CSEET Economic and Business Environment Syllabus

Economic and Business Environment syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Economic and Business Environment in CSEET, not a summary of it.

1. 1

   Basics of Demand and Supply

   4 topics

   • Law of Demand
   • Law of Supply
   • Market Equilibrium
   • Elasticity of Demand and Supply
2. 2

   National Income Accounting

   3 topics

   • GDP, GNP, NNP
   • Methods of Calculating National Income
   • Problems in Measurement of National Income
3. 3

   Indian Financial Markets

   4 topics

   • Money Market
   • Capital Market
   • Stock Exchanges
   • Regulatory Bodies
4. 4

   Business Environment

   4 topics

   • Micro and Macro Environment
   • PESTEL Analysis
   • SWOT Analysis
   • Impact of Globalization

Economic and Business Environment flashcards for CSEET

19 of 50 cards from the Economic and Business Environment deck — real questions with worked answers.

1. State the Law of Demand.

   Other things being equal (ceteris paribus), as the price of a good falls, its quantity demanded rises, and as price rises, quantity demanded falls — an inverse relationship between price and quantity demanded.

2. Why does the demand curve slope downward from left to right?

   Because of the inverse price-quantity relationship, driven by the law of diminishing marginal utility, the income effect, the substitution effect, and the entry of new buyers at lower prices.

3. Distinguish between a movement along the demand curve and a shift of the demand curve.

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

4. Name the main exceptions to the Law of Demand.

   Giffen goods (inferior staples), Veblen/status goods, goods expected to change in price (price expectations), necessities, and situations of ignorance — where demand may rise as price rises.

5. What is a Giffen good?

   An inferior good for which demand increases as its price rises (and falls as price falls), because the negative income effect outweighs the substitution effect — a key exception to the Law of Demand.

6. State the Law of Supply.

   Other things being equal, as the price of a good rises, the quantity supplied increases, and as price falls, quantity supplied decreases — a direct (positive) relationship between price and quantity supplied.

7. Why does the supply curve slope upward from left to right?

   Higher prices raise profitability, encouraging existing producers to supply more and attracting new firms into the market; the positive price-quantity relationship gives the curve its upward slope.

8. List the main exceptions to the Law of Supply.

   Agricultural goods (perishables), labour supply (backward-bending), goods of artistic/rare nature with fixed supply, expectation of future price changes, and clearance/distress sales.

9. What is market equilibrium?

   The state where quantity demanded equals quantity supplied at a particular price (the equilibrium price), so there is neither surplus nor shortage and there is no tendency for price to change.

10. What happens in a market when price is above the equilibrium price?

    Quantity supplied exceeds quantity demanded, creating a surplus (excess supply), which pushes the price down toward equilibrium.

11. What happens in a market when price is below the equilibrium price?

    Quantity demanded exceeds quantity supplied, creating a shortage (excess demand), which pushes the price up toward equilibrium.

12. How does an increase in demand (rightward shift) affect equilibrium, supply unchanged?

    Both the equilibrium price and the equilibrium quantity rise.

13. How does an increase in supply (rightward shift) affect equilibrium, demand unchanged?

    The equilibrium price falls and the equilibrium quantity rises.

14. Define price elasticity of demand (PED).

    The degree of responsiveness of quantity demanded to a change in the good's price, measured as the percentage change in quantity demanded divided by the percentage change in price.

15. Give the formula for price elasticity of demand.

    PED = (% change in quantity demanded) / (% change in price) = (ΔQ/Q) ÷ (ΔP/P). It is normally negative, so the absolute value is used.

16. What do the values Ed > 1, Ed < 1, and Ed = 1 indicate for elasticity of demand?

    Ed > 1 = elastic demand; Ed < 1 = inelastic demand; Ed = 1 = unitary elastic demand.

17. What are perfectly elastic and perfectly inelastic demand?

    Perfectly elastic demand (Ed = ∞) means quantity changes infinitely at a single price (horizontal curve); perfectly inelastic demand (Ed = 0) means quantity does not change with price (vertical curve).

18. List the main determinants of price elasticity of demand.

    Availability of substitutes, nature of the good (necessity vs luxury), proportion of income spent, number of uses, durability, time period, and habit/addiction.

19. Define income elasticity of demand and its formula.

    It measures responsiveness of demand to a change in consumer income: Income Elasticity = (% change in quantity demanded) / (% change in income). Positive for normal goods, negative for inferior goods.

See more Economic and Business Environment flashcards →

Planning Economic and Business Environment for CSEET

Economic and Business Environment (CSEET) FAQ