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CODE DPB 10013
NAME MICROECONOMICS
CREDIT HOUR 3
FACE TO FACE 4 hour / week
PRE-REQUISITE(S) NONE
PROGRAMME DIPLOMA IN ISLAMIC BANKING AND FINANCE
VERSION 230419_1
DATE EFFECTIVE June2019
STRUCTURE COMPULSORY / COMMON CORE / DISPLINE CORE / SPECIALIZED / EFECTIVE
CLO
1. CLO1 : Interpret basic theory and concepts of microeconomics. ( C2 , PLO 1 )
2. CLO2 :Apply the knowledge of microeconomics theories to solve the business problems. ( C3 , PLO
5 )
3. CLO3 :Discuss clearly the impact of economic changes towards market equilibrium.
PLO 1. PLO 1:Apply principles of Islamic banking, financial service and compliance in accordance with
emerging changes and challenges in Islamic banking and finance field
2. PLO 5:Use digital applications and interpret data in Islamic banking and finance operation
3. PLO 7:Participate in acquiring new knowledge and entrepreneurship relating activities
ASSESSMENT Test (1) – 10%
Quiz (2) – 10%
End of chapter (2) – 20%
Case study (1) – 10%
Final examination (1) – 50%
SYLLABUS 1.0 INTRODUCTION TO MICROECONOMICS
Describe microeconomic in general, economic problems, world economy system
RTA (03 : 01)
2.0 THE DEMAND AND SUPPLY THEORY
Law of demand and supply, demand curve (individual and market) and supply curve (firms and industries),
factors influencing demand and supply and exceptional demand and supply curve. (RTA 06:02)
3.0 MARKET EQUILIBRIUM
Skills in analyzing the effect of changes in demand and supply towards market equilibrium, solve
problems, make decisions by analyzing of market equilibrium using table, diagram and mathematical
concepts, government intervention RTA (06:02)
4.0 PRICE ELASTICITY OF DEMAND AND SUPPLY
Price elasticity of demand and supply, skill in measuring the elasticity value, demonstrates and
understands the degree of demand and supply elasticity and analyze the relationship between price
elasticity of demand and total revenue, factors influencing the elasticity of demand and supply. RTA
(06:02)
5.0 PRODUCTION THEORY
Factors of production, terms and concepts of production, law of diminishing marginal returns, stages of
production, short run production function. RTA (06 : 02)
6.0 PRODUCTION COST
Short run costs, long run costs, the relationship between productivity curve and cost curve, the concept of
optimum production level, economics of scale and diseconomies of scale. RTA(06 : 02)
7.0 DETERMINANT OF OUTPUT LEVEL AND MARKET PRICE STRUCTURE

DPB 10013 MICROECONOMICS (INTRODUCTION)

The study of;
How individuals and societies
use limited resources to
satisfy unlimited wants, and
How such choices are made

1. Land
Naturally occurring resource
Supply of land inherently fixed
on location and geography
Value of land is dependent on
quality and location

2. Labour
 Physical and intellectual services
 Labourers:
1. may be skilled or unskilled
2. Are unique and have feelings
3. Offer services but are not to be exploited
4. Can be moved from one location to another
5. Differ in efficiency and productivity

3.Capital
 Consists of assets such as money, equipment,
machinery and raw materials
 Capital can be moved from one location to
another, and can be increased or decreased

4.Entrepreneur
 A person with the skills and ability to
organize production and bear risks
 Manages a firm and functions as a leader,
planner and co-ordinator of the firms
activities

Types
of
goods
Economics goods
-consumer goods
-Capital goods
Free goods
Public goods
Finished
goods

FIELDS OF ECONOMICS
MICROECONOMICS MACROECONOMICS
 is the study of small economic
units, i.e individuals and firms.
 The focus of microeconomic
studies or price theory is how
economic agents such as
individuals, households, firms and
producers make economic
decisions to achieve their
respective goals.
 Also discusses how the prices of
goods and factors of production,
wages, rents and interest rates are
determined.
 Is the overall study of a country’s
economic activities and main
economic sectors.
 Is also known as the theory of
income determination
 A microeconomic analysis focuses
on the economy as a whole.
 Focus on a general price level, not
on the prices of individual items.
 Problems are focused on
consumption and investment as the
main variables in the theory of
national income.
 Monetary studies involve studies on
banks and national financial
institutions.

a. Problems of Scarcity.
 Problem of scarcity occur when goods and services are
limited compared to man’s unlimited wants and desires.
This problem occurs due to limited supply of natural
resources, time, energy, finances and factors of
production.
 Individuals have problems of scarcity of time for
recreation, study and entertainment as well as scarcity of
money to pay for fees and to purchase food, drinks and
clothes.
 Firms face problems of scarcity of capital caused by
limited economic resources. For example, a firm may not
have sufficient capital to carry out international projects.
 The government faces problems of scarcity of financial
resources and revenue to build basic amenities for society
such as schools, clinics and roads.

b. Problems of Choice
 When the scarcity, choices have to be made.
 Everyone cannot have what he or she wants, so
they have to choose from the available
alternatives.
 Arise when we are faced with problems of scarcity
 Consumers need to make choices in order to
maximize satisfaction, while producers need to
make choices in order to maximize profits.
 Unlimited demand is managed according to
priorities and rational choices based on an
individual’s current budget.

c. Opportunity cost
 The cost of one choice in terms of the best
forgone alternative. If you cannot obtain
what you need, then you have to choose
among the alternatives.
 Arises from limited factors of production

a. What mix of goods and services will be produced
 In a market economy, the interaction of self-interested
buyers and sellers determines the mix of goods and
services that are produced
 There are insufficient available economic resources to
fulfill man’s unlimited wants.
 The determination of the goods to be produced by a
country determines the pattern of allocation of
available economic resources to the various economic
activities
 The pattern of allocation of economic resources is
determined to ensure that available are efficiently used
to produced goods and services to yield maximum
satisfaction to the economy as a whole
 Due to limited factors of production, not all goods that
a society demands can be produced.

b. How much goods and services should be
produced
 To overcome this basic economic problem, a
producer must identify the quantity of demand in
the market
 If there is a high demand for a particular good, the
producer will increase production of the good. If
there is a low demand, the producer must decrease
the production.
 Due to limited factors of production, excess
production in wastage of factors of production.
Therefore, the government’s main aims to ensure
sufficient production of goods and services.

c. How is output produced
 In a market economy, profit-maximizing producers
will be expected to select a mix of resources that
result in the lowest possible level of cost
 Production techniques are divided into labour-
intensive and capital-intensive techniques
 In the cost of labour is less than the cost of capital,
the producer selects the labour-intensive
production method.

d. For whom should the product be produced
 Deals with who gets what
 Detrmined by the interaction of buyers and sellers
in both output and resource markets
 Producer produces a good for people who can
afford the cost of the good

CAPITALIST(FREE
MARKET)
SOCIALIST
(CENTRALLY
PLANNED)
MIXED ISLAM

 CHARACTERISTICS
1. Ownership of resources
2. Decision maker
3. Price determination
4. Freedom to reap profits
5. Freedom of choice
6. Production objective
 Solving basic economic problems
 Merits and demerits of economic systems

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DPB 10013 MICROECONOMICS (INTRODUCTION)

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DPB 10013 MICROECONOMICS (INTRODUCTION)