GUIDELINES FOR REVISION

1. Every bullet contains one main heading and several subheadings

2. Put a tick mark on each subheading/strike it with a pencil as you
complete studying it.
3. This will help you to identify subtopics you are confused with and they
could be clarified in the class without wastage of your precious time.
4. Write down your doubts so that you dont forget them. You could mail
them to me if they are urgent and cannot wait till Monday.

BASIC ECONOMIC PROBLEM

Economic problem
Economic resources/factors of production definitions, key characteristics,
examples, influences on their supply, mobility of these factors
(Common mistakes done in this chapter to be discussed in the class)
Opportunity cost Definition, examples to illustrate the concept,
relationship between opportunity cost and consumers, opportunity cost
and workers, opportunity cost andproducers, opportunity cost
andgovernment, how can opportunity cost be shown diagrammatically
(PPC) and its explanation, definition of PPC, examples of PPC, how PPC
illustrates choice and resource allocation, Evaluation of a particular course
of action in terms of opportunity cost.
Economic goods & Free goods definitions, examples, characteristics,
relation with opportunity cost

HOW MARKETS WORK

Allocation of resources in market/mixed/planned economies
Explanation(not just listing) of advantages/disadvantages of market
economy/system, reallocation of resources in market system
Importance of competition & incentives, productive efficiency,
allocativeeffeciency
Market failure definition, when it happens/nature of market failure,
reasons for market failure

Benefits of state/government intervention
Demand & supply definitions, changes/shift/extension in demand/supply
very clear diagrams/labeling(carries 2 3 marks), causes of changes in
demand & supply conditions, analysis of the effects of these changes on the
markets,
impact of subsidies, taxes, cost of production, prices of other goods on the
supply explanation and diagrammatic representation
(CONCENTRATE ON THE SUPPLY TOPICS AS LESS QUESTIONS WERE ASKED PREVIOUS YEARS)
(Movement of the shift to left/right be perfect in it)
Disposable income definition
Normal good/inferior good definition, examples
Equilibrium price definition, demonstration, disequilibrium
Price elasticity of demand definition, calculations, formulas,
interpretation of PED/PES
Elastic/Inelastic demand/supply definition , diagrams, factors determining
them, differences, changes
Usefulness of price elasticity in revenue changes, consumer expenditure
Identification of different diagrams
Private costs/private benefits/Social costs/social benefits/External
costs/external benefits definitions, conflict of interest short term/long
term
conservation of resources/using resources
public expenditure/private expenditure, uses of public expenditure,
financing public expenditure, government influence on private expenditure,
comparison of expenditures
cost benefit analysis - definition