Bahria College Karsaz

Economics
Important Objective for 2nd Term

 Alfred Marshal described economics as the “study of material welfare”

 Production plant, financial resources, market situation are responsible for scale of production
 During the inflation the value of money diminishes.
 Money acts as a medium of exchange
 All free gifts of nature are called land
 Adam’s Economics is a study of Wealth
 Adam Smith wrote his book in 1776 Wealth of Nation
 According of Alfred Marshal Economics is science of Material Welfare
 Alfred Marshal belongs to Neo Classical school of thought
 Factor of Production are Land Labour, Capital and organization
 Normative Economics involves Problem and solution
 Scarcity definition of economics is presented by Robbins
 Willingness, ability and price are Condition of Demand
 Price decreased demand increases is called law of demand.
 Price decrease supply decreases is called law of supply
 Demand Equation is equal to Qd = a – bp
 Human wants and scarcity of means are the main causes of economics problems
 The first book on economics was written by Adam Smith
 According to Adam Smith Economics consists of production, consumptions, exchange and
distribution of wealth
 The ability of a good to satisfy wants is called utility.
 During inflation the value of money decreases.
 The law of increasing return is also called law of decreasing cost.
 Human wants are unlimited
 The goods which are used for the direct satisfaction of wants are called commodities (consumer
goods).
 The law of Consumer Satisfaction is also called Law of equi-marginal utility.
 Value of money decreases during inflation.
 GNP includes Domestic Products and Foreign Remittance
 Balance of Payment includes Visible & Invisible Goods
 In inflation means rise in Price
 Supply is a part of stock
 Demand curve has Negative Slope
 At equilibrium demand is equal to supply
 When at same price demand or supply increases and decreases is called change in demand
 A proportional change in demand due to price is called Elasticity of Demand
 The study of human behaviour as a relationship between ends and scare means which have
alternative uses is called economics.
 If the changes in demand and price are in same ratio, the elasticity of demand will be equal to 1
 When marginal utility of commodity becomes 0 the total utility will be maximum. .
 Macro economics is also called theory of income and employment.
 The fluctuations in economy are caused due to scarcity.
 Macro economics is also known as theory of employment and income.
 Land, labour, capital and organization are the factors of production.
 The marginal cost curve always intersects average cost curve at its minimum points.
 The elasticity of demand for luxuries is less then unity.
 A firm is in equilibrium when Both MC = MR and MC cuts MR from below
 Perfectly Elastic Demand means a small change in price brings unlimited change in demand
 Perfect Competition is a situation where large number of buyer and seller is present

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 When total utility is maximum then marginal utility is Zero
 When economics activities are at peak, it is called Boom
 Malthus gave the theory of population
 The liability of partners in partnership is unlimited.
 An economics problem means due to means are limited while human wants are un limited
 Elasticity of Demand for necessities is Perfectly inelastic
TC
 Average Total Cost is equal to
Units
 In the long run all cost are variable.
 Elasticity of demand is a % age change in demand due to % change in price
 Price and income elasticity are not same thing
 The sum of all utilities is called total utility
 The point of satisfaction / Satiety is when Marginal Utility is zero
 Law of Equi Marginal Utility is also known as Law of Consumer Maximum Satisfaction
 Perfectly Elastic Demand means A small change in price brings unlimited change in demand
 Law of demand is also called change in qty demand
 Law of supply is also known as extension and contraction in demand
 The basic problem of economics is scarcity.
 If demand curve is parallel to the Y axis, then elasticity of demand will be in-elastic.
 Money acts as a medium of exchange.
 Macro economics deals with the economy as a whole
 The balance of payment of a country include both visible and invisible items
 When marginal utility of a commodity becomes zero then total utility will be maximum.
 To achieve the disposable personal income the direct personal taxes are subtracted from the
personal income.
 Total Cost is equal to sum of Fixed cost (FC) and variable cost (VC)
 When marginal utility is zero then total utility is Maximum
 Sun Shine is not an economic good
 Laws of return are applicable in Agriculture Sector
 Sales tax is indirect tax
 According Adam Smith International Trade between two countries takes place when there is
Absolute Advantage
 The burden of indirect taxes can not be Shifted

PRINCIPLES OF COMMERCE

1. Systematic economic activity refers to industry.

2. Production is a part of industry.
3. Fabricating industry refers to manufacturing.
4. Paper and electronic industry is a part of light industry.
5. Oil industry belongs to extract industry.
6. Location refers to the site of business.
7. Retain earnings refers to the past profits.
8. Capital is brought in by shareholders.
9. Long-term investment goes to buying machines.
10. In sole proprietorship there must be only one owner.
11. Government interference is most in company.
12. the liability of sole proprietor and partner is unlimited it means that he will have to pay in case of loss
not only business property but his personally property is liable to pay his debts.
13. Minimum legal constraints are faced by sole proprietorship.
14. One who participates in the conduct of partnership business is known as active partner.
15. Tax –saving is a unique advantage of a partnership.

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16. Any change in the composition of partners makes the partnership dissolve.
17. By law a company is an artificial human.
18. The retailers are the middle men who sell goods in small qty.
19. The limited liability is one of the qualities of a company.
20. A company established by legislative assembly is referred to as statutory company.
21. The whole sellers goods in large qty or bulk.
22. the marketing mix bases on product, price, place and promotion.
23. A company is run by board of directors.
24. Shares are sold to general public by public company.
25. Registration with the registrar of companies is compulsory for public company.
26. Separate management is enjoyed by a company.
27. Publicity is a free of cost.
28. Board of directors on a company is formed by elections.
29. The minimum number of shareholders on a public company is 7.
30. The maximum number of share holders on public limited company is unlimited.
31. Govt. interference is less in sole proprietorship.
32. The members of the registered societies have limited liability.
33. Members of a society are required to pay both annual fee an services charges.
34. A society is run on no profit and loss.
35. Registered societies must use the word limited after their names.
36. Transportation creates place utility.
37. Every marketing activity involves risk.
38. Buying creates possession utility.
39. In domestic trade the exchange of goods and services are taken place with in the country.
40. Utility store is a kind of retailing.
41. Home delivery of goods is made by mail order houses.
42. Wages of sales persons are saved by mail order houses.
43. Foreign trade involves exporting.
44. Profit must be shared equally if there is no partnership deed or agreement.
45. Buying from abroad is known as import.
46. In foreign trade shipping order is issued by transporting agency.
47. The document confirming the value of goods is known as consular invoice.
48. The bonded warehouses are used under the contract with the custom authority at port.
49. Custom permit is necessary in import.
50. Exporting business requires certificate of origin.
51. Bill of lading is issued by shipping company.
52. A request by a bank to the exporter is known as letter of credit.
53. The goods and services are introduced to the general public by marketing.
54. Selling goods abroad is known as exporting.
55. Letter of credit is opened by a banker.
56. Direct marketing channel involves producer and consumer.
57. Indirect channel is time-consuming.
58. Direct marketing channel is best used for perishable goods.
59. The essential part of a direct channel is consumer.
60. Presenting goods and services personally is salesman ship.
61. The free of cost promotion of a product is publicity.
62. A method of sales promotion is bonus scheme.
63. Advertising is the paid form of non personal presentation.
64. Nestle mineral water is displaying during press conference of president of Pakistan it is publicity.
65. if goods are sold to consumer through middle men it is called Indirect channel of distribution .
66. Chamber of commerce issued certificate of origin.
67. The language used in the ad should be easy to understand.

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68. Print ad should carry minimum words.
69. if life insurance is done for a limited period of time it is called term life insurance.
70. The finance which a person need to live is called consumer finance.
71. Jingles are the pictures.
72. Files maintained by names of areas are referred to as geographical files.
73. Alphabetical filing follows the principles of dictionary.
74. Fidelity insurance covers credit transactions.
75. The insured under ordinary life insurance has to pay premium for a period of whole life.
76. Differences of opinions lead the partnership to dissolve.

Note Also study the five years papers

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Short Questions and Answer
1- What do you know about Micro and Macro Economics?
2- Write down the subject matter of economics?
3- Define elasticity of demand and enlist the degrees of elasticity of demand?
4- What is difference between Adam Smith and Marshal’s Definitions?
5- Economics may be a useful for agriculturist explains?
6- Define and explain the scarcity definition of Economics?
7- Define equilibrium explain with graph?
8- What is difference between demand and desire?
9- Define utility what is relationship between utility and usefulness?
10- What is relation between total and marginal utility?
11- What are different kinds of utility?
12- Define production? What are different scales of production?
13- Define the Malthusian Theory of Population?
14- Define the law of increasing return?
15- What do you means by subject matter of economics?
16- Economics may be helpful to solve economics problem explain?
17- Define elasticity of demand and what are the kinds of it?
18- How can you differentiate between Robbins and Marshal’s definition?
19- Define equilibrium? Show equilibrium with the help of supply and demand?
20- Define and enlist the main point of material definition of Economics?
21- Graphically show the effect on equilibrium when demand and supply change?
22- Define Utility? What is difference between usefulness and Utility?
23- Define utility what is relationship between Marginal and Total Utility?
24- Define Elasticity of supply? Enlist the degree of elasticity of supply?
25- What are different kinds of utility?
26- Define law of equi marginal utility? Explain the assumptions of the law?
27- Define the Malthusian Theory of Population?
28- When total utility is maximum than marginal utility is zero explain?

Long Questions

1- How Elasticity of Supply is measured

2- law of Diminishing Marginal Utility
3- Law of variable proportion with table and graph
4- Assumptions of the law of variable proportion
5- Elasticity of Demand
6- Kinds of Elasticity of Demand?
7- Marginal Productivity theory with critical analysis
8- Law of Equi-Marginal Utility?
9- Define and explain the Malthusian theory of Population with critical reviews?
10- Importance of economics
11- Scope of economics