I.Com (Intermediate in Commerce) Principles of Economics Syllabus

Principles of Economics syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Principles of Economics in I.Com (Intermediate in Commerce), not a summary of it.

1. 1

   Introduction to Economics

   3 topics

   • Definitions of Economics
   • Scope and Importance of Economics
   • Basic Economic Concepts
2. 2

   Consumer Behaviour

   4 topics

   • Utility Analysis
   • Law of Diminishing Marginal Utility
   • Indifference Curve Analysis
   • Consumer's Equilibrium
3. 3

   Theory of Demand and Supply

   4 topics

   • Law of Demand and Demand Curve
   • Law of Supply and Supply Curve
   • Elasticity of Demand and Supply
   • Equilibrium of Demand and Supply
4. 4

   Production and Factors of Production

   3 topics

   • Meaning of Production
   • Factors of Production
   • Laws of Returns
5. 5

   Cost and Revenue Analysis

   3 topics

   • Concepts of Cost
   • Short Run and Long Run Costs
   • Total, Average and Marginal Revenue
6. 6

   Price and Output Determination

   3 topics

   • Market Structures
   • Perfect Competition
   • Monopoly
7. 7

   Factor Pricing and Distribution

   3 topics

   • Rent
   • Wages
   • Interest and Profit
8. 8

   National Income

   3 topics

   • Concepts of National Income
   • Methods of Measuring National Income
   • Circular Flow of Income
9. 9

   Money and Banking

   3 topics

   • Functions of Money
   • Quantity Theory of Money
   • Inflation and Deflation
10. 10

    Public Finance

    3 topics

    • Meaning and Scope of Public Finance
    • Canons of Taxation
    • Zakat and Ushr
11. 11

    International Trade

    3 topics

    • Importance of World Trade
    • International Specialization
    • Balance of Trade and Balance of Payments

Principles of Economics flashcards for I.Com (Intermediate in Commerce)

19 of 52 cards from the Principles of Economics deck — real questions with worked answers.

1. Who defined Economics as 'a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses'?

   Lionel Robbins, in his 1932 book 'An Essay on the Nature and Significance of Economic Science'. This is the scarcity definition.

2. How did Adam Smith define Economics, and what is this definition called?

   Adam Smith defined Economics as 'an inquiry into the nature and causes of the wealth of nations.' It is called the wealth definition. Smith is known as the Father of Economics.

3. How did Alfred Marshall define Economics?

   Marshall defined Economics as 'a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and use of the material requisites of wellbeing.' This is the welfare definition.

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

   Microeconomics studies individual units (a consumer, firm, or single market) — e.g., price determination of one good. Macroeconomics studies the economy as a whole — e.g., national income, employment, inflation.

5. State two reasons why Economics is important to study.

   It helps solve the central problem of scarcity and choice, guides efficient allocation of resources, aids government policy-making (taxation, budgeting), and helps individuals/firms make rational consumption and production decisions.

6. Why is Economics considered both a science and an art?

   It is a science because it studies cause-and-effect relationships systematically and forms laws. It is an art because it applies those laws to solve practical problems like poverty and unemployment.

7. What is the fundamental economic problem that gives rise to the subject of Economics?

   The problem of scarcity relative to unlimited human wants, which forces people to make choices about the allocation of limited resources among alternative uses.

8. Define 'scarcity' in Economics.

   Scarcity is the condition in which limited resources are insufficient to satisfy unlimited human wants. It is the root cause of all economic problems.

9. Define 'opportunity cost' and give an example.

   Opportunity cost is the value of the next-best alternative forgone when a choice is made. Example: if a farmer uses land to grow wheat instead of rice, the forgone rice output is the opportunity cost.

10. What is meant by 'choice' in Economics and why is it necessary?

    Choice is the act of selecting among alternative uses of scarce resources. It is necessary because wants are unlimited but resources are limited, so not all wants can be satisfied at once.

11. What are the four factors of production?

    Land, Labour, Capital, and Organisation (Entrepreneur). Their rewards are rent, wages, interest, and profit respectively.

12. Distinguish between 'wants' and 'goods' in Economics.

    A want is a desire backed by the ability and willingness to satisfy it. A good is any material thing or service that satisfies a human want and has utility.

13. Distinguish between economic goods and free goods.

    Economic goods are scarce and have a price (e.g., food, clothes). Free goods are available in unlimited quantity at zero price (e.g., air, sunlight) and are not the subject matter of Economics.

14. Define 'utility'.

    Utility is the power or capacity of a commodity to satisfy a human want. It is the want-satisfying power of a good or service.

15. What is the difference between Total Utility (TU) and Marginal Utility (MU)?

    Total Utility is the total satisfaction obtained from consuming all units of a commodity. Marginal Utility is the addition to total utility from consuming one more (additional) unit.

16. State the formula for Marginal Utility in terms of Total Utility.

    MUn = TUn − TUn−1, i.e., marginal utility of the nth unit equals total utility of n units minus total utility of (n−1) units.

17. What is the relationship between Total Utility and Marginal Utility at the point of maximum satisfaction?

    Total Utility is maximum when Marginal Utility equals zero. Beyond this point MU becomes negative and TU starts to fall (point of satiety).

18. What is the cardinal utility approach?

    It assumes utility can be measured numerically in units called 'utils' (e.g., 10 utils), allowing quantitative comparison. It is associated with Marshall and the Law of Diminishing Marginal Utility.

19. State the Law of Diminishing Marginal Utility.

    As a consumer consumes more and more units of a commodity, the marginal utility (additional satisfaction) derived from each successive unit goes on decreasing, other things remaining equal.

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