Applied Economics

Unit I: Introduction ————————————————————– 3 hours

1. 1. Concept of Micro Economics and Macro Economics
   2. Measurement of Inequality
   3. Equilibrium
   4. Statics and Dynamics
   5. Stock and Flow ratio variables

Unit II: Theory of Consumer Demand ————————————— 6 hours

1. 1. Ordinal Approach (Indifference Curve Analysis)
   2. Consumer equilibrium
   3. Price Effect
   4. Income Effect
   5. Substitution effect
   6. Price elasticity of demand and its determinants
   7. Income and Cross elasticity of demand
   8. Price and cross elasticity of supply
   9. Economics of Speculation

Unit III: Analysis of Cost and Revenue ————————————– 5 hours

1. 1. Nature and types of cost curves (traditional as well as modem)
   2. Relationship among total, average and marginal cost curves
   3. Nature and types of revenue curves
   4. Relationship among total, average and marginal revenue curves

Unit IV: Theory of Production ————————————————- 4 hours

1. 1. Producer’s equilibrium in long run:
      1. In terms of minimization of cost and maximization of output
   2. Cobb- Douglas Production Function

Unit V: Product Pricing ——————————————————— 6 hours

1. 1. Concept of market equilibrium
   2. Concept of firm’s equilibrium
   3. Tax and subsidy upon market equilibrium and price
   4. Linear programming
   5. Cost Benefit method.

Unit VI: Factor Pricing ———————————————————- 3 hours

1. 1. Modem theory of factor pricing (Demand and Supply Theory)

Unit VII: National Income —————————————————— 2 hours

1. 1. Methods and difficulties of measurement

Unit VIII: Theories of Employment —————————————— 2 hours

1. 1. Principle of Effective demand

Unit IX: Consumption, Saving and Investment Functions ———- 4 hours

1. 1. Propensity to consume and multiplier
   2. Propensity to save and Paradox of thrift
   3. Investment
   4. Marginal efficiency of capital and accelerator

Unit X: Business Cycle ———————————————————- 2 hours

1. 1. Meaning
   2. Types
   3. Causes
   4. Effects
   5. Remedies

Unit XI: The Mechanism of Foreign Exchange ————————– 3 hours

1. 1. The determination of the rate of foreign exchange
   2. The adjustable ‘Peg’ system
   3. Fixed exchange rates
   4. Floating exchange rates

Unit XII: Macro Stabilizing Policies —————————————– 2 hours

1. 1. Fiscal policy
   2. Monetary Policy

Unit XIII: Economics of Development ————————————— 6 hours

1. 1. Meaning
   2. Challenges and prospects in Nepal
   3. Global Economy
   4. Concepts of Liberalization, Privatization and Globalization
   5. Regional Trade Agreements in South Asia:
      1. SAARC
      2. BIMSTEC
      3. SAPTA
      4. SAFTA
   6. Multinational Companies FDI in Nepal
   7. WTO

Text Books:

1. 1. Mankiew, N.G.: Principles of Microeconomics, Harcourt Brace College Publishers
   2. Sampat Mukhcrjee: Modem Economic Theory; W’ishwa Prakashan, (A Division of Wiley Eastern Ltd.), New Delhi.
   3. Mankiew, N.G.: Macroeconomics, New York: Worth Publisher

References:

1. 1. D.N. Dwivedi: Microeconomics Theory anti Applications, Pearson.
   2. Dominick Salvatore: Theory and Problems of Microeconomics, Schaum’s outlines cries McGraw hill Inc, Singapore.