SEMESTER -III B.A (Hons) BUSINESS ECONOMICS 

Microeconomics-II (DSC 7) 

UNIT–I: Market Structure (18 hours)

Perfect Competition: Firm equilibrium in the short and long run. Short run supply curve for the firm and the market, long run industry supply; constant, increasing and decreasing cost industry; producer and consumer surplus. Monopoly: Profit Maximisation, multiplant firm, monopoly power and its measurement, social costs of monopoly, price discrimination. Monopolistic Competition: product differentiation; equilibrium of the firm in the industry-with entry of new firms and with price competition, Comparisons. Oligopoly and Game Theory: Cournot model and reaction curves, Stackelberg‘s model, Bertrand model, Quantity leadership, Price leadership, Non collusive stable equilibrium, DISCIPLINE SPECIFIC CORE COURSE – 7 (DSC-7): MICROECONOMICS-II 66 Simultaneous quantity setting, Collusion, Cartels, Concepts of Game Theory: Dominant strategies and Nash Equilibrium, Mixed strategies, Prisoner's Dilemma.

UNIT – II: Factor Market (10 hours)

Factor pricing in the case of single and many variable factors, demand for labor in a product market with perfect competition and monopoly, monopsony, bilateral monopoly and role of labour unions. Economic rent and quasi rent.

UNIT – III: General Equilibrium (9 hours)

Equilibrium and efficiency under pure exchange and production; Edgeworth box; Pareto optimality conditions; market trade; Walras’ law; existence of equilibrium and efficiency; Implications of the first and second welfare theorem.

UNIT – IV: Welfare (8 hours)

Social Welfare Function; welfare maximization, Fair allocation, Envy and equity, Arrow's Impossibility Theorem