CBSE Class 12 Board Exam Economics Syllabus

Economics syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Economics in CBSE Class 12 Board Exam, not a summary of it.

1. 1

   Introductory Microeconomics

   3 topics

   • Consumer's Equilibrium and Demand
     • Utility analysis and indifference curves
     • Law of demand and demand curve
     • Price elasticity of demand
   • Producer Behaviour and Supply
     • Production function and returns to a factor
     • Cost and revenue concepts
     • Supply and elasticity of supply
   • Forms of Market and Price Determination
     • Perfect competition and its features
     • Monopoly and monopolistic competition
     • Equilibrium price and effects of shifts
2. 2

   Introductory Macroeconomics

   4 topics

   • National Income and Related Aggregates
     • Circular flow of income
     • Methods of calculating national income
     • GDP, GNP and real vs nominal income
   • Money and Banking
     • Functions of money and supply
     • Commercial banks and credit creation
     • Central bank and its functions
   • Determination of Income and Employment
     • Aggregate demand and supply
     • Investment multiplier
     • Excess demand, deficient demand and measures
   • Government Budget and Balance of Payments
     • Components of government budget
     • Budget deficits
     • Foreign exchange rate and balance of payments
3. 3

   Indian Economic Development

   3 topics

   • Development Experience and Economic Reforms
     • Indian economy on the eve of independence
     • Five year plans
     • Economic reforms since 1991 (LPG)
   • Current Challenges Facing the Indian Economy
     • Poverty and human capital formation
     • Rural development and employment
     • Infrastructure and sustainable development
   • Comparative Development Experiences
     • Comparison with China and Pakistan
     • Developmental indicators

Economics flashcards for CBSE Class 12 Board Exam

23 of 50 cards from the Economics deck — real questions with worked answers.

1. What is the consumer's equilibrium condition under the utility (cardinal) approach for a single commodity?

   Equilibrium is where Marginal Utility (MU) = Price (P), i.e., MUx/Px = 1. The consumer buys up to the point where the marginal utility of the good equals its price (in terms of money).

2. State the Law of Diminishing Marginal Utility.

   As a consumer consumes more units of a commodity, the marginal utility derived from each successive unit goes on decreasing, other things remaining constant.

3. What is the consumer's equilibrium condition under the Indifference Curve (ordinal) approach?

   Equilibrium is where the budget line is tangent to the indifference curve, i.e., MRS = Px/Py, and the indifference curve is convex to the origin (MRS is diminishing).

4. Define Marginal Rate of Substitution (MRS).

   MRS is the rate at which a consumer is willing to give up units of one good to obtain one more unit of another good while keeping total satisfaction (utility) constant. MRS = ΔY/ΔX.

5. State the Law of Demand.

   Other things being equal, there is an inverse relationship between the price of a commodity and its quantity demanded: as price falls, quantity demanded rises, and vice versa.

6. What is the formula for Price Elasticity of Demand by the percentage method?

   Ed = (Percentage change in quantity demanded) / (Percentage change in price) = (ΔQ/Q) / (ΔP/P). It is negative, but expressed in absolute terms.

7. Distinguish between a normal good and an inferior good in terms of income effect.

   For a normal good, demand rises as income rises (positive income effect). For an inferior good, demand falls as income rises (negative income effect).

8. What is the difference between a movement along a demand curve and a shift of the demand curve?

   A movement along the curve (extension/contraction) is caused by a change in the good's own price. A shift (increase/decrease) is caused by changes in other factors like income, tastes, or prices of related goods.

9. Define Total Product (TP), Average Product (AP) and Marginal Product (MP).

   TP = total output produced by all units of a variable factor. AP = TP/units of variable factor. MP = change in TP from one additional unit of the variable factor (MPn = TPn − TPn-1).

10. State the Law of Variable Proportions.

    As more units of a variable factor are added to fixed factors, Marginal Product first increases, then decreases, and finally becomes negative — passing through stages of increasing, diminishing, and negative returns.

11. Distinguish between fixed cost and variable cost.

    Fixed cost does not change with the level of output (e.g., rent) and exists even at zero output. Variable cost changes directly with output (e.g., raw materials) and is zero at zero output.

12. What is the relationship between Average Cost (AC), Average Variable Cost (AVC) and Average Fixed Cost (AFC)?

    AC = AFC + AVC. AFC continuously falls as output rises; the gap between AC and AVC narrows but never disappears, since AFC approaches zero but never becomes zero.

13. State the Law of Supply.

    Other things being equal, there is a direct (positive) relationship between the price of a commodity and its quantity supplied: as price rises, quantity supplied rises, and vice versa.

14. What is the relationship between Marginal Cost (MC) and Average Cost (AC)?

    When MC < AC, AC falls; when MC > AC, AC rises; MC cuts AC at AC's minimum point. MC always intersects both AVC and AC at their lowest points.

15. Define Price Elasticity of Supply.

    It measures the responsiveness of quantity supplied to a change in price. Es = (Percentage change in quantity supplied) / (Percentage change in price).

16. List the main features of perfect competition.

    Very large number of buyers and sellers, homogeneous products, free entry and exit, perfect knowledge, perfect factor mobility, and no transport costs. Firms are price-takers; the firm faces a perfectly elastic (horizontal) demand curve.

17. List the main features of a monopoly market.

    Single seller, no close substitutes, restricted entry of new firms, and price-making power. The firm faces a downward-sloping demand curve; AR > MR.

18. What are the main features of monopolistic competition?

    Large number of sellers, product differentiation, freedom of entry and exit, selling costs (advertising), and partial price control. The demand curve is downward-sloping and more elastic.

19. Compare AR and MR under perfect competition versus monopoly.

    Under perfect competition, AR = MR = Price (both horizontal). Under monopoly (and imperfect competition), AR > MR and both slope downward.

20. What is the equilibrium condition of a firm under any market structure?

    A firm is in equilibrium where MC = MR and MC cuts MR from below (MC is rising). This maximizes profit (or minimizes loss).

21. What is market equilibrium price?

    The price at which quantity demanded equals quantity supplied (Qd = Qs). There is neither excess demand nor excess supply; it is determined at the intersection of demand and supply curves.

22. What is the effect of an increase in demand (with supply constant) on equilibrium price and quantity?

    Both equilibrium price and equilibrium quantity rise.

23. Differentiate between a price ceiling and a price floor.

    A price ceiling is a government-imposed maximum price below the equilibrium (causes shortage/excess demand, e.g., rent control). A price floor is a minimum price above equilibrium (causes surplus/excess supply, e.g., minimum support price).

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