1. Total utility and marginal utility

2. Utility maximization: equalizing marginal utility per dollar

3. Individual and market demand curves

4. Income and substitution effects

2.3. Firm behavior and market structure -25-35%

2.3.1. Production and costs -10-15%

1. Production functions: short and long run

2. Marginal product and diminishing returns

3. Short-run costs

4. Long-run costs and economies of scale

5. Cost minimizing input combination
6. Profit:

a. Accounting versus economic profits

b. Normal profit

c. Profit maximization: MR=MC rule

2.3.2 Perfect competition

1. Profit maximization

2. Short-run supply and shutdown decision

3. Behavior of firms and markets in the short run and in the long run

4. Efficiency and perfect competition

2.3.3 Monopoly

1. Sources of market power

2. Profit maximization

3. Inefficiency of monopoly

4. Price discrimination

5. Natural monopoly

2.3.4 Oligopoly

1. Interdependence, collusion, and cartels

2. Game theory and strategic behavior

2.3.5 Monopolistic competition

1. Product differentiation and role of advertising

2. Profit maximization

3. Short-run and long-run equilibrium

4. Excess capacity and inefficiency

Unit 2.4. Market Failure and the Role of Government - 12-18%
A. Externalities

1. Marginal social benefit and marginal social cost

2. Positive externalities

3. Negative externalities

4. Remedies

B. Public goods

1. Public versus private goods

2. Provision of public goods

C. Public policy to promote competition

1. Antitrust policy

2. Regulation

D. Income distribution

1. Equity

2. Sources of income inequality

Unit 2.5: Factor Markets – 10-18%

1. Derived factor demand
2. Marginal revenue product
3. Labor market and firms’ hiring of labor
4. Market distribution of income

Semester 2: Macroeconomics

Unit 3.1: Measurement of Economic Performance - 12–16%
A. National income accounts

1. Circular flow

2. Gross domestic product

3. Components of gross domestic product

4. Real versus nominal gross domestic product

B. Inflation measurement and adjustment

1. Price indices

2. Nominal and real values

3. Costs of inflation

C. Unemployment

1. Definition and measurement

2. Types of unemployment

3. Natural rate of unemployment

Unit 3.3: National Income and Price Determination - 10–15%
A. Aggregate demand

1. Determinants of aggregate demand

2. Multiplier and crowding-out effects

B. Aggregate supply

1. Short-run and long-run analyses

2. Sticky versus flexible wages and prices

3. Determinants of aggregate supply

C. Macroeconomic equilibrium

1. Real output and price level

2. Short and long run

3. Actual versus full-employment output

4. Economic fluctuations

Unit 3.4: Financial Sector - 15–20%
A. Money, banking, and financial markets

1. Definition of financial assets: money, stocks, bonds

2. Time value of money (present and future value)

3. Measures of money supply

4. Banks and creation of money

5. Money demand

6. Money market

7. Loanable funds market

B. Central bank and control of the money supply

1. Tools of central bank policy

2. Quantity theory of money

3. Real versus nominal interest rates

Unit 3.5: Inflation, Unemployment, and Stabilization Policies - 20–30%
A. Fiscal and monetary policies

1. Demand-side effects

2. Supply-side effects

3. Policy mix

4. Government deficits and debt

B. Inflation and unemployment

1. Types of inflation

a. Demand-pull inflation

b. Cost-push inflation

2. The Phillips curve: short run versus long run

3. Role of expectations

Unit 3.6: Economic Growth and Productivity - 5–10%
A. Investment in human capital
B. Investment in physical capital
C. Research and development, and technological progress
D. Growth policy

Unit 4: Open Economy: International Trade and Finance -10–15%
A. Balance of payments accounts

1. Balance of trade

2. Current account

3. Capital account

B. Foreign exchange market

1. Demand for and supply of foreign exchange

2. Exchange rate determination

3. Currency appreciation and depreciation

C. Net exports and capital flows
D. Links to financial and goods markets