Semester-1 Bi-102 - Economics

SEMESTER-1
BI-102 - ECONOMICS
Introduction  Describe types of elasticity of demand,
This course focuses on the fundamentals of economic concepts, determinants and measurement of elasticity and
development of understanding and skills of students in order to law of supply, elasticity,
enable them identify and correlate various economic issues with  Explain the cost of production,
cost and management accounting.  Distinguish between implicit costs and explicit
costs,
Objectives
 Explain how under perfect competition the
The objective of this course is to provide the student with a basic
equilibrium price of a commodity is equal to its
knowledge of economic theories to enable them:
marginal cost and average cost of production,
 Understand the economic environment in which business
 Explain the functioning of a market economy,
and public organizations operate
 Explain how the price system works by applying
 Appreciate economic practices in country’s economy and
appropriate economic concepts and principles,
acquire correct knowledge of fiscal and monetary policy of
Government and its impacts on business environment.  Identify macro-economic concepts to explain the
measurement and determination of national
income,
Outcomes  Explain inflation and its causes,
After studying this course, students should be able to:
 Differentiate between domestic and international
 Explain the basic concepts of scarcity choice, trade,
 Describe the consumer behaviour and its analysis,  Explain the problems and performance of
 Differentiate between small and large-scale production, industrial sector in Pakistan and to
 Identify and explain types of internal and external  Explain foreign private investment and its impact
economies, on Pakistan economy.
 Explain law of demand and causes of change in demand
other than change in price,
INDICATIVE GRID
SECTION SYLLABUS CONTENTS WEIGHTAGE
Microeconomics
1. Nature and Scope of Economics
2. Consumer Behavior and its Analysis
A 3. Demand, Supply and Price Determination 45%
4. Scale of Production
5. Cost and Revenue
6. Market Structure, Price and Output Determination
Macroeconomics
7. Concept of National Income
B 8. Theory of Employment and National Income 40%
9. Monetary and Fiscal Policy
10. International Trade
Economy of Pakistan
11. Growth, Structure and Performance of Pakistan Economy
C 15%
12. Current Economic Affairs
13. Foreign Trade and Economic Assistance
TOTAL 100%
Note: The weightage shown against each section indicates, study time required for the topics in that section. This may not
necessarily specify the number of marks to be allocated to that section in the examination.
2. Consumer Behaviour and its

CONTENTS Analysis
SECTION-A Utility-kinds and aspects. Cardinal and ordinal
approaches of utility. Law of diminishing marginal
MICROECONOMICS utility. Indifference curve analysis and consumer
1. Nature and Scope of Economics equilibrium. Price effect, income effect and
substitution effect.
Basic concepts- economic wants and allocation of scarce
resources. Natural resources, labour capital and enterprise.
Production possibility frontier and concept of opportunity 3. Demand, Supply and Price
cost. Key features of market planned and mixed economy- Determination
merits and demerits. Demand- Determinants of demand, law of demand,
shift in demand, elasticity of demand, measurement
of elasticity of demand. Percentage and total outlay
methods. Brief description of cross and income elasticity of sector; Overview of industrial sector of Pakistan;
demand. Determinants and importance of elasticity of performance and problems of industrial sector;
demand. Supply stocks and supply. Determinants of supply, causes of industrial backwardness; privatisation of
law of supply, shift in supply. Elasticity of supply- state-owned enterprises; needs and types of
Determinants of elasticity of supply. Market equilibrium- industrial credit.
surplus and shortage conditions. Consumer and Producers
surplus. 12. Current Economic Affairs
Pakistan’s current economic indicators, trend of
4. Scale of Production prices of consumer goods and petroleum products
Production function. Small and large scale production- and the role of government in controlling and
advantages and disadvantages. Internal and external monitoring of the price hikes, comparisons of
economies of scale. Laws of returns. (Special emphasis on Pakistan’s economy with the economy of other
law of diminishing returns). Very brief introduction of developing countries in South Asia and the world
returns to scale. over.
5. Cost and Revenue 13. Foreign Trade and Economic

Average, marginal and total cost. Marginal, average and total Assistance
revenue in perfect and imperfect competition. Concept of Exchange rate and convertibility of Pak rupee;
implicit and explicit cost. devaluation and its impact on Pakistan’s economy;
forms of foreign economic assistance, cost and
6. Market Structure, Price and Output benefit of foreign economic assistance; foreign
Determination private investment and its impact on Pakistan’s
Characteristics of perfect and imperfect competition economy.
(monopoly, oligopoly and monopolistic competition) in
short run and long run. Price discrimination in monopoly.
SECTION-B
MACRO- ECONOMICS
7. Concept of National Income
Circular flow of national income. Concepts of national
income GDP, GNP, NNP, NI at factor cost and PI. Methods to
measure national income Difficulties and importance.
8. Theory of Employment and National

Income
Consumption saving and investment function. Investment
multiplier, acceleration, inflationary and deflationary gaps,
taxation, budget.
9. Monetary and Fiscal Policy

Nature and functions of money, quantity theory of money;
inflation- its causes, effects and measures to control.
Functions of commercial banks, credit creation and role of
commercial banks in economic development of Pakistan.
Functions of central bank, monetary and fiscal policy and
role of central bank in the economic development of
Pakistan. Brief introduction of money and capital market.
10. International Trade

Balance of trade and balance of payment, causes of adverse
balance of payment and methods to correct them. Exchange
rate determination. Protectionism or barriers to free
international trade. Arguments in favour or against
protection. WTO.
SECTION- C
ECONOMY OF PAKISTAN
11. Growth, Structure and Performance of
Pakistan Economy
Growth and structure of economy- overview of economic
policies in Pakistan, Role of agriculture in economic
development; performance and problems of agriculture
RECOMMENDED BOOKS
CORE READING
TITLE AUTHOR PUBLISHER
Economics McGraw-Hill Companies, Inc. 1221
Paul A. Samuelson and William D.
Avenue of the Americas, New York, NY
Nordhaus
10020.
Pakistan Economic Survey Finance Division, Economic Advisor Government of Pakistan.
(Latest) Wing
Economy of Pakistan Saeed Nasir and Kamal Haider Imtiaz Book
ADDITIONAL READING
TITLE AUTHOR PUBLISHER
Modern Economic Theory Kewal Krishan Dewett/ Adarsh Chand & Company Ltd.

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SEMESTER-1

2. Consumer Behaviour and its

5. Cost and Revenue 13. Foreign Trade and Economic

8. Theory of Employment and National

9. Monetary and Fiscal Policy

10. International Trade

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