**DESCRIPTION OF COURSES**

**AG ECON 601 MICROECONOMICS II (3L+0P) II**

*Pre-requisite: Ag Econ 501 Microeconomics I*

**Objective**

The objective of this course is to teach economic theories that are applicable to firm and also places primary emphasis on the nature and functions of product markets, study of factor markets and evaluation of government regulation of markets.

**Theory**

UNIT I

Theory of price under pure monopoly- Equilibrium of the monopolist-Predictions in dynamic changes – Shift in the market demand- Change in costs- Imposition of tax- Multiplant firm- Bilateral monopoly- Price discrimination model- Types and effects of price discrimination- Equilibrium of price discriminating monopolist- Monopolistic competition- assumptions- product differentiation and demand curve- Equilibrium of the firm.

UNIT II

Oligopoly markets- Non collusive oligopoly- Cournot’s Duopoly model- Stackelberg’s Duopoly model- Kinked demand model- Collusive Oligopoly- Cartels and profit maximization- Market sharing cartel- Price leadership in oligopoly- Models of low cost and dominant firm price leader- Theory of games- Two person Zero sum game- Certainty and uncertainty models.

UNIT III

Pricing of factors of production and Income distribution- Demand/supply/ pricing of single and several factors- Factor pricing in perfectly and imperfectly competitive markets- Monopolistic power in product market- monopsonistic power in factor market- Bilateral monopoly-elasticity of factor substitution- Technological progress and income distribution- Pricing of fixed factors- The adding- up and product exhaustion theorems- Euler’s and Walras theorems.

UNIT IV

General Equilibrium theory- The Walrasian system- Two commodity exchange- Production and exchange- Multimarket equilibrium- General equilibrium and allocation of resources- Factor ownership and income distribution- Welfare economics- Pareto optimality- Maximization of social welfare- Welfare maximizing state- The efficiency of perfect competition- The efficiency of imperfect competition.

**Suggested Readings**

- Henderson, J.M. and Quandt, R.E.
*Microeconomic Theory: A Mathematical Approach*. McGraw-Hill. Koutsoyiannis, A. 2003.*Modern Microeconomics*. The Macmillan Press. - Varian, Hal R. 1992.
*Microeconomic Analysis*. W. W. Norton and Co.