demand for factors.
3. Price and Output Determination:
Marginal analysis as an approach to price and output determination: perfect competition - short run and long run equilibrium of the firm and industry, price and output determination, supply curve; Monopoly - short run and long run equilibrium, price discrimination, welfare aspects, monopoly control and regulation; Monopolistic competition - general and Chamberlin approaches to equilibrium, equilibrium of the firm and the group with product differentiation and selling costs, excess capacity under monopolistic and imperfect competition, criticism of monopolistic competition; Oligopoly — Non collusive (Cournot, Bertrand, Edgeworth, Chamberlin, kinked demand curve and Stackelberg's solution) and collusive (Cartels and mergers, price leadership and basing point price system) models; Price and output determination under monopsony and bilateral monopoly; Workable competition - Structure, conduct and performance norms.
4. Alternative Theories of the Firm :
Critical evaluation of marginal analysis; Baumol's sales revenue maximization model; Williamson's model of managerial discretion; Marris model of managerial enterprise; Full cost pricing rule; Bain's limit pricing theory and its recent developments including SylosLabini's Model; Behavioural model of the firm; Game theoretic models.
Neoclassical approach - Marginal productivity theory; Product exhaustion theorem; Elasticity of technical substitution, technical progress and factor shares; Theory of distribution in imperfect product and factor markets; Determination of rent, wages, interest and profit; Macro theories of distribution - Ricardian, Marxian, Kalecki and Kaldor's.
M.A. Applied Economics