BUSINESS ECONOMICS

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CHAPTER 1 : INTRODUCTION TO BUSINESS ECONOMICS
1.1 Introduction to Business Economics 11
1.2 Brief introduction to Economics 12
1.2.1 Microeconomics vs. Macroeconomics 13
1.2.2 Meaning of Scarcity and Choice. 14
1.3 Meaning of Business Economics 15
1.4 Nature of Business Economics 16
1.5 Scope of Business Economics 16
1.6 Characteristics of Business Economics 18
1.7 Difference between Business Economics and Traditional Economics 19
1.8 Relationship between Business Economics and Traditional Economics 20
1.9 Relationship of Business Economics with other disciplines 21
1.10 Basic Problems of an Economic System 23
1.11 Working of price mechanism 24
1.12 Business decision making process 29
1.12.1 Steps of business decision making process 30
1.12.2 Contribution of business economics to the business decision making process 31
1.12.3 The classification of business decisions 32
1.13 Importance of the study of Business Economics 32
Questions for Review 33

CHAPTER 2 : DEMAND ANALYSIS
2.1 Demand Analysis 37
2.1a Concept of Demand, Demand Schedule, Demand Function and Law of Demand 38
2.1.b. Meaning of movement and shift of demand curve 41
2.1.c.Individual Demand Market Demand 43
2.1.d Concept of Supply, Supply Schedule, Function and Law of Supply 43
2.1e The Concept of Equilibrium 46
2.2 Determinants of demand 472.3 Elasticity of demand 49
2.4 Types of elasticity of demand 49
2.5 Price elasticity of demand 50
2.6 Diagrammatic representation of Price Elasticity of demand 51
2.7 Determinants of Price Elasticity of demand 53
2.8 Measurement of elasticity of demand 53
2.9 Percentage Method 54
2.10 Point Elasticity Method 54
2.11 Total Outlay Method 56
2.12 Arc Elasticity Method 57
2.13 Income elasticity 58
2.14 Types of Income Elasticity of demand 59
2.15 Cross Elasticity 60
2.16 Note: The relation among AR, MR and Price elasticity of demand. 61
2.17 Application of elasticity of demand 62
Questions for Review 62

CHAPTER 3 : PRODUCTION FUNCTION
3.1 Producer behavior 66
3.2 Production function 66
3.3 Periods of Production 67
3.4 Measures of Productivity 67
3.5 Law of Variable Proportions 67
3.6 Laws of returns to scale 70
3.7 Isoquant 72
3.8 Diminishing Marginal rate of Technical Substitution 73
3.9 Isoquant Map or Equal Product Map 74
3.10 Properties of Isoquant 75
3.11 Optimum Input Combination (Least cost combination or Producer’s Equilibrium) 78
3.12 Iso-cost Curve 78
3.13 Selection of the Optimum or Least Cost Combination 79
3.14 Expansion Paths 81
3.15 Returns to scale 813.

16 Internal and external economies and diseconomies. 86
Questions for Review 89

CHAPTER 4 : COST OF PRODUCTION AND COST CURVES
4.1. Cost of Production 91
4.2. Understanding the different concepts of cost 91
4.3. Behaviour of costs 93
4.4. Different Concepts of Cost and their interrelation 96
4.5. Short run AC Curves 96
4.6. Long run AC Curves 100
4.7. Modern Approach of Cost 104
Questions for Review 107

CHAPTER 5 : CONCEPT OF REVENUE
5.1. The Concepts of revenue 109
5.2 Concept of Total Revenue Average Revenue Marginal Revenue 109
5.3. Marginal Revenue and Marginal Cost in determining Equilibrium of a Firm. 114
Questions for Review 118

CHAPTER 6 : OBJECTIVES OF BUSINESS FIRM, PERFECT COMPETITION
Chapter 6 A
6.1.1 Market Structure: Objectives of Business Firms 121
6.1.2 Profit Maximization Objective 121
6.1.3 Baumol’s sales revenue maximization 122
6.1.4 Baumol’s Sales Maximization Model without Advertising 123
6.1.5 Baumol’s Sales Maximization Model with Advertising 124
6.1.6 Marris’s Hypothesis of Maximization of Firm’s Growth Rate 126
6.1.7 Managerial utility maximization theory 126
6.1.8 Behavioural Theory by Cyert and March 129
Questions for Review 133
Chapter 6 B
6.2 Perfect competition 134
6.3 Equilibrium of a perfectly competitive firm 1366.4 Short -run equilibrium of a competitive firm 136
6.4.1 TR-TC Approach 136
6.4.2 MC- MR Approach 137
6.5 Short Run Equilibrium of a competitive firm ( Maximizing profits) 139
6.6 Short Run Equilibrium of a Competitive Firm (Minimising Losses) 140
6.7 Short-Run Equilibrium of a Competitive Firm (Earning Normal Profits) 142
6.8 Long Run Equilibrium of a Competitive Firm 143
6.9 Short run supply curve of a competitive firm 144
6.10 Long run supply curve of a competitive firm 146
6.11 Short run equilibrium of competitive industry 147
6.12 Long run equilibrium of competitive industry 148
6.13 Long run supply curve of competitive industry 148
Questions for Review 149

CHAPTER 7 : MONOPOLY AND PRICE DISCRIMINATION
7.1. Monopoly: Meaning 152
7.2. Characteristics of Monopoly 152
7.3. Sources of Monopoly 153
7.4. Kinds of Monopoly 153
7.5. Price and output determination under Monopoly 154
7.6. Monopoly and Supply Curve 157
7.7. Comparison between Monopoly equilibrium and Perfectly competitive equilibrium 157
7.8. Price Discrimination 158
7.9. Conditions for Price discrimination 158
7.10. Degrees of price discrimination 159
7.11. Equilibrium under Price Discrimination 159
7.12. Dumping 161
Questions for Review 163

CHAPTER 8 : MONOPOLISTIC COMPETITION
8.1. Monopolistic Competition : Meaning 165
8.2. Assumption and features of monopolistic competition 165
8.3. Price and output determination under Monopolistic Competition 1678.4. Group equilibrium in the long period 138
8.5 Selling Cost in Monopolistic competition 170
Questions for Review 171

CHAPTER 9 : OLIGOPOLY
9.1 Oligopoly Meaning and Assumptions 173
9.2 Types of Oligopoly 172
9.3 Features of Oligopoly 173
9.4 Kinked Demand Curve 176
9.5 Oligopoly Equilibrium 177
9.6 Cournot’s Duopoly Model 179
9.7. Bertrand’s Duopoly Model 182
9.8. Edgeworth Duopoly Model 184
9.9 Chamberlin’s Oligopoly Model 186
9.10 Price and Output Determination under Collusive Oligopoly 188
9.11 Cartels 188
9.12 Joint profit maximization by the cartel 189
9.13 Market -Sharing Cartels 190
9.14 Market-Sharing by Non-Price Competition 191
9.15 Market-Sharing by Output Quota 191
9.16 Price Leadership: Types and Price-Output Determination 192
9.17 Types of Price Leadership: 192
9.18 Price-Output Determination under Price Leadership by the Dominant Firm 195
Questions for Review 196

CHAPTER 10 : FACTOR PRICING
10.1 Factor Pricing 201
10.1.1 The theory of distribution 201
10.2 Personal and Functional Distribution of Income 201
10.3 Marginal Productivity Theory of Distribution 202
10.4 Wages 204
10.5 The theories of wages 206
10.6 Collective bargaining 210
10.7 Is Minimum wage law justified? 213

10.8 Supply Curve of Labor 213
10.8.1 Market Demand and Supply Curves for Labour in Perfect
Competition 215
10.8.2 Wage determination under Monopsony 215
10.9 Exploitation of Labour 217
10.10 Bilateral Monopoly in Factor Market: the case of collective bargaining 218
10.11Theories of Rent 219
10.11.1 Ricardian theory of Rent 219
10.12 Transfer Payments 222
10.13 Economic Rent 223
10.14 Differential Rent 223
10.15 Quasi-Rent 223
10.16 Theories of Interest 225
10.17 The abstinence or waiting theory of interest 226
10.18 Bohm-Bawerk’s view of interest 226
10.19 Fisher’s theory 227
10.20 The loanable funds theory 227
10.21 Liquidity Preference Theory 229
10.22 The concept of Profit 232
10.23 Theories of Profit 232
10.23.1 Walker’s Theory of Profit 232
10.23.2Clark’s Dynamic Theory 232
10.23.3 Hawley’s Risk Theory of Profit 233
10.23.4 Knight’s Theory of Profit 233
10.23.5 Schumpeter’s Innovation Theory of Profit 235
Questions for Review 236
Compendium 239
Question Papers of B. Com Dibrugarh University
(General /Speciality – in Semester system) 208
Question Papers 2012 250
Question Papers 2013 252
Question Papers 2014 254
Question Papers 2015 256