CMA Foundation Fundamentals of Economics and Management Syllabus

Fundamentals of Economics and Management syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Fundamentals of Economics and Management in CMA Foundation, not a summary of it.

1. 1

   Basic Concepts of Economics

   3 topics

   • Introduction to Economics
   • Basic Problems of an Economy
   • Role of Government in Different Economies
2. 2

   Theory of Demand and Supply

   3 topics

   • Law of Demand and Elasticity of Demand
   • Theory of Consumer Behavior
   • Law of Supply and Elasticity of Supply
3. 3

   Theory of Production and Cost

   3 topics

   • Laws of Production - Law of Variable Proportions
   • Laws of Returns to Scale
   • Concept of Cost and Revenue
4. 4

   Forms of Market

   4 topics

   • Different Forms of Market - Perfect Competition
   • Monopoly
   • Monopolistic Competition
   • Oligopoly
5. 5

   National Income

   3 topics

   • Concepts and Measurement of National Income
   • Circular Flow of Income
   • National Income Accounting
6. 6

   Business Cycles

   2 topics

   • Phases of Business Cycles
   • Causes and Impact of Business Cycles
7. 7

   Management Process

   5 topics

   • Introduction to Management
   • Planning and Decision Making
   • Organizing
   • Directing
   • Controlling
8. 8

   Organizational Structure

   3 topics

   • Types of Organizational Structures
   • Delegation of Authority
   • Decentralization
9. 9

   Communication

   2 topics

   • Types and Process of Communication
   • Barriers to Effective Communication
10. 10

    Motivation and Leadership

    2 topics

    • Theories of Motivation
    • Leadership Styles and Theories

Fundamentals of Economics and Management flashcards for CMA Foundation

24 of 52 cards from the Fundamentals of Economics and Management deck — real questions with worked answers.

1. What is the definition of Economics according to Lionel Robbins?

   Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.

2. What are the two main branches of Economics and what does each study?

   Microeconomics studies individual units (consumers, firms, prices of single goods); Macroeconomics studies the economy as a whole (national income, employment, inflation, growth).

3. What are the three central/basic problems of every economy?

   (1) What to produce and in what quantities, (2) How to produce (technique/resource combination), and (3) For whom to produce (distribution of output).

4. Why do the basic economic problems arise?

   They arise because of scarcity of resources relative to unlimited human wants, which forces choice and allocation among alternative uses.

5. What does the Production Possibility Curve (PPC) illustrate?

   The maximum combinations of two goods an economy can produce with given resources and technology; it shows scarcity, choice, and opportunity cost, and is concave due to increasing opportunity cost.

6. What is opportunity cost?

   The value of the next best alternative foregone when a choice is made.

7. How are the central problems solved in a capitalist (market) economy?

   By the free price mechanism / market forces of demand and supply, with private ownership and profit motive guiding decisions, and minimal government interference.

8. How are economic problems solved in a socialist (centrally planned) economy?

   By a central planning authority that owns resources and decides what, how, and for whom to produce, aiming at social welfare rather than profit.

9. What is a mixed economy?

   An economy where both the private sector and the government (public sector) coexist and jointly decide allocation of resources, combining the market mechanism with state planning.

10. What are the main roles/functions of government in an economy?

    Allocation function (provide public goods, correct market failure), distribution function (reduce inequality via taxes/transfers), and stabilization function (control inflation, unemployment, growth).

11. State the Law of Demand.

    Other things remaining constant, as the price of a good falls its quantity demanded rises, and as price rises quantity demanded falls — an inverse price-quantity relationship.

12. What are the exceptions to the Law of Demand?

    Giffen goods, Veblen/prestige goods, expectation of future price changes, ignorance, and necessities of life.

13. Give the formula for price elasticity of demand (Ed).

    Ed = (Percentage change in quantity demanded) / (Percentage change in price) = (ΔQ/Q) ÷ (ΔP/P).

14. Name the five degrees of price elasticity of demand.

    Perfectly elastic (Ed=∞), Perfectly inelastic (Ed=0), Unitary elastic (Ed=1), Relatively elastic (Ed>1), and Relatively inelastic (Ed<1).

15. What are the main types of elasticity of demand other than price elasticity?

    Income elasticity of demand (responsiveness to income change) and Cross elasticity of demand (responsiveness to price change of a related good).

16. In the theory of consumer behaviour, what does the Law of Diminishing Marginal Utility state?

    As a consumer consumes more units of a good, the marginal (extra) utility derived from each successive unit goes on decreasing.

17. State the consumer equilibrium condition under the Law of Equi-Marginal Utility.

    A consumer maximizes utility when the marginal utility per rupee is equal across all goods: MUx/Px = MUy/Py = ... = MU of money.

18. What is an indifference curve, and what are its key properties?

    A curve showing combinations of two goods giving equal satisfaction; it slopes downward, is convex to origin, never intersects another, and higher curves mean higher satisfaction.

19. What is the consumer's equilibrium condition in the indifference curve approach?

    At equilibrium the budget line is tangent to the highest attainable indifference curve, where MRS(xy) = Px/Py.

20. State the Law of Supply.

    Other things remaining constant, the quantity supplied of a good rises as its price rises and falls as its price falls — a direct price-quantity relationship.

21. Give the formula for price elasticity of supply (Es).

    Es = (Percentage change in quantity supplied) / (Percentage change in price) = (ΔQ/Q) ÷ (ΔP/P).

22. State the Law of Variable Proportions (Law of Returns to a Factor).

    As more units of a variable factor are applied to a fixed factor, total product first increases at an increasing rate, then at a diminishing rate, and finally declines.

23. What are the three stages of the Law of Variable Proportions?

    Stage I: Increasing returns (TP rises at increasing rate); Stage II: Diminishing returns (TP rises at diminishing rate, MP positive but falling); Stage III: Negative returns (TP falls, MP negative). A rational producer operates in Stage II.

24. Distinguish between the Law of Variable Proportions and Returns to Scale.

    Law of Variable Proportions is a short-run concept with some factors fixed; Returns to Scale is a long-run concept where all factors are varied in the same proportion.

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