Economics with Islamic Orientation by Zubair HasanEconomics with Islamic Orientation by Zubair Hasan

Economics with Islamic Orientation

byZubair Hasan

Paperback | June 14, 2015

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This book, spread over 24 chapters, covers Economics with a greater orientation towards Islamic viewpoints. It is also suitable for students studying the subject in developing economies. The book combines the material of two earlier texts of the authoraMacroeconomics (2009) and Fundamentals ofMicroeconomics (2011). The material has been refined and updated; new explanatory diagrams and illustrations have been included.
Prof. Dr. Zubair Hasan is an economist and acclaimed author. He is currently a Professor at INCEIF - The Global University of Islamic Finance. He has published numerous articles, commentaries and book reviews in academic journals, in addition to authoring several books. including Theory of Profit (Vikas, 1975), Introduction to Microec...
Title:Economics with Islamic OrientationFormat:PaperbackDimensions:720 pages, 10.24 × 7.48 × 1.19 inPublished:June 14, 2015Publisher:Oxford University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:983471405X

ISBN - 13:9789834714055


Table of Contents

1. What is Economics About?1.1 Wants and Scarcity1.1.1 Choice-making1.1.2 Values and economics1.2 Definition and Scope1.2.1 Behavioural norms1.2.2 Nature and scope1.3 Methodological Pitfalls1.3.1 Fallacy of composition1.3.2 Causation fallacies1.3.3 Tautological reasoning1.3.4 Exclusionist argumentation1.4 Methods of Economics1.5 Money and Exchange1.6 Microeconomics and Macroeconomics1.7 Problems Economists Seek to Resolve1.8 The Language of Economics1.9 Economic Systems1.9.1Axiomatic differences1.9.2 Property rights1.9.3 Operational mechanism1.9.4 Motivation scheme1.9.5 Societal prioritiesSummaryGlossaryConcepts for reviewCase studyTest questions2. Demand and Supply2.1 Markets, Goods and Prices2.2 Early Markets: Example2.3 Demand for Commodities2.4 The Law of Demand2.4.1 Assumptions2.4.2 Why do most demand curves have a negative slope?2.4.3 Exceptions2.5 Changes in Demand2.5.1 Causes2.6 Supply of Commodities2.6.1 Law of supply2.6.2 Assumptions2.7 Changes in Supply2.7.1 Causes of change in supply2.8 Market Equilibrium2.9 Demand and Supply: Relative importance2.9.1 Role of price2.10 Equilibrium: Static versus Dynamic2.11 Applications2.11.1 Administered pricesSummaryGlossaryConcepts for reviewCase studyTest questions3. Elasticity of Demand and Supply3.1 The Concept of Elasticity3.2 Price Elasticity of Demand3.3 The Measurement3.3.1 Proportionate change method3.3.2 Total outlay method3.3.3 The line segment ration or the point method3.3.4 Average revenue and marginal revenue rule3.4 Determinants of EDP3.4.1 Significance of EDP3.5 Elasticity of Demand: Non-price Concepts3.5.1 Cross elasticity of demand3.5.2 Income elasticity of demand3.6 Price Elasticity of Supply3.7 Determinants of Price Elasticity of Supply3.7.1 Cost elasticity3.8 Elasticity and Islamic EconomicsSummaryGlossaryConcepts for reviewCase studyTest questions4. Consumption: Analysis and Behavioural Forms4.1 Islam and Consumption4.2 Wants, Needs and Desires4.3 Consumer Behaviour4.3.1 Utility: what it is and what it is not4.3.2 Utility maximization4.4 Consumer's Equilibrium4.4.1 Utility analysis4.4.2 Indifference curves and utility4.4.3 Income effect4.4.4 Substitution effect4.4.5 Price effect and its components4.5 Indifference Curves: Different ShapesSummaryGlossaryConcepts for reviewCase studyTest questions5. Production and Cost Functions5.1 Production: Philosophical and Technical Aspects5.1.1 Factors of production5.1.2 Time and factor (input) classification5.2 Firms and Their Objectives5.2.1 Maximization and minimization5.3 The Production Function5.3.1 Properties of isoquants5.4 Short-run Production Function5.4.1 Total, average and marginal output5.5 Short-run Production Costs5.5.1 Total cost5.5.2 Output and costs5.6 Long-run Cost Curves5.6.1 Firm size and cost5.6.2 Economies of scale5.6.3 Diseconomies of scale5.6.4 Scale, efficiency and social responsibility5.7 Explicit and Implicit Costs5.7.1 Normal profit5.8 Cobb-Douglas production function and returnsSummaryGlossaryConcepts for reviewCase studyTest questions6. Perfect Competition6.1 Market Structures6.2 Profit Maximization6.3 Perfect Competition6.3.1 The model6.3.2 Pure competition6.4 Profit Maximization in the Short Run6.4.1 Total revenueatotal cost approach6.4.2 Marginal costamarginal revenue approach6.4.3 Relationship between MP, AP, MC and AVC6.4.4 Cost efficiency again6.4.5 Profit maximization in the long run6.5 Producersa Surplus6.7 Effect of a Per Unit Tax on OutputSummaryGlossaryConcepts for reviewCase studyTest questions7. Monopoly and Pricing Power7.1 The Other Limit7.2 Nature of Monopoly Power7.2.1 Measuring monopoly power7.3 Sources of Monopoly Power7.3.1 Natural monopolies7.3.2 Legal monopolies7.3.3 Scale monopolies7.3.4 Islam and monopolies7.4 Monopoly and Profit Maximization7.5 Factors Influencing Pricing Decision7.6 Price Discrimination7.7 Rules for Initial Price Fixation7.8 Markup Pricing and Islamic Banks7.9 Monopoly and Taxation7.10 Monopoly and Social Welfare7.11 Why Do Monopolies Exist?7.12 Regulation of PriceSummaryGlossaryConcepts for reviewCase studyTest questions8. Monopolistic Competition and OligopolyA. Monopolistic Competition8.1 New Structures8.2 Distinctive Features8.3 Price and Output8.3.1 Short-run equilibrium8.3.2 Long-run equilibrium8.4 Inefficiency of the Structure8.5 The Variety Issue8.5.1 Islamic angle8.6 Advertising AgainB. Oligopoly8.7 Salient Features8.8 Concentration Measurements8.9 Firms' Behaviour8.10 Models8.10.1 The kinked demand theory8.10.2 Collusion: motivations8.10.3 Price leadership8.11 Efficiency Vis-A-Vis OligopolySummaryGlossaryConcepts for reviewCase studyTest questions9. Factor Pricing and Equity9.1 From Production to Distribution9.2 Marginal Productivity and Distribution: The Theory9.3 Evaluation of the Theory9.4 Factor Returns in Monopolistic Markets9.5 Islam and Income Distribution9.5.1 Equity criteria9.6 Role of the stateSummaryGlossaryConcepts for reviewCase studyTest questions10. Wages of Labour10.1 Labour and Its Peculiarities10.2 Demand For Labour10.2.1 Factors affecting demand for labour10.3 Supply of Labour10.3.1 Changes in labour supply10.3.2 Factors influencing labour supply10.4 Labour Market Equilibrium10.5 Monopsony10.6 Some Other Issues10.6.1 Islam and labour10.6.2 Minimum wage10.6.3 Collective bargaining10.6.4 Wage differences10.7 Profit-sharingSummaryGlossaryConcepts for reviewCase studyTest questions11. Rent, Interest and ProfitA. Rent11.1 The Concept and Theory11.2 Ricardo on Rent11.2.1 Criticism of the theory examined11.2.2 Rent and price11.3 Modern Theory11.3.1 Some implications11.4 Rent in Islamic EconomicsB. Interest11.5 What is Interest?11.5.1 Why pay interest?11.5.2 Interest rate determination11.6 Why Islam Prohibits Interest11.6.1 Interest payments are illogical and unjust11.6.2 Islamic alternativeC. Profit11.7 Indifferent Attitude11.7.1 Issues in profit theorySummaryGlossaryConcepts for reviewCase studyTest questions12. Markets, Environment and Sustainability12.1 Markets versus Welfare12.1.1 The fundamental theorem12.1.2 Three basic questions12.2 Tools for Analysis12.2.1 Pollution and absorption12.2.2 Demand and supply framework12.3 Remedial Measures12.3.1 Coasian theorem: creation of property rights12.3.2 Standard setting and pollution12.3.3 Pollution charges12.4 Sustainability12.4.1 Islamic viewpointSummaryGlossaryCases for reviewCase studyTest questions13. Money, Banking and Prices13.1 Money: Definition and Functions13.2 State and Money13.2.1 From metals to paper13.3 The Rise of Central Banks13.3.1 Issuance of currency notes13.3.2 The currency principle: representative paper money13.3.3 The banking principle: convertible paper money13.4 Methods of Note Issue13.5 Money and Economies13.6 Money and Prices13.7 Price Level Changes13.8 Money Supply and Price Level13.9 The Rise of Islamic Banking13.10 The Distinctive Features of the Islamic Approach to Finance13.10.1 Ban on giving or taking interest13.10.2 Avoidance of gharar or indeterminacy13.10.3 Participatory financing13.10.4 Enhanced customer protection13.10.5 Asset-based financeSummaryGlossaryConcepts for reviewCase studyTest questions14. Macroeconomics: Nature and Significance14.1 Macroeconomics: Content and Scope14.2 Policy Objectives14.2.1 Growth14.2.2 Full employment14.2.3 Distributive justice (equity)14.2.4 Stability14.2.5 Environmental care14.2.6 Poverty eradication14.2.7 Self-reliance14.3 Conflicts and Trade-Offs14.4 Role of the State14.5 Two Approaches14.6 Basic Assumptions14.7 GNP Growth and Human WelfareSummaryGlossaryConcepts for reviewCase studyTest questions15. National Income: Variants and Measurement15.1 National Income and Accounts15.2 A Simple Two-sector Model15.3 Productive and Unproductive Activities15.4 Intermediate Products and Final Products15.5 Input-output Tables15.6 Methods of Measuring National Product15.6.1 Expenditure method15.6.2 Output method15.6.3 Income method15.7 Personal and Disposable Income15.8 Some Special Transactions15.8.1 Sale of second-hand goods15.8.2 Interest on public debt15.8.3 Stock market transactions15.9 Domestic versus National Product15.10 Composition of Final Output15.10.1 The expenditure sale15.10.2 The income side15.11 Measurement of GNP in Developing CountriesSummaryGlossaryConcepts for reviewCase studyTest questions16. Aggregate Demand and Aggregate Supply16.1 Aggregative Concepts16.1.1 Equilibrium16.2 Price Level16.3 Aggregate Demand16.3.1 Why do aggregate demand curves slope downwards?16.4 Determinants of Aggregate Demand16.4.1 Private consumption16.4.2 Public consumption16.4.3 Private investment16.4.4 Public investment16.4.5 Net expenditures on exports16.4.6 Income variations abroad16.4.7 Foreign exchange rate16.5 Aggregate Supply16.5.1 Short-run supply curve16.5.2 Long-run supply curve: full employment16.6 Determinants of Aggregate Supply16.6.1 Input prices16.6.2 Prices of imported resources16.6.3 Market corrections16.6.4 Productivity16.6.5 Taxes and subsidies16.6.6 Regulation policy16.6.7 Socio-political environment16.7 Changes in Equilibrium16.7.1 Changes in aggregate demand and equilibrium16.7.2 Changes in aggregate supplySummaryGlossaryConcepts for reviewCase studyTest questions17. Aggregate Demand: Consumption and Investment17.1 Introduction17.2 Consumption and Savings Functions17.2.1 Why do average and marginal propensities differ?17.3 Some Complications17.3.1 How is GNP determined?17.3.2 Consumption, savings and investment17.3.3 The multiplier17.3.4 Business and the GNP17.3.5 Government and the GNP17.3.6 Multiplier versus stabilizing operatorsSummaryGlossaryConcepts for reviewCase studyTest questions18. Aggregate Supply: Factor Incomes and Savings18.1 Supply Side Economics: Origin and Characteristics18.2 Investment, Capital Formation and Production18.3 Investment: Types and Characteristics18.3.1 Plant and machinery purchases are irregular18.3.2 Fixity of capital in the short run18.3.3 Investment in inventories18.4 Role of Expectations and Profits18.4.1 Role of profit18.5 The Accelerator and the Checks18.6 Demand for Labour18.6.1 Money wage and price level flexibility18.6.2 Money wage floor model18.6.3 Evaluation of the model18.7 Employment and Wages in the Short Run18.7.1 Why are wage rates sticky downward?18.7.2 Phillips curve18.7.3 Wages, output and productivity18.8 Aggregate Supply and Taxation18.8.1 Labour supply18.8.2 Supply of capitalSummaryGlossaryConcepts for reviewCase studyTest questions19. Markets in Equilibrium: The IS-LM model19.1 Introduction19.2 Equilibrium of Goods and Services Market19.3 Investment, Interest and Income19.4 Savings, Interest and Income19.4.1 Position of the IS curve19.5 Money Market Equilibrium: The LM Curve19.5.1 Demand for money19.5.2 Nominal money and real money19.5.3 Supply of money19.5.4 The LM curve19.6 The ISaLM Model19.7 Dynamic Change and Equilibrium Adjustment19.8 Limitations of the IS-LM Model19.9 Modifications in the IS-LM ModelSummaryGlossaryConcepts for reviewCase studyTest questions20. Monetary Policy: Bases, Goals and Instruments19.9 Modifications in the IS-LM Model20.2 Quantity Theory of Money20.3 Demand for Money20.4 Money Supply Components20.5 Credit (Money) Creation by Banks20.5.1 State intervention20.6 Demand and Supply Mismatch20.6.1 Inflation20.6.2 What causes inflation?20.6.3 Deflation20.7 Goals and Targets20.8 Central Banks and Credit Control20.8.1 Bank rate policy20.8.2 Statutory reserve variations20.8.3 Profitainterest linkage20.8.4 Open market operations20.8.5 Moral suasion20.9 The Ailment and the CureSummaryGlossaryConcepts for reviewCase studyTest questions21. Fiscal Policy: Public Revenue and Expenditure21.1 Government and Economy21.2 Sources of Revenue21.3 Theories of Taxation21.4 Characteristics of a Good Tax System21.5 Tax Types a Direct and Indirect21.6 Price Elasticity and Incidence21.7 Cost and Incidence21.8 Objectives of Fiscal Policy21.9 Sukuk and Public Revenue21.10 Public Expenditure21.11 Islam and Fiscal Policy21.11.1 Sources of revenue21.12 Public Expenditure and IslamSummaryGlossaryConceptsCase studyTest questions22. National Income Distribution22.1 Introduction22.2 Measurement of Inequalities22.2.1 Limitations22.3 Growth and Equity Relationship22.3.1 The case of Malaysia22.4 Income: Generation and Distribution22.4.1 Asset distribution22.4.2 Redistributive measures and intergeneration equity22.4.3 Impact of macroeconomics variables on income distribution22.4.4 Effects of distribution on macroeconomic variables22.5 Limitations and Precautions22.6 Cross Country Income Inequalities22.7 Islamic Economics and Income DistributionSummaryGlossaryConcepts for reviewCase studyTest questions23. Inter-temporal and International Income Comparisons23.1 Introduction23.2 Inter-temporal Income Comparisons23.3 Real Income Measurement: Quantity and Price Indices23.3.1 Chain base indices23.4 Steps in the Construction of Price Indices23.4.1 Specifying the purpose of construction23.4.2 Choice of the base year23.4.3 Data collection23.4.4 Sources of data23.4.5 Deciding on a weighting system23.4.6 Combining the data23.5 Deflating the Nominal Aggregates23.5.1 Implicit GDP deflators and CPI compared23.6 Limitations of Index Numbers23.6.1 Real income and welfare23.6.2 Representative commodities and the weighting system23.6.3 Combining the data23.7 GNP Deflators23.8 International Comparisons23.8.1 World Bank atlas method23.8.2 The ICP conversion procedures23.8.3 Need for improvementSummaryGlossaryConcepts for reviewCase studyTest questions24. Open Economies: International Trade, Balance of Payments and Exchange Rates24.1 Introduction24.1.1 Gains from trade24.2 Basis of Trade: The Theory24.2.1 Absolute difference in costs24.2.2 Comparative differences in costs24.2.3 Terms of trade24.3 Barriers to Trade24.3.1 Free trade versus protection24.3.2 UNCTAD XI recommendations24.4 Balance of Payments24.4.1 Current account24.4.2 Capital and financial account24.5 Exchange Rates: Fixity versus Flexibility24.5.1 Fixed rates24.5.2 Flexible ratesSummaryGlossaryConcepts for reviewCase studyTest questionsBibliographyIndex