Department of Economics

University of the Punjab, Lahore

Code: ECON-101
Title: Principles of Microeconomics
Credit Hours:03
Objectives:
This course is meant to be an introduction to the decision-making process of households,
ftrms, and government, and the resulting allocation of resources through markets. The cor:rse
examines how individuals and firms make decisions by weighing up costs and benefits, and
how the interaction of their decisions leads to market and social outcomes. The objective of
the course is to provide students with a clear understanding of the subject of economics as it
pertains to the behavior of consumers, firms, public sector and society and provides basic tools
for public policy analysis. By the end of the course, students should be able to understand key
economic iszues addressed by microeconomics as illustrated by relevant data and case studies
from around the world. They should also be able to comprehend various aspects of
microeconomics including basic concepts and tools, their use in buildiug economic theories
and the application of these theories to critically anallze and explain real world situations.
Course Contents
Preliminaries
The Themes of Microeconomics, Scarcity and Economics, what is a Market? Real versus
Nominal Priceq Why Study Microeconomics?
Consumer Choice
Cardinal Approach/Utility Analysis, Marginal Utility, Law of Diminishing Marginal Utility,
Law of Equi-Marginal Utility, Consumer pquilibrium, Ordinal Approach of Consumer
Behavior, Indifference Cunres, Features of IndifferEnce Curves, Budget Line, Consumer
Equilibrium. Comparative Statics
The Besics of Demend & Supply
Demand and Supply, The Market Mechanism, Changes in Market Equilibrium.
Elasticities of Demend & Supply
of Demand, Price Elasticity of Supply, Point versus Arc Elasticities,
Price Elasticity
Computing Elasticities, Price Elasticity and Total Expenditure, Cross-Price Elasticity of
Demand, Income Elasticity of Demand.

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Economics,
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Dean Faiultyffi Economics
Depadment of
UniversitY of the Punjab, & Management Sciences
P.U. Lahore.
Quaid-i-Azam CamPs, Lahore
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Course Contents
Introduction
The economy in aggregate, Complexities of the world of business, Scope of macroeconomics,
Brief accoultt of the development of macro.economic after the World War-[I, Concept of
business cycles: Boom and Depression, Concepts of Inflation and Unemployment,
Macroeconomic variables and their mutual relationship, Macro-models as abstraction from the
real economy.
National Income
Definition and concept of national income, Computation of national income: Product, lncome
and Expenditure approaches, Circular flow of income, Nominal versus Real income, Per capita
income and the standard of living. The circular flow of National Income, GDP and GNP,
Meazurement of GNP: Expenditure (dernand), Product (supply) and lnqome (factor rewards)
approaclq Value added at factor cost and market prices, Personal and disposable income, Per
capita income, GNP as measure of welfare, Injections into and I.rakages from the economy:
Saving and lnvestment, Exports and Imports, Domestic Absorption, Nominal and Real
income, The GDP deflator, Problems in computation of national income, The underground
economy, Components of Aggregate Demand: 'fhe closed and open economy models.
Components of Aggregate Demand
The Concept of Open and closed economy models, Concept of aggregate markets: Product,
Money, Labor and Capital markets, Components of aggregate demand: Consumption,
lnvestrnent and Government spending, lncome and expenditure identities.
Money and Banking
Money definition, forrns and functions, Centrat Bank and its functions with reference to the
State Bank of Pakistan, Commercial banking, The Quantity Theory of money, Inflation:
measureilrent and impacts, causes of in{lation and remedies, Monetary policy brief
introduction.
Public Finance and Taxation
Soqrces of public revenue, Various forms of taxes: Direct and Indirec! lncome and
Commodity taxes, Sales, Excise, Customs, Non-tax revenues, Major heads of public
expenditure, Revenue and Capital account, Concept of budget deficits and sources of filling
the gaps, Deficit financing, Fiscal policy: meaning and objectives.
International Trade
Global distribution of resources, Concept of imports and exports, Theory of absolute and
comparative advantage, Currancy exchange rates, Balance of Payments: causes of def,rcits in
BOP of Pakistar and remedial measures, Custom Unions, The problern of external debt,
Cornmercial Policy: objectives and scope.
f,sssmmended Books:
. Mankiw, G-Principles of Economics- Latest Edition- South- West Publishers.
. McConnell, Campbell & Stairley Brue, and Sean Flynn, Macroeconomics, Latest Edition.
(McGraw-Hill Economics)
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. Samulson aqd Nordhaus - Economics -Latest Edition - McGraw Hill. Inc.

Code: ECON-201
Title: Intermediate MicroeconoDics
Credit Hours: 03
Prerequisite: Principles of Microeconomics, Calculus I
Objectives:
The course seeks to provide an understanding of the core economic models for the analysis of
decisions by consumers, markets and firms. It would provide illustrations of the applications
of some models to contemporary issues in economics. The objective of this course is to enable
students to develop ability to use analyic reasoning to understand and apply basic models of
microeconomic theory. Simple Calculus and Graphical methods will be used extersively.
Course Contents
Consumer Theory
Budget Constaint, Consumer Preferences, Indifference Curveq Well-Behaved Preferences,
Utility, Utility Functions, Choice, Utility Maximization, Deriving the Demand Curve,
Consumer Surplus.
Demend:
Nonnal and Inferior Goods, Iacome Ofer Curues and Engel Curves, Odinary Goods and
Giffen Coods, Ttie Price Offer Curve and the Demand Cuwe, Substitutes and Cbrnplernents,
The Inverse Demand Functioo, Concept of Elasticities.
Reveeled Preferences:
The idea of Revealed Preferenceq From Revealed Preference to Preference, Recovering
Preferences, The Weak Axiom of Revealed Preferences, The Strong Axiom of Revealed
Preference, how to ch€ck SARP?
Slutsky Equation
Substitution Effect, Income effect, Sign of Substitution Effect, Total Change in Demand, Rates
ofChange, Iaw of demand, Compensating Demand C\rrves.
Technologr
Inputs and Outputs, Describing Tecbnological Constrains, Examples of Technology,
Properties ofTechnology, I-ong Run and Short Run, Returns to Scale
Profit Mrximizrtion
Profits, Fixed and Variable Factors, Short run profit mardmizatiorq Comparative Statistic,
Profit Maximization in the l-ong RurL Inveme Factor Demand Curves, Profit Maximization
and Retuns to Scale