E1.

1 110: Introduction to Microeconomics 

 
E1.1.1 Background and Rationale 
The  basic  purpose  of  this  course  is  to  introduce  students  to  the  study  of 
microeconomics.  The  course,  essentially,  deals  with  the  concepts  of  supply  and 
demand. Examples and applications are drawn from Zambia. 
 
E1.1.2 Learning Outcomes 
By the end of this course, students are expected to:  
 
(a) Demonstrate  an  understanding  of  the  nature  and  methodology  of 
microeconomics. 
(b) Show  knowledge  of  the  concepts  of  supply  and  demand  in  product  and  input 
markets. 
(c) Demonstrate  the  foundation  necessary  for  the  study  of  intermediate 
microeconomics. 
 
E1.1.3 Course Content 
1.0 The Study and Methodology of Microeconomics 
● Definition  of  Economics,  distinction  between  micro-  and 
macroeconomics, positive and normative economics. 
● Basic  concepts:  scarcity,  rationality,  opportunity  costs,  PPF,  marginal 
concepts, sunk costs. 
● Actors  in  a  market  economy:  households,  firms,  government,  external 
sector. 
● Models  (static  models,  dynamic  models  and  comparative  models), 
graphs and math. 
● Use  one  example  of  a  market  to  illustrate,  demand,  supply,  equilibrium, 
comparative  statics  etc.  Example  can  be  used  to  introduce  the  structure 
of the course. 
 
2.0 Consumer Choice Theory 
2.1 Budget  and  preferences  (indifference  curves),  concept  of  utility 
(cardinal, ordinal and marginal utility), individual demand curve. 
2.2 Market demand curve; elasticity of demand. 
2.3 Comparative statics – shifts and movements. 
2.4 Consumer surplus. 
 
3.0 Theory of the Firm 
3.1 Objectives of the firm. 
 3.2 Technology,  production  function,  diminishing  returns,  returns  to  scale, 
marginal  product,  average  product,  total  product,  marginal  cost, 
average cost, total cost. Graphical illustration. 
3.3 Distinction between short- and long-run. 
3.4 Supply curve of a firm, market supply curve. Comparative statics. 
3.5 Producer surplus 
 
4.0 Perfect Competition 
4.1 Concept  of  market  structure,  classification  of  market  structures  based 
on different criteria. 
4.2 Definition of perfect competition, underlying assumptions. 
4.3 Definition of equilibrium. Importance of the concept. 
4.4 Market equilibrium and efficiency. 
4.5 Consumer and producer surplus. 
4.6 Long-run vs. short-run. 
 
5.0 Monopoly 
5.1 Definition of Monopoly. 
5.2 Graphical illustration of monopoly case. 
5.3 Welfare loss – comparison to perfect competition. 
5.4 How to regulate a monopoly.  
 
 
E1.1.4 Assessment​Continuous Assessment 40%Final examination
60%   
 
E1.1.5 Prescribed Text Books 
Begg,  D.,  S.  Fischer  and  R.  Dornbusch.  2003.​Economics.  Eighth  Edition.  MaGraw-Hill, 
London.ISBN-13: 978-007710775-8 
 
McEachern,  W.  A.  2003.  ​Economics:  A  Contemporary  Introduction.  Thomson 
South-Western,United States of America. ISBN: 0-324-07291-0 
 
 
E1.1.6 Recommended Text Book 
Besanko,  D.  A.  And  Braetigum,  R.  R.2011.  ​Microeconomics,​Fourth  Edition,  John  Wiley 
and Sons Inc, United States of America.ISBN: 978-0-470-56358-8 
 
 
Frank, R.H., 2008. ​Microeconomics and Behavior,​ Seventh Edition, McGraw-Hill, New 
York. ISBN 978-0-07-337573-1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
E1.110: INTRODUCTION TO MACROECONOMIC THEORY 
 
E1.1.1 Course Aim 
This course is designed to introduce students to the study of macroeconomics. The 
course essentially deals with the concepts of national income determination, money 
and banking, public finance and international trade. Examples and applications must 
be drawn from Zambia. 
 
E1.1.2 Course Objectives 
By the end of this course students are expected to:  
● Demonstrate an understanding of the nature and methodology of 
macroeconomics. 
● Show knowledge of the concepts of national income determination, money and 
banking, public finance, and international economics. 
● Demonstrate the foundation necessary for the study of intermediate 
macroeconomics. 
E1.1.3 Course Content 
 1. Study and Methodology of Macroeconomics 
● Basic Definitions 
● Normative and positive approach; 
● Basic concepts: scarcity, rationality, opportunity costs, PPF, 
● The Basis for Trade 
● The Gains from Trade 
● Absolute Advantage 
● Comparative Advantage 
● Terms of Trade 
● Protectionism 
 
2. National Income 
● Circular Flow. 
● National Income Accounting 
● Real vs. nominal – price indices 
● Determinants of national income; income and expenditure model (Keynes in 
his simplest form). 
 
3. Unemployment 
● Definition 
● Types 
● Causes and cure 
● Effects. 
 
4. Inflation 
● Definitions 
● Causes and cures 
● Effects 
 
5. Government Sector 
● Public Finance. 
● The budget incl. debt management. 
● Fiscal Policy. 
 
6. The Monetary Sector 
● What is money? 
● The banking system and the Central Bank. 
● Monetary Policy. 
 
7. External Sector 
● Balance of Payments 
 ● The Foreign Exchange Market 
● Determination of Exchange Rates  
● Exchange Rate Regimes 
 
E1.1.4 Method of Teaching 
Four contact hours per week lectures. 
 
 
E1.1.5 ASSESMENT​: ​CA; 40% (a combination of Tests and quizzes ) 
: Final Exam; 60% 
 
E1.1.6 Required Reading 
1. Ahuja . Macroeconomics Theory and practice (7​th​ Edition) ​S. Chand Publishing​. 
2. Begg, D., S. Fischer and R. Dornbusch. Economics. (7​th​ Edition). London: 
MaGraw-Hill, 2003. 
3. Robert Pindyk, Daniel Rubinfeld ( 2002). ​Microeconomics​ (fifth edition). Delhi; 
4. Pearson Education Books 
 
E1.1.7 Recommended Reading 
1. Hardwick, P. B. Khan and J. Langmead. ​Introduction to Modern Economics​. 
London: Longman, 2006. 
2. Karl E. Case and Ray C. Fair (2002). ​Principles of Economics​ (Sixth Edition). New 
York and London; Prentice Hall. 
3. Salvatore D and Eugene A. Duilo (Latest version). ​Principles of Economics​ (2​nd 
Edition). New York. Schaum’s Series. Tata McGraw-Hill 
4. Duilo Eugene (2006) ​Macroeconomics​ (Third Edition). New York; Schaum’s 
McGraw-Hill edition 
5. Paul Samuelson. ​Economics​. New York; McGraw-Hill