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DEPARTMENT 06

Consumer Theory and Demand

How consumers choose and how demand is formed. Advanced modules need calculus.
Entry Level: L1CBSE 12CUETUPSC Paper I

Syllabus Modules & Canonical Topics

5 Modules comprising 27 Canonical Topics.

06.1

Utility and Preferences

5 Canonical Topics
06.1.1
Cardinal and ordinal utility
L1
06.1.2
Total and marginal utility; diminishing marginal utility
L1
06.1.3
Consumer equilibrium: the equi-marginal principle
L1
06.1.4
Preference axioms
L3
06.1.5
Utility functions: Cobb-Douglas, substitutes and complements
L3
06.2

Indifference Curve Analysis

5 Canonical Topics
06.2.1
The budget line
L1
06.2.2
Indifference curves and their properties
L1
06.2.3
Marginal rate of substitution
L1
06.2.4
Consumer equilibrium with indifference curves
L1
06.2.5
Corner solutions
L3
06.3

Demand

5 Canonical Topics
06.3.1
Demand and its determinants
L1
06.3.2
The law of demand and its exceptions: Giffen and Veblen goods
L1
06.3.3
Movement along versus shift of the demand curve
L1
06.3.4
From individual to market demand
L1
06.3.5
Price-consumption, income-consumption and Engel curves
L2
06.4

Elasticity of Demand

5 Canonical Topics
06.4.1
Price elasticity of demand
L1
06.4.2
Measuring elasticity: percentage, total outlay and geometric methods
L1
06.4.3
Income elasticity of demand
L2
06.4.4
Cross-price elasticity of demand
L2
06.4.5
Uses of elasticity: pricing, taxation and policy
L2
06.5

Advanced Consumer Theory

7 Canonical Topics
06.5.1
Consumer surplus
L2
06.5.2
Income and substitution effects: Hicks and Slutsky
L3
06.5.3
Revealed preference
L3
06.5.4
The Slutsky equation
L4
06.5.5
Marshallian and Hicksian demand; duality
L4
06.5.6
Indirect utility and expenditure functions
L4
06.5.7
Compensating and equivalent variation
L4
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