BBA 104 MICRO AND MACRO ECONOMICS Faculty: AP/PS

Lecture Faculty RNo Topic and Questions

L1 PS The economic approach: concepts of scarcity and trade off
etc
1 1. The use of scarce resources is costly: Trade off must
always be made. – explain the statement.
2 2. Individuals choose purposefully- they try to get the
most from their limited resources. – Explain the
statement.

3 3. Individuals make decisions at the margins. - explain

the statement.

83 4. Economic actions often generate secondary effects.

- explain the statement.

84 5. Although information can help us make better

choices, its acquisition is costly. - explain the
statement.

85 6. The value of a good or service is subjective. - explain

the statement.

L2 PS The economic approach: economics as the science

4 7. The test of a theory lies in its ability to predict. -
explain the statement.

5 8. Incentives matter – choice is influenced in a

predictable way by changes in incentive. - explain
the statement.
6 9. “The economic way of thinking stresses that good
intentions lead to sound policy”. - explain the
statement.

86 10. “The government should provide goods such as

health care, education and highways because it can
provide them free.” - explain the statement.
87 11. “Positive economics cannot tell us which
agricultural policy is better, so it is useless to policy
makers.
L3 PS Demand and consumer choice: concept of demand,
determinants of demand, exceptions to the law of demand
7 12. What do you mean by demand, demand schedule
and what is the law of demand.
8 13. Differentiate between change in demand and
quantity demanded.
88 14. Distinguish between individual demand and market
demand and show the derivation of the market
demand from the individual demand.
89 15. Discuss the different non-price determinants of
demand.
90 16. Discuss the various exceptions to the law of
demand.
L4 PS Theory of consumer behaviour – Part 1
17. Discuss the different methods of calculating price
BBA 104 MICRO AND MACRO ECONOMICS Faculty: AP/PS

elasticity of demand.
10 18. What are determinants of price elasticity? How is
the concept of elasticity used?
11 19. Show that demand curves with same elasticities
may have different slopes and vice versa.
12 20. Show that when demand curve is linear, demand
becomes more elastic as the price of the product
increases.
13 21. What is income elasticity? How can income
elasticity be used in classification of goods.
14 22. What is cross price elasticity of demand? How does
the cross price elasticity of demand help us in
determining the relationship between two goods?
15 23. Discuss the law of equimarginal utility and derive
the demand curve with the help of this law.
91 24. What are indifference curves? State the properties
of indifference curves?
92 25. What are the different types of indifference curves
depending on the nature of the commodities?
93 26. Explain the concept of ‘Bliss point’.
94 27. How is equilibrium consumption of a consumer
determined?
95 28. Explain the concepts of income effect and
substitution effect? Discuss normal goods, inferior
goods and Giffen goods in the light of income effect
and substitution effect.
L5 PS Theory of consumer behaviour – Part 2
16 29. What is the price consumption curve? What is the
shape of the PCC when both goods are normal
goods and when one good is a Giffen good?
17 30. What is the income consumption curve? Comment
on the shape of the income consumption curve?
96 31. What is the Engles’ curve? Show the derivation of
the Engles’ curve?
97 32. Distinguish between Engles’ curve for normal goods
and inferior goods?
98 33. Discuss the process of the derivation of the demand
curve from the PCC. Also discuss the relationship
between the shape of the PCC and the demand
curve
L6 PS Theory of Production
18 34. What do you mean by short run and long run
production function?
19 35. Show the relationship between AP, MP &TP.
20 36. What are isoquants? What are the properties of
isoquants?.
99 37. What are different possible shapes of isoquants
depending of the kind of production functions?
100 38. Explain the concept of ridge lines.
101 39. Discuss the concept of returns to scale with the help
of the concept of expansion path
L7 PS Theory of costs: short run and long run cost functions and
cost curves
21 40. Discuss the different short run cost curves. Why
BBA 104 MICRO AND MACRO ECONOMICS Faculty: AP/PS

does the marginal cost curve cut the average

variable and the average cost curves at the
minimum points?
22 41. Discuss the relationship between MC, AVC & AC.
123 42. Why is the long run average cost curve called an
envelop curve?
102 43. Discuss the derivation of the long run marginal cost
curve.
103 44. Comment on the shape of the long run average cost
curve and returns to scale
L8 PS Objectives of a firm & methods to achieve them
23 45. What are the different objectives of a firm
24 46. How can the objective of profit maximization be
achieved?
104 47. How Can the objective of revenue be achieved?
105 48. What is the condition for profit maximization?
L9 PS Perfect competition: assumptions, derivation of short run
and long run supply curves etc.
25 49. What are the assumptions of perfect competition?
Differentiate between pure competition and perfect
competition.
26 50. Discuss the short run equilibrium of a perfectly
competitive firm. Discuss the concepts of the
breakeven point and shut down point.
27 51. Why is the MC curve of a firm called the supply
curve of an individual firm?
28 52. Distinguish between profit maximizing and revenue
maximizing motives of a firm.
29 53. Differentiate between economic profit and
accounting profit.
30 54. Discuss the short run equilibrium in perfect
competition.
106 55. Discuss the derivation and the shape of the long run
industry supply curve the case of increasing,
decreasing and constant cost industries.
107 56. Discuss the long run equilibrium in perfect
competition.
108 57. Can a firm in a perfectly competitive market earn
super normal profit in long run?
109 58. What do you understand by excess capacity? Is
there the existence of excess capacity in long run
under PC?
110 59. In a competitive market a business operator
produces efficiently- that is if the cost of producing
a good is minimized – the operator will be able to
make at least normal profit. Do you agree with the
statement? Explain your answer
L10 PS Monopoly: features of monopoly, monopoly and
determinant of monopoly power, discriminating monopoly
111 60. What is a monopoly, does the monopolist have a
supply curve? What are the barriers needed for the
existence of a monopoly.
112 61. Discuss the short run equilibrium in Monopoly.
Why does the monopolist never operate in the
BBA 104 MICRO AND MACRO ECONOMICS Faculty: AP/PS

inelastic part of the demand curve?

31 62. Discuss the long run equilibrium in Monopoly.
32 63. What is monopoly power? What are the sources of
monopoly power?
33 64. Discuss the process of price discrimination in
Monopoly.
41 65. What are the conditions required for price
discrimination.
L11 PS Monopolistic competition: assumptions short run and long
run equilibrium
66. Discuss the short run equilibrium under
monopolistic competition.
67. Discuss the long run equilibrium under
monopolistic competition.
68. How is a monopolistic competition similar to
perfect competition and how is it similar to a
monopoly.
L12 PS Oligopoly: concept of oligopoly, types of oligopoly.
34 69. Discuss the main features of oligopoly.
35 70. Discuss the price leadership model.
36 71. What is a cartel?
113 72. Discuss Bertrand model.
114 73. What is collusion? Discuss the different obstacles to
collusion.
115 74. Discuss the cournot model of Duopoly.
116 75. Discuss Sweezy’s Model of sticky prices
117 76. Do firms under oligopoly have supply curves? What
are reaction functions?
122 77. Explain the determination of the equilibrium output
in a Cournot model and compare the outcome to
that of collusion.
L13 PS Market failure: definition of market failure and cause of
market failure
37 1. What do you understand by market failure?
38 2. Discuss the main causes for market failure.
39 3. What are the possible remedies to market failure?
118 4. What do you understand by externalities and how do
they lead to market failure.
119 5. What are public goods? Why do they need to be
produced by be government?
L14 PS Demand Forecasting
120 78. What is demand forecasting?
121 79. What are the different methods of demand
forecasting?
40 80. Discuss the importance of demand forecasting.
L15 AP National income accounting:

42 1. How is the national income of a country measured?

43 2 .What is the difference between GDP and GNP?

44 3 .What is the difference between GNP and NNP?

4. Discuss the different methods of national income
accounting
BBA 104 MICRO AND MACRO ECONOMICS Faculty: AP/PS

46 5. Do you think the value added method in National

Income accounting takes into account the problem of
double counting? How?

47 6. Discuss the limitations of the concept of GDP

48 7. There are several problems in encountered in national

income accounting ‘Discuss these problems.

L16 AP Inflation: definition, causes and effects of inflation,

measures of controlling inflation:

49 8. What is money?

50 9. What are the important functions of money?

51 10. What are the different types of money?

52 11. What is meant by money supply?

53 12. What is reserve-deposit ratio?

54 13. What is monetary base?

55 14. What is currency deposit ratio?

56 15. What are open-market operations?

57 16. What is meant by reserve requirements?

58 17. What is excess reserve?

59 18. What is meant by monetary policy?

60 19. How the quantity of money is controlled?

61 20. Discuss the Quantity Theory of Money.

62 21. Explain the concept of money demand

L17 AP Inflation
63 22. Discuss the GDP Deflator.
64 23. Differentiate between CPI and GDP Deflator.
65 24. What is Consumer‘s Price Index and what are its uses?
25. What is the Wholesale Price Index and what are its
uses?
67 26. Movements in CPI and WPI need not match at all’
Discuss why.
68 27. Define inflation?
69 28. What is demand pull inflation?
70 29. What is cost push inflation?
71 30. Discuss the different measures of inflation control?
72 31. Explain the concept of Phillips curve
L18 AP Simple Keynesian Model: assumptions and main
BBA 104 MICRO AND MACRO ECONOMICS Faculty: AP/PS

conclusions: concept of multiplier.

73 32. Discuss the Keynesian consumption function.
74 33. What is Marginal propensity to consume?
75 34. What is Average Propensities to consume?
76 35. Discuss the Saving Function
77 36. Explain what is meant by marginal propensity to save.
78 37. How can you determine equilibrium Level of Income
using AD-AD approach?
79 38. In the simple Keynesian model, an increase of one
dollar in autonomous expenditure will cause
equilibrium income by a multiple of this one-dollar
increase. Explain the process by which this happens.
80 39. Discuss the concept of Investment multiplier.
81 40. Explain the concept of government expenditure
multiplier.
82 41. Explain the tax cut multiplier.
124 42. What are the Keynesian motives of holding money?
125 43. What is meant by Fiscal Policy?
126 44. What is meant by Monetary Policy?
L19 AP BBM , Business Cycles:
127 32. What is a Balanced Budget Multiplier.?
128 33. What are Business Cycles?
129 34. What are the different phases of business Cycles?
130 35. Describe Trade Cycles.
L20 AP Investment capital formation and wealth of nations
131 36. What is interest rate?
132 37. Explain the concept of present value.
133 38. How does the capital market influence the growth and
prosperity?
134 39. What is marginal efficiency of capital?
135 40. What is marginal efficiency of investment?
L21 AP Gaining from international trade: reasons for trade and
gains from trade. (classical and neoclassical theory of
trade)
136 41. Discuss the reasons for international Trade.
137 42. Discuss the Gains from Trade.
138 43. Discuss the direct and indirect gains from trade?
139 57. Discuss the impact of Trade Openness.
140 58. Do you think the imposition of tariffs by a small open
economy is beneficial for the economy? Explain your
answer.
L22 AP Unemployment: types of unemployment, , remedies
59. What is seasonal unemployment?
60. What is frictional unemployment?
61. Discuss what is meant by Disguised unemployment.
62. Discuss structural unemployment?
63. What is natural rate of unemployment?
64. Explain the concept of Okun’s Law.
L23 AP Heckscher – Ohlin theory of international trade:
141 65. Discuss the H-O theory of trade.
142 66. Why is the H-O theory of trade considered to be an
improvement over the previous theories?
143 67. Discuss the Leontief paradox.
L24 AP International finance and foreign exchange market: BOP
BBA 104 MICRO AND MACRO ECONOMICS Faculty: AP/PS

and BOT, current and capital accounts

144 68. How the exchange rate is determined?
145 69. What is meant by fixed exchange rate?
146 70. What is meant by floating exchange rate?
147 71. What are the pros and cons of fixed exchange rate?
148 72. What are the pros and cons of floating exchange rate?
149 73. Define the nominal exchange rate and the real exchange
rate.
150 74. Explain the concept of purchasing power parity.
151 75. What is Balance of Payment?
152 76. What isBOT?
153 77. Discuss the Current Account Balance of BOP.
154 78. Discuss the Capital account of BOP.
L25 AP International finance and foreign exchange market:
depreciation and appreciation of currency
155 79. Discuss the Capital account of BOP.
80. Discuss the Capital account of BOP
156 81. Differentiate between Appreciation and Depreciation of
exchange rates.
82. Devaluation can increase the trade balance if certain
conditions are fulfilled
L26 AP Market failure: public goods and market failure:
157 83. What are public goods?
158 84. Why do they need to be produced by be government?
159 85. Explain the concept of free riders problem.
L27 AP Concepts of taxes
160 86. What are direct and indirect taxes?
161 87. What do you mean by progressive, proportional and
regressive taxation?
162 88. What do you understand by externalities and how do
they lead to market failure.
L28 AP Income inequality and poverty: measures of poverty and
inequality, poverty as scarcity
163 89. Discuss the different measures of poverty.
164 90. What is the Lorenz curve and GINI coefficient?
165 91. “Poverty results from scarcity” Explain the statement.
 

TEXT BOOK :

Macroeconomic Theory, Mankiw.

Macroeconomic Theory, Froyen.