SBOTS 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 SBOTS, not a summary of it.

1. 1

   Microeconomics

   4 topics

   • Demand & Supply
   • Elasticity
   • Theory of Consumer Behavior
   • Market Structures
2. 2

   Macroeconomics

   4 topics

   • National Income & GDP
   • Inflation & Unemployment
   • Aggregate Demand & Supply
   • Business Cycles
3. 3

   Money & Banking

   3 topics

   • Functions & Evolution of Money
   • Credit Creation by Banks
   • Quantity Theory of Money
4. 4

   Public Finance & Fiscal Policy

   3 topics

   • Taxation & Government Expenditure
   • Budget Deficit & Public Debt
   • Fiscal Policy Tools
5. 5

   International Economics

   4 topics

   • Balance of Payments
   • Exchange Rate Systems
   • Trade Theory & Tariffs
   • Remittances & Foreign Reserves
6. 6

   Pakistan's Economy

   4 topics

   • Economic Survey of Pakistan
   • Federal Budget & Fiscal Position
   • External Sector & CPEC
   • IMF Programs & Economic Reforms

Economics flashcards for SBOTS

23 of 59 cards from the Economics deck — real questions with worked answers.

1. State the Law of Demand.

   Other things being equal, as the price of a good rises, its quantity demanded falls, and as price falls, quantity demanded rises — an inverse price-quantity relationship, giving a downward-sloping demand curve.

2. State the Law of Supply.

   Other things being equal, as the price of a good rises, the quantity supplied rises, and as price falls, quantity supplied falls — a direct relationship, giving an upward-sloping supply curve.

3. What is market equilibrium in demand and supply analysis?

   The price-quantity combination where quantity demanded equals quantity supplied; there is no surplus or shortage, so price has no tendency to change (equilibrium/market-clearing price).

4. Distinguish a change in quantity demanded from a change in demand.

   A change in quantity demanded is movement ALONG the demand curve caused by the good's own price. A change in demand is a SHIFT of the whole curve caused by non-price factors (income, tastes, prices of related goods, expectations, population).

5. How do substitute and complementary goods differ in cross-price effects?

   Substitutes: a rise in one good's price raises demand for the other (positive cross elasticity). Complements: a rise in one good's price lowers demand for the other (negative cross elasticity).

6. Give the formula for Price Elasticity of Demand (PED).

   PED = (% change in quantity demanded) / (% change in price). It is normally negative; the absolute value indicates responsiveness.

7. Define elastic, inelastic and unit-elastic demand by PED value.

   Elastic: |PED| > 1 (quantity responds more than price). Inelastic: |PED| < 1 (quantity responds less than price). Unit-elastic: |PED| = 1 (proportional response).

8. How does Price Elasticity of Demand relate to total revenue?

   If demand is elastic, a price cut raises total revenue (and a price rise lowers it). If inelastic, a price rise raises total revenue. If unit-elastic, total revenue is unchanged by price changes.

9. Give the formula and meaning of Income Elasticity of Demand (YED).

   YED = (% change in quantity demanded) / (% change in income). Positive for normal goods, negative for inferior goods; YED > 1 indicates a luxury good.

10. Give the formula for Cross Price Elasticity of Demand (XED).

    XED = (% change in quantity demanded of good A) / (% change in price of good B). Positive for substitutes, negative for complements, zero for unrelated goods.

11. List key determinants of price elasticity of demand.

    Availability and closeness of substitutes, proportion of income spent on the good, whether it is a necessity or luxury, degree of habit/addiction, and the time period considered (more elastic in the long run).

12. What is the Price Elasticity of Supply (PES) formula?

    PES = (% change in quantity supplied) / (% change in price). It is usually positive; supply is more elastic when firms can adjust output easily and over longer time periods.

13. State the Law of Diminishing Marginal Utility.

    As a consumer consumes more units of a good in a given period, the marginal (additional) utility from each successive unit eventually declines, other things equal.

14. What is the consumer's equilibrium (utility-maximizing) condition using marginal utility?

    Utility is maximized when the marginal utility per rupee spent is equal across all goods: MUx/Px = MUy/Py = ... , subject to the budget constraint.

15. What does an indifference curve show, and why is it convex to the origin?

    It shows all combinations of two goods giving the consumer equal satisfaction. It is convex because of the diminishing marginal rate of substitution — willingness to give up one good for another falls as more of the latter is held.

16. What is the consumer's optimum in indifference curve analysis?

    Where the highest attainable indifference curve is tangent to the budget line, i.e., MRS (slope of indifference curve) equals the price ratio Px/Py.

17. List the four main market structures from most to least competitive.

    Perfect competition, monopolistic competition, oligopoly, and monopoly (pure monopoly being least competitive).

18. Name the defining features of perfect competition.

    Many small buyers and sellers, homogeneous (identical) products, free entry and exit, perfect information, and firms are price takers; the firm faces a perfectly elastic (horizontal) demand curve.

19. What characterizes a monopoly market?

    A single seller of a product with no close substitutes, high barriers to entry, the firm is a price maker, and it faces the downward-sloping market demand curve.

20. How does monopolistic competition differ from oligopoly?

    Monopolistic competition has many firms selling differentiated products with easy entry. Oligopoly has a few interdependent firms, high entry barriers, and outcomes depending on rivals' reactions (often modeled with game theory).

21. State the profit-maximizing output rule for any firm.

    A firm maximizes profit where Marginal Revenue equals Marginal Cost (MR = MC), with MC rising through that point.

22. Define Gross Domestic Product (GDP).

    The total market value of all final goods and services produced within a country's borders during a given time period, regardless of producer nationality.

23. Distinguish GDP from GNP (Gross National Product).

    GDP measures output produced within a country's geographic borders; GNP measures output by a country's nationals/residents (GDP plus net factor income from abroad).

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