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Principles of Economics

Semester 1 · 17 topics in 5 units

Past question papers for Principles of Economics

Unit I 4 topics

  1. Definitions of economics: wealth, welfare, scarcity and growthAdam Smith's wealth definition, Marshall's welfare definition, Robbins' scarcity definition and Samuelson's growth-oriented definition, each with its features and criticism, followed by the nature and scope of economics.6 min
  2. Basic concepts: goods, utility, wants, demand, supply, economic laws, micro and macroThe vocabulary of the paper: kinds of goods, utility, wants, demand and supply, firm and industry, the four factor incomes, the nature of economic laws and their assumptions, and the difference between micro and macro economics.6 min
  3. Economic systems: capitalism, socialism and mixed economyThe central problems every economy must solve, and how capitalism, socialism and the mixed economy answer them: features, merits and demerits of each, with India as the example of a mixed economy.5 min
  4. Cost and revenue conceptsTotal, fixed, variable, average and marginal cost and opportunity cost, with a worked cost schedule and the shapes of the curves; total, average and marginal revenue under perfect and imperfect competition, with schedules and the TR-MR relationship.6 min

Unit II 4 topics

  1. Utility, diminishing marginal utility and equi-marginal utilityForms of utility, total and marginal utility with a schedule, the law of diminishing marginal utility with its assumptions, exceptions and importance, and the law of equi-marginal utility worked through a budget table, with its criticism and applications.6 min
  2. Consumer's surplusMarshall's concept of consumer's surplus: definition, a worked schedule, the area under the demand curve, its assumptions, the main criticisms, Hicks' reformulation and its uses in taxation, monopoly pricing and public policy.4 min
  3. Indifference curves: properties and consumer's equilibriumThe ordinal approach of Hicks and Allen: indifference schedule and map, marginal rate of substitution, the six properties of indifference curves with reasons, the budget line, and consumer's equilibrium at the point of tangency, worked with figures.6 min
  4. Law of demand and its exceptionsStatement and assumptions of the law of demand, individual and market demand schedules, why the demand curve slopes downward, determinants of demand, the difference between movement along and shift of the curve, and the exceptions and limitations of the law.5 min

Unit III 3 topics

  1. Production function, law of variable proportions and returns to scaleThe production function in the short and long run, total, average and marginal product, the law of variable proportions with a schedule and its three stages, the classical law of diminishing returns, and increasing, constant and diminishing returns to scale.6 min
  2. Economies and diseconomies of scaleMarshall's division of economies of large-scale production into internal and external economies, the kinds of each with examples, the corresponding diseconomies, and how they give the long-run average cost curve its U-shape.4 min
  3. Factors of production: properties of land, labour, capital and organisationMeaning and properties of the four factors of production: land, labour, capital and organisation, with the kinds of capital, capital formation, efficiency of labour and the functions of the entrepreneur.5 min

Unit IV 3 topics

  1. Perfect competition and monopoly: features and price-output determinationFeatures of perfect competition, price determination by the industry, equilibrium of the firm in the short and long run with a worked schedule; meaning, features, types and sources of monopoly, monopoly equilibrium worked with figures, and a comparison of the two.6 min
  2. Monopolistic competition, oligopoly and duopolyChamberlin's monopolistic competition: features, product differentiation and selling costs, short- and long-run equilibrium and excess capacity; features of oligopoly, the kinked demand curve, collusion and price leadership; and duopoly with the Cournot model.5 min
  3. Price discrimination and pricing in practiceMeaning, types, degrees and conditions of price discrimination, the equilibrium of a discriminating monopolist worked with elasticities, dumping and the welfare question; then skimming, penetration and product life cycle pricing.6 min

Unit V 3 topics

  1. Marginal productivity theory of distribution and wagesThe marginal productivity theory of J.B. Clark and its modern form, worked through a hiring schedule, with its assumptions and criticism; then money and real wages, minimum wages under the Code on Wages, 2019, and the causes of wage differentials.6 min
  2. Rent: the Ricardian theory and quasi-rentEconomic and contract rent; Ricardo's differential theory of rent under extensive and intensive cultivation, worked through grades of land, its assumptions, whether rent enters price, and its criticism; the modern transfer-earnings view; and Marshall's quasi-rent with a worked figure.6 min
  3. Interest and profit: loanable funds theory and innovation theoryGross and net interest; the loanable funds theory of Wicksell and Robertson, its sources of supply and demand worked into an equilibrium schedule, its merits over the classical theory and Keynes' criticism; meaning of profit and Schumpeter's innovation theory with its criticism.6 min