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(Department of Business Administration)
ECONOMIC ANALYSIS (5525)
CHECKLIST
SEMESTER: AUTUMN 2010
This packet comprises the following material:
- Text Book
- Course Outline
- Assignment No. 1, 2
- Assignment Forms ( 2 sets )
In this packet, if you find anything missing from the above mentioned material, please contact at the address given below:
Mailing Officer
Services Block No. 28
Allama Iqbal Open University
H-8, Islamabad
Phone: 051-9057611-12
Dr. Syed Hassan Raza
Course Coordinator
(Department of Business Administration)
1. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
2. SUBMITTING ASSIGNMENTS BORROWED OR STOLEN FROM OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN “AIOU PLAGIARISM POLICY”.
Course: Economic Analysis (5525) Semester: Autumn 2010
Level: MBA Marks: 100
ASSIGNMENT No. 1
Note: All questions carry equal marks.
Q. 1 Elaborate rationale intrinsic in a centrally planned economy that would make innovation difficult? Explain in detail underlying assumptions intrinsic in a capitalist country that would foster innovation? (20)
Q. 2 Argue the following statements from the perspective of equity and efficiency.
i. “Everyone in society should be guaranteed the best health care possible.”
ii. “When workers are laid off, they should be able to collect unemployment benefits until they find a new job.” (20)
Q. 3 Economists debate the effect of income taxes on the economy. Some economists emphasize the demand side effects of a change in income tax rates. Others point to the supply side effects. What do the demand side economists say happens when income taxes are cut? What do the supply side economists say happens? Who’s right? Could they both be right? Explain. (20)
Q. 4 Describe the equilibrium of a market, illustrate the forces that move a market toward its equilibrium. Explain the role of prices in market economies. (20)
Q. 5 Would you expect economists to disagree less about public policy as time goes on? Why or why not? Can their differences be completely eliminated? Why or why not? (20)
ASSIGNMENT No. 2
Total Marks: 100
This assignment is required to be presented after completion of classes expected to be held at the end of semester prior to your final examination at your allocated study centre. During the presentation, you can bring supporting material like transparencies and visual aids. Your attendance and presentation of this assignment is compulsory without which you will fail in course, although you might be allowed to appear in the final examination, but required to pass the presentation in any case.
You are also advised to prepare two copies of this paper. Submit one copy to your teacher and use second copy for presentation in the class. Placed below are topics of which you should select only one for writing a paper consisting of 30 typed pages. You are also required to prepare a report typed pages and present it with the help of transparencies/data show, for effective presentation.
“The Economic Survey of Pakistan” contains statistical information about the economy as well as the Ministry of finance’s analysis of current policy issues. Find a recent copy of this annual report at the library or visit http://www.finance.gov.pk/finance_economic_survey.aspx and read a chapter assigned to you. Summarize the economic problem at hand and describe the Ministry’s recommended policy.
Serial No. | Topics |
1. | Growth and Investment |
2. | Manufacturing and Agriculture |
3. | Fiscal Development |
4. | Inflation, Money and Credit |
5. | Capital Market, Trade and Payments |
6. | External and Domestic Debt |
7. | Population, Labour Force and Employment |
8. | Education |
9. | Poverty, Health and Nutrition |
10. | Energy, Transport and Communication |
You are required to select one of the following topics according to the last digit of your roll number. For example, if your roll number is D-3427185 then you will select topic number 5 (the last digit): The report should include:-
i. Introduction to the topic
ii. Important sub-topics
iii. Practical study of the organization with respect to the topic
iv. Review of theoretical and practical situations
v. Merits, demerits, deficiencies or strengths of the organization with respect to topic under study
vi. Conclusions and recommendations
vii. Annex, if any
Economic Analysis
Course Outline (5525)
Unit 1: Nature of Economics and Basic Economic Concepts
· Economic: Micro and Macro Economics
· Positive and Normative Economics
· Is Economics Science or an Art?
· Basic Economic Concepts:
· Resources and its scarcity
· Scarcity and Choice
· Opportunity Cost and its uses
· Production Possibility Frontier
· Law of increasing cost or diminishing return
· The concept economic efficiency and growth
Types of Economies
· Command Economy
· Market Economy
· Mixed Economy
· Islamic Economic System
· Prices System and Resource Allocation
Unit-2: Analysis of Demand and Supply
· Utility Analysis
· Consumer Behavior
· Cardinal and Ordinal Utility
· Marginal Utility
· Law of Diminishing Marginal Utility
· Law of Equi-marginal Utility
· Limitations of this Law
· Utility and Demand
· Meaning of Demand
· Types of Demand
· Law of Demand
· Limitations of Law of Demand
· Derivation of Individual and Market Demand Curve and the Concept of Consumer Surplus
· Law of Supply
· Derivation of Individual and Market Supply Schedule
· Equilibrium of Supply and Demand Curves
Elasticity of Demand and Supply
· Measurement of the elasticity of demand
· Price elasticity of demand
· Income elasticity of demand and cross-price elasticity of demand
· The determinants of the price elasticity of demand
· Relationship between elasticity of demand and the revenue
· Price elasticity of supply in the short and long run
· The applications of and the uses of elasticity of demand and supply
· Supply and demand analysis and the intervention of the government
Indifference Curve Analysis
· Scale of preferences
· Indifference curves
· Properties of indifference curve
· Marginal rate of substitution
· Budgetary constraint and the determination of consumer equilibrium
· Income substitution, price effects and derivation of demand curve
· Superiority and weaknesses of indifference curve technique
· Applications and uses of indifference curve technique
Unit 3: Forms of Business Organizations and the Theory of Production
· The nature of the firm
· Sole proprietorship
· Partnership
· Private and public limited companies
· Production Function
· Total, average and marginal product
· Law of diminishing return
· Returns to scale
· Analysis of costs: Fixed, variable and total costs
· Average fixed, average variable, average total costs and marginal costs
· Relationship between production and costs
· Derivation of average fixed cost, average variable costs, average total costs and marginal cost curves
· Efficient level of production
· Long-run costs: Economies and diseconomies of scale
· Firm demand curve and the market demand curve
Unit 4: Market and Market Structures
· Market: meaning and classification of markets
· Perfect and imperfect markets
· Forms of market structures: perfect competition, monopolistic competition, monopoly and oligopoly
· Conditions for the determination of price and output relationship of the firm in each market in the short run and long-run
Unit 5: Pricing of Factors of Production
· Factor markets
· Factor supply and the concept of marginal factor cost
· Firm demand for factors of production
· Labour, labour supply and demand curve and the equilibrium in the labour market
· Determination of equilibrium wage rate under perfect and imperfect market conditions
· Interest, rent and profit
· Supply of capital
· Interest, credit market, rate of interest
· Rent, pure and economic rent
· Profit: sources of economic profit
· Concept of externalities and the need for government intervention in imperfectly competitive market conditions.
Unit 6: The Measurement of National Income and the Determination of Equilibrium Level of Income
· Concept and measurement of national income
· Gross national output and gross national expenditure
· Difficulties in the measurement of national income
· National income and circular flow of income and expenditure
· Consumption function and the determination of equilibrium level of income and output.
· Inflationary and deflationary gap
· Determinants of investment and the marginal efficiency of capital
Unit 7: Fiscal and Monetary Policy
· Public versus private finance
· Government spending: taxes and transfer
· Government and aggregate demand
· Effect of government spending on output
· The effects of taxation on output
· The combined effects of spending
· Money: definition and functions of money
· Functions of central bank and commercial banks
· Money demand, money supply and the determination of interest rate
· Monetary policy, instruments and objectives of monetary policy
Unit 8: Inflation and Unemployment
· Different types of inflation, causes and consequences
· Different types of unemployment and causes
· Relation between inflation and unemployment
· Methods of controlling inflation and unemployment
Unit 9: International Trade, Balance of Payments & International Financial System
· Need for international trade
· International trade theory
· Principle of absolute and comparative advantage
· Structure of balance of payments
· Equilibrium in the balance of payments
· Causes and consequences of balance of payments dis-equilibrium
· Methods of controlling balance of payments dis-equilibrium
· Relationship between international trade, balance of payments and the determination of exchange rate
· Types of foreign exchange rate determination system
· Fixed, floating and flexible exchange rates and their advantages and disadvantages
· International Monetary Fund: structure, functions and role in the determination of exchange rate system
· World Bank: functions and role in development of less developed countries
· GATT, rounds of GATT and the New World Order, World Trade Organization (WTO).
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