UGC NET Economics UNIT 1- MICROECONOMICS

(Summary Table)

(UGC NET & M.A. Economics Standard)

Topic	Core Concept / Definition	Key Formula / Relation / Diagram Reference	Major Economist(s)
1. Theory of Consumer Behaviour	Explains how a rational consumer allocates income to maximize satisfaction.	Utility Maximization: $M U_{X} / P_{X} = M U_{Y} / P_{Y}$ ; Budget Line: $P_{X} X + P_{Y} Y = M$	Alfred Marshall
2. Indifference Curve Analysis	Consumer equilibrium occurs at tangency of indifference curve and budget line.	$M R S_{X Y} = P_{X} / P_{Y}$ convex to origin	Hicks & Allen
3. Revealed Preference Theory	Preferences inferred from actual choices, not introspection.	Weak Axiom of Revealed Preference (WARP)	Paul Samuelson
4. Demand Function	Relationship between price and quantity demanded.	$Q_{d} = f (P, Y, T, P_{r}, E)$	Marshall
5. Elasticity of Demand	Measures responsiveness of demand to change in price, income, etc.	$E_{p} = \frac{Δ Q / Q}{Δ P / P}$	Marshall
6. Consumer Surplus	Extra satisfaction consumer derives over what he pays.	$C S = \int_{0}^{Q} D (Q) d Q - P Q$	Marshall
7. Cardinal Utility Analysis	Utility measurable in utils; based on diminishing marginal utility.	$M U = \frac{Δ T U}{Δ Q}$ ; $M U_{X} / P_{X} = M U_{Y} / P_{Y}$	Alfred Marshall
8. Ordinal Utility (Hicksian)	Consumer ranks bundles; equilibrium via indifference curves.	$M R S = P_{X} / P_{Y}$ ; Utility maximized where IC tangent to budget line	Hicks & Allen
9. Law of Demand	Price and demand inversely related, ceteris paribus.	$Q_{d} = a - b P$	Alfred Marshall
10. Giffen & Veblen Goods	Giffen goods show positive relation between P and Qd; Veblen goods due to status effect.	$\frac{d Q_{d}}{d P} > 0$	Sir Robert Giffen, Thorstein Veblen
11. Theory of Production	Shows relation between inputs and output.	$Q = f (L, K)$	J.B. Clark
12. Law of Variable Proportions	Short-run law: output increases at a decreasing rate beyond optimum input.	Three stages: Increasing, Diminishing, Negative returns	Marshall
13. Isoquant & Isocost	Isoquant = combinations of inputs giving same output; Isocost = same cost.	Equilibrium: $M R T S_{L K} = \frac{w}{r}$	Hicks
14. Returns to Scale	Long-run proportionate change in output due to change in all inputs.	CRS, IRS, DRS	Kaldor, Hicks
15. Cost Concepts	Relation between cost and output.	$T C = T F C + T V C$ ; $A C = T C / Q$ ; $M C = Δ T C / Δ Q$	Marshall
16. Short-run & Long-run Costs	In short run, some factors fixed; in long run, all variable.	LAC = Envelope of SAC curves	Marshall
17. Economies of Scale	Internal and external cost advantages due to size.	Decreasing LAC with scale	Alfred Marshall
18. Law of Supply	Positive relation between price and quantity supplied.	$Q_{s} = f (P)$	Marshall
19. Market Equilibrium	Achieved where demand = supply.	$Q_{d} = Q_{s}$ → $P^{}, Q^{}$	Walras
20. Perfect Competition	Many firms, homogeneous products, price takers, free entry/exit.	Profit max. at $M C = M R = P$	Cournot, Marshall
21. Monopoly	Single seller, price maker, downward-sloping demand curve.	$M R = M C$ ; $M R < P$ ; Lerner Index: $L = \frac{P - M C}{P}$	Joan Robinson
22. Monopolistic Competition	Product differentiation, many sellers, free entry.	$M R = M C$ in short run; Normal profit in long run	Chamberlin
23. Oligopoly	Few sellers, interdependence, strategic behavior.	Models: Cournot, Bertrand, Stackelberg, Kinked Demand	Cournot, Stackelberg, Sweezy
24. Duopoly	Two firms dominate the market.	Cournot: simultaneous output decisions; Stackelberg: leader–follower model	Cournot, Stackelberg
25. Price Discrimination	Same product sold at different prices without cost difference.	$M R_{1} = M R_{2} = M C$	Pigou
26. Game Theory	Analyzes strategic interdependence among rational players.	Payoff Matrix; Nash Equilibrium	John Nash
27. General Equilibrium Analysis	Simultaneous equilibrium in all markets.	Pareto Efficiency conditions: $M R S = M R T = M R T S$	Walras, Pareto
28. Pareto Optimality	No one can be made better off without making someone worse off.	Efficiency in exchange, production, and product mix	Vilfredo Pareto
29. Kaldor–Hicks Compensation Criterion	Welfare improves if gainers can compensate losers and still be better off.	Potential compensation principle	Kaldor & Hicks
30. Scitovsky Paradox	Logical inconsistency in Kaldor–Hicks test.	A→B and B→A both possible	T. Scitovsky
31. Social Welfare Function (SWF)	Social welfare depends on individual utilities.	$W = f (U_{1}, U_{2}, \dots, U_{n})$	Bergson & Samuelson
32. Utility Possibility Frontier (UPF)	Shows all efficient distributions of utilities.	Tangency of UPF & SWF → Maximum social welfare	Bergson, Hicks
33. Theory of Second Best	If one optimality condition fails, others may not hold.	Welfare can’t be improved by partial correction.	Lipsey & Lancaster
34. Externalities	Costs or benefits imposed on third parties without compensation.	Divergence between private & social cost/benefit	Pigou, Coase
35. Public Goods	Non-rival and non-excludable goods.	Free rider problem; Samuelson condition: $\sum M R S = M R T$	Paul Samuelson
36. Asymmetric Information	One party has more information than another.	Leads to adverse selection & moral hazard	Akerlof, Spence, Stiglitz
37. Adverse Selection	Hidden information before contract → low-quality participants.	Example: “Market for Lemons”	George Akerlof
38. Moral Hazard	Hidden actions after contract → risk-taking behavior.	Example: Insurance behavior	Stiglitz
39. Signaling & Screening	Tools to reduce info asymmetry.	Signaling (Spence); Screening (Stiglitz)	Spence, Stiglitz
40. Behavioral Economics	Incorporates psychology into rational choice models.	Prospect Theory; Bounded Rationality	Kahneman, Tversky, Simon

Quick Conceptual Recap

Theme	Core Question Answered	Key Equation / Idea
Consumer Behaviour	How individuals maximize satisfaction?	$M U_{X} / P_{X} = M U_{Y} / P_{Y}$
Producer Behaviour	How firms minimize cost or maximize output?	$M R T S_{L K} = w / r$
Market Structures	How firms interact and set prices?	$M C = M R$ ; varies by market type
Welfare Economics	How to judge social efficiency and welfare?	Pareto, Kaldor–Hicks, SWF
Information Economics	How imperfect info affects efficiency?	Adverse Selection, Moral Hazard

Suggested Readings

H.L. Ahuja – Advanced Microeconomic Theory
Koutsoyiannis, A. – Modern Microeconomics
Varian, H.R. – Microeconomic Analysis
Nicholson & Snyder – Intermediate Microeconomics
Ferguson & Gould – Microeconomic Theory
Pindyck & Rubinfeld – Microeconomics
Sen, Amartya – Collective Choice and Social Welfare

For Quick Exam Recall (UGC NET Keywords)

Consumer Equilibrium: $M R S = P_{X} / P_{Y}$
Producer Equilibrium: $M R T S = w / r$
Pareto Efficiency: $M R S = M R T = M R T S$
IS Curve (Goods Market): $Y = C + I + G$
LM Curve (Money Market): $M / P = L (Y, r)$
Phillips Curve: $π = π^{e} - β (u - u_{n})$
Rational Expectations: $Y = Y^{*} + α (π - π^{e})$

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