Business Economics
ECO – 535
School of Business & Economics
Program
Credit Hours
Recommended Texts
Additional Books
Assessment Scheme
Capsule Statement
This course is an economist' kit of tools for MBA students that can be used to understand the
basics of economics. It covers micro-and macroeconomic issues that are essential for managers
and professionals. The course starts with basic microeconomic concepts such as demand,
supply, elasticities, production and cost. Having established the solid ground of the basics of
microeconomics, parts of macroeconomics including national income accounts, aggregate
demand, aggregate supply, concepts of inflation and unemployment, major macroeconomic
policy operations will be dealt with. After completing the course the participants will be able to
apply principles of economics to solve economic problems being faced by both public and
private sectors of Pakistan.
Learning Objectives
Students are expected to:
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Develop sound understanding of Microeconomic basics.
Be able to analyze the functioning of the firms
Do business condition analyses
Understand the impact of changes in fiscal and monetary policies on the economy
Learning Outcomes
It is expected that after the completion of the course students will be able to:
 Understand the key elements involved in business decisions.
 Understand the strategies of the firm
 Understand the nature of the market, price strategy and competitive environment.
 Comprehend the functioning of the economy.
 Analyze the role of fiscal and monetary policy in stabilizing the economy.
TEACHING METHODOLOGY:
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Recommended Books Reading
Lectures / Presentations
Assigned Problems
Knowledge Sharing Sessions
Assignments / Special Topics
Websites / Internet Search
Research Based Material
Handout Material
Reading Recommended Material
QUIZZES/ ASSIGNMENTS
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To assess the understanding of the knowledge shared in the class, assignments and
quizzes will be taken. The objective of quizzes and assignments is to strengthen the
conceptual knowledge and to develop the analytical skills among the students on the
assigned topics. Quiz may be in the form of MCQs, short questions numeric or graphs.
No Make up Quiz/assignment will be taken.
Assignments must be submitted on due date; late submission will be penalized. Take
home problems and exercises must be completed before the next class session.
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Expectations from Participants
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Regular attendance and participation in class activities.
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Advance chapter reading of the relevant topic.
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Submission of assignments and other exercises on time.
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No plagiarism in quizzes and assignments otherwise the case to be sent to disciplinary
committee
CONSULTANCY SERVICE
You are welcome and free to discuss your academic issues with me during my office
hours. You may request for an appointment if the office hours do not fit into your schedule.
CALANDAR ACTIVITY
Part I: Microeconomics
Session
1,2&3
4 &5
6
7 &8
Topics
Introduction to Economics
 What do economists study?
 Scarcity and Choice
 Trade offs
 Efficiency and Equity
 The opportunity cost
 The Production Possibilities Frontier
 Micro versus Macro Economics
 Positive Versus Normative Analysis
Conclusion
The market forces of Supply and Demand
Demand
 Demand Schedule
 Law of Demand
 Demand Curve
 Individual Demand and market
demand
 Shifts in the demand curve
Supply
 Supply Schedule
 Law of Supply
 The Supply schedule and the
 Supply curve
 Individual Supply versus Market
supply
 Shifts in Supply
 Market Equilibrium
Supply and Demand: Government
Regulations
 Price Ceiling
 Price Floor
 Effect on market Outcome
Conclusion
Elasticity of demand and Supply
 Price elasticity of demand
 Calculation of the Price Elasticity:
Point Elasticity and Average Based
Formula
 Factors Affecting Price Elasticity of
Demand
 Price Elasticity and Total Revenue
 Price Elasticity of Supply
 Factors Affecting Price Elasticity of
Supply
Conclusion
Reading Material
W &W (Ch.1)
pp. 2-22
Activity
Take Home Exercise:
Review Questions 1,
2, 6, and 8 from
W&W pp. 23-25 27
Assignment #1
W&W( Ch.3)
PP.66-87
W&W( Ch.3)
PP. 88-90
Exercise:
Review questions 2, 4
& 5 from W&W
page 98-99
Case study # 1
(W&W) p.101
Quiz #1
W&W( Ch.3)
pp. 91-95
Exercise:
Applications of
supply demand and
elasticity
W&W pp. 94-95
9,
10&11
The Production Function and the Costs of
Production
 The Production Function
 Efficient Method of Production
 Production Function and Types of
Costs
 Short run cost analysis
 Long run Costs
 The Law of Diminishing Returns
 Economies and Diseconomies of
Scale
Conclusion
Market Structures and Competitive
Markets
Quiz # 2
Assignment # 2
W &W (Ch.12)pp.
343-367
Case Study # 2
From W&W p. 363
A group of 3-4
participants will
present a case study
assigned by the
resource person.
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12 &13
14 &15
16
17&18
The meaning of Competition
Demand for an Individual’s Firms
Product
 Profit maximization and competitive
firm’s supply curve
 Short-run Equilibrium of the Firm
(Economic Profit, Loss, and
Breakeven)
 The supply curve in the competitive
market.
 Long-run equilibrium of the firm
Conclusion
Monopoly and Monopolistic Competition
 Monopoly
 Demand Curve for the Monopolist
 Profit Maximization/Equilibrium in
Monopoly
Monopolistic Competition
 Feature of the Market
 The short-run equilibrium (profit or
Loss)
 The long-run equilibrium
 Monopolistic versus perfect
competition
 Price Discrimination
Conclusion
W&W( Ch.13) pp.
373- 382
Problems and
Exercises
Problems and
Exercises
W&W( Ch .13)
pp. 391-396
Quiz #3
Assignment #3
MID-TERM EXAM
Oligopoly
 Characteristics of Oligopoly
 Behavior of a Firm in an
Oligopolistic Market
 Mutual Interdependence
 Leadership pricing
 Kinked Demand Curve
Conclusion
W&W( Ch .13)
pp. 387-391
Case Study # 3
Part II: MACRO ECONOMICS
Session
19 – 21
22 – 25
26-28
29 – 30
Topics
Reading Material
Introduction to Macroeconomics
Measuring the Value of Economic Activity
 The Circular Flow Model
 National Income Accounts: GDP
 Real GDP and Nominal GDP
 The GDP Deflator
 The Components of Expenditure
Mankiw (ch. 2)
 Other Measures of Income
pp. 15-37
GNP, NNP, National Income,
Personal Income, Disposable
 Measuring the Cost of Living: The
consumer Price Index
 The CPI versus GDP Deflator
 Measuring Unemployment
Conclusion
Components of Demand For Goods and
Services
 Components of GDP
 Consumption, Consumption
Function, The Marginal Propensity to
Consume, Marginal propensity to
save
 Investment, Investment function
Mankiw ( Ch3)
 Government Spending and Taxes
pp. 53-67
 Equilibrium in Goods and Service
Market: The Supply and Demand for
the Economy’s output
Equilibrium in the Financial
. Markets:
 The Supply and Demand for
Loanable Funds
 Changes in Saving: The Effects of
Fiscal Policy
 Changes in Investment Demand
Conclusion
The IS LM Model
 The Goods Market and the IS Curve
 The Keynesian Cross
 Planned Expenditure: The Economy
in Equilibrium
Mankiw ( Ch.10)
 Fiscal Policy and the Multiplier:
pp. 257-270
Government Purchases
 Fiscal Policy and the Multiplier
Taxes
 How Fiscal Policy Shifts the IS
Curve
Conclusion
The Money Market and The LM Curve
 The Theory of Liquidity Preference
 Income, Money Demand, and the LM
Mankiw ( Ch.10)
Curve
pp. 271-279
 How Monetary Policy Shifts the LM
Activity
Analysis of Pakistan’s
Economy Data
Case Study # 4
Quiz # 4
Problems Exercises
Assignment # 4
Quiz # 5
Discussion on the
Leading Indicators of
Pakistan’s Economy
Curve
 The Short run Equilibrium
Conclusion
END-TERM EXAM
Good Luck