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Dfccil Economics and Marketing Notes 53
Dfccil Economics and Marketing Notes 53
questions asked from this matter. Going by the previous year trends, the questions from this topic are in
the range of easy to moderate, to score 12 out of 12 in this topic you need to have a thorough
knowledge of all the terms of this section. Hence, to solve the purpose, in this post, we are sharing the
complete details for Economics and Marketing for DFFCIL. You can download the PDF which is provided
at the bottom for future revision.
What is Economics?
Economics is defined as the social science which is concerned with the manufacture, supply, and
consumption of goods and services. Through Economics we are able to study how individuals,
businesses, governments and nations make selections regarding how to distribute resources among the
citizens.
Economics mainly focuses on the actions of human beings, on the basis of assumptions that humans act
with logical behaviour.
Economics can be mainly divided into 2 main types which are microeconomics and macroeconomics
PPC highlights the possible combination of two goods that can be created with the help of available
resources and technology.
MOC along with POC of a specific good is the amount of other good which is lost for production of an
additional unit of another good.
MRT is defined as the ratio of the one good sacrificed to produce one more unit of another good.
What is Demand?
Demand is defined as the amount of a product that a consumer is able and willing to purchase at a given
price in a given period.
• Commodity price
• Consumer’s income
• Price of the related goods
• Consumer’s taste and preference
• Expectations of future price change
Type of Goods
Goods are mainly categorized into 5 categories which are substitute goods, complementary goods,
inferior goods, and Giffen goods. The details of these type of goods are given below:
Substitute Goods
The goods which can be substituted by the consumers and when there is an increase in the price of one
good then the demand for other substitutable good increases. For example, Tea and Coffee are
substitute goods.
Complementary Goods
The goods that are paired to each other are complementary goods. When the price of one good
increases it results in a decrease in demand for the other good. For example, Petrol and Car are
complementary goods.
Normal Goods
Normal goods are used in consumer’s day to day life. These goods have a direct relation with income.
When the consumer’s income increases the demand for normal goods also increases.
Inferior Goods
Goods that have a negative relation with the income. These goods have less demand at higher income
and high demand and lower-income.
Giffen Goods
Giffen goods is a kind of inferior goods that customers consume more as the price increases, violating
the law of demand.
Types of Demand
Cross Demand
The demand which is mainly dependent on the prices of related goods is called cross demand. The
complementary goods and substitutes are known as related goods. Complementary goods such as pen
and ink are inversely associated with the prices of other goods but the case in substituting goods are just
contradictory. Demand for substituting goods are directly proportional to the prices.
Income Demand
Direct Demand
The demand for goods and services directly made by the consumer is called direct demand.
Derived Demand
The demand of goods and services made as per the direct demand of consumer is called derived
demand.
Joint Demand
The demand which is made for two or more goods and services to fulfil the single need or want is called
joint demand.
Composite Demand
The demand which is made for a single commodity made in order to use for different objectives is called
composite demand
Supply means the goods which are offered for sale at a particular price for a specific period. The supply
depends upon the capacity and intention of producers to produce goods and services for sale at a
particular price.
The law of supply creates a direct relationship between price and supply. Organizations/ individuals
supply less at lower rates and more at higher rates.
Market
The market is defined as a place where buyers and sellers meet for the exchange of goods and services
through sale and purchase.
Market Structure
It is defined as the number of organizations/ individuals operating in the industry, type of product and
nature of competition between them.
Perfect competition refers to the market condition where there are a large number of buyers and
sellers. Organizations/ individuals sell identical products at a uniform rate.
• A perfect competition market will have a large number of buyers and sellers
• A perfect competition market will have homogenous product
• A perfect competition market will have free entry and exit of firms
• A perfect competitive market will have perfect knowledge
Monopoly Market
Monopoly refers to the market condition where the market is dominated by a single seller who has full
control over the price.
A monopolistic competition market refers to the market condition in which many organizations/
individuals sell closely related but differentiated products.
• In a monopolistic competition market, there will be a large number of buyers and sellers than
perfect competition
• There is product differentiation in monopolistic competition market
• Firms/ individuals have freedom of entry and exit in a monopolistic competition market
• In a monopolistic competition market, there is a lack of the right knowledge, hence, there is
partial control over price
Oligopoly Market
An oligopoly market refers to the market condition in which there is a fair number of sellers and a large
number of buyers.
• In an oligopoly market, there are few dominant individuals/ organizations who are large in size
• There is a mutual interdependence in an oligopoly market
• There is an entry barrier in an oligopoly market
• There is both standardized as well as distinguished product in an oligopoly market
• Prices are rigid in an oligopoly market
Macroeconomics
GDP is defined as the aggregate money value of final goods and services produced within the country’s
territory. The formula of GDP at Market Price is P * Q, where P is the Market Price and Q is the final
goods and services.
GNP measures the monetary value of the final products produced yearly in a counter plus net factor
from foreign. The formula of GNP is GDP plus net factor income earned from abroad. Here is net factor
income is obtained by reducing the factor income earned by foreigners from the country excluding the
incomes earned by the residents of that country from abroad.
NDP is defined as the difference between the NNP (Net National Product) and NFI (Net Factor Income)
from abroad. The formula of NDP = GNP – (Depreciation + NFI)
NNP is defined as the monetary value of final goods and services produced at the current price
produced annually in a country.
What is Inflation?
Inflation is defined as the increase in the price of basic goods and services which leads to the decline of
purchasing power of consumers. There are various types of inflation namely comprehensive inflation,
sporadic inflation, open inflation, suppressed inflation, hyperinflation, deficit inflation, demand-pull
inflation, cost-push inflation, etc.
Comprehensive Inflation
When prices of all commodities increase throughout the economy then it is called comprehensive
inflation.
Sporadic Inflation
When prices of a few commodities increase in specific regions then it is called sporadic inflation.
Open Inflation
When prices of goods and services are not controlled by the government, then it is called open inflation.
The government does not attempt to limit inflation then it is called open inflation.
Suppressed Inflation
When government controls price rise through price controls, regulating, etc. then it is called suppressed
inflation.
Hyperinflation
When inflation rises so rapidly that it becomes difficult to control by government or authority. In
quantitative terms, when prices increase above 1000% per annum then it is called hyperinflation.
Deficit Inflation
This type of inflation occurs due to a deficit of financing by the government or authority.
Credit Inflation
This type of inflation occurs due to excessive money supply in the economy or disproportionate credits
from banks.
Scarcity Inflation
Scarcity inflation takes place due to the hoarding of basic commodities by black marketers and
unscrupulous traders.
Demand-Pull Inflation
This type of inflation happens due to various factors such as exploding population, rising income, etc.
which leads to excessive demand that does not meet the supply and tends to increase in the price of
goods and services.
Cost-Push Inflation
Cost-Push Inflation occurs when the cost of prices of goods and services rise due to the increasing cost
of production or raw materials.
Here are the details of marketing, steps and types for the DFCCIL Exam:
What is Marketing?
Steps of Marketing
Types of Marketing
There are mainly two types of marketing which are niche marketing and relationship marketing. The
details of these marketing techniques are listed below:
Niche Marketing
Niche marketing is a sort of marketing in which marketing is done on a specific targeted group. The idea
of this type of marketing is to focus on a particular segment of consumers who have unique and similar
needs.
Relationship Marketing
Relationship Marketing is a sort of marketing that involves creating and maintain a relationship with
customers, dealers, contractors, suppliers, shareholders, employees, stakeholders, etc.