Economics (EC 1223) - Grade 12

Unit Area Covered Marks
Unit 1 Introduction 05 Read more
Unit 2 Consumer’s Equilibrium and Demand 10 Read more
Unit 3 Producer’s Behaviour and Supply 10 Read more
Unit 4 Forms of Market and Price Determination 10 Read more
Unit 5 Simple Applications of Demand and Supply 20 Read more
Unit 6 National Income and Related Aggregates 10 Read more
Unit 7 Money and Banking 05 Read more
Unit 8 Determination of Income and Employment 10 Read more
Unit 9 Government Budget and the Economy 10 Read more
Unit 10 Role of Government 10 Read more
Total Marks 100

Unit 1


  • Some basic tools in the study of Economics: Equation of a line, slope of a line, slope of a curve.
  • Meaning of microeconomics and macroeconomics. What is an economy? Central problems of an economy: what how and for whom to produce; concepts of production possibility frontier and opportunity cost
  • explain some basic tools-equation, slope, graph, etc. used to represent concepts and theories in mathematical and geometric forms.
  • understand that study of economics is broadly categorized into microeconomics and macroeconomics and understand the difference between the two
  • infer that fundamental cause of all economics problems is scarcity of resources, wants being unlimited a natural fact.
  • infer that every country- big or small, rich or poor – faces certain economic problems of what, how and for whom to produce.
  • explain the common problems through the mathematical tools.

Unit 2

Consumer’s Equilibrium and Demand

  • Consumer's equilibrium – meaning of utility, marginal utility, law of diminishing marginal utility, conditions of consumer's equilibrium using marginal utility analysis. Indifference curve analysis of consumer's equilibrium-the consumer's budget (budget set and budget line), preferences of the consumer(indifference curve, indifference map) and conditions of consumer's equilibrium
  • Demand, market demand, determinants of demand, demand schedule, demand curve, movement along and shifts in the demand curve
  • Price elasticity of demand - factors affecting price elasticity of demand; measurement of price elasticity of demand
    • percentage-change method
    • geometric method (linear demand curve); relationship between price elasticity of demand and total expenditure.

Unit 3

Producer’s Behaviour and Supply

  • Production function: Total Product, Average Product and Marginal Product. Returns to a Factor.
  • Cost, Short run costs - total cost, total fixed cost, total variable cost; Average fixed cost, average variable cost and marginal cost-meaning and their relationship.
  • Revenue-total, average and marginal revenue
  • Producer's equilibrium-meaning and its conditions in terms of marginal revenue-marginal cost.
  • Supply, market supply, determinants of supply, supply schedule, supply curve, movements along and shifts in supply curve, price elasticity of supply; measurement of price elasticity of supply
    • percentage change method
    • geometric method

Unit 4

Forms of Market and Price Determination

  • Perfect competition - Features;After Determination of market equilibrium and effects of shifts in demand and supply.
  • Other Market Forms -monopoly, monopolistic competition, oligopoly - their meaning and features.
    • infer that microeconomics conceives of four types of market situations: perfect competition, monopoly, monopolistic competition and oligopoly.
    • explain meaning, features and its implication of a perfectly competitive market.
    • explain how price is determined in a perfectly competitive market and represent the same graphically
    • recognise the implications of shift in demand, or in supply, or in both simultaneously as such shifts affect price and output. Represent the same graphically
    • identify features and their implication of monopoly, monopolistic competition and oligopoly markets

Unit 5

Simple Applications of Demand and Supply

  • Applications of Demand and supply.
    • explain the implication of maximum price ceiling by the government and represent the same on a graph.
    • explain the implication of minimum price ceiling by the government and represent the same on a graph.

Unit 6

National Income and Related Aggregates

  • Some basic concepts: consumption goods, capital goods, final goods, intermediate goods; stocks and flows; gross investment and depreciation.
  • Circular flow of income; Methods of calculating National Income – Value Added or Product method, Expenditure method, Income method.
  • Aggregates related to National Income: Gross National Product (GNP), Net National Product (NNP), Gross and Net Domestic Product (GDP and NDP) - at market price, at factor cost;
  • National Disposable Income (gross and net), Private Income, Personal Income and Personal Disposable Income; Real and Nominal GDP. GDP and Welfare

Unit 7

Money and Banking

  • Money-Its meaning and features Supply of money – Currency held by the public and netdemand deposits held by commercial banks. Money creation by the commercial banking system
    • explain the difficulties of barter system of exchange of goods and services.
    • also explain how introduction of money has removed these difficulties
    • point out functions of money in this context.
    • explain the concept of „money supply‟. Identify the components of money supply.
    • understand how commercial banks create money
  • Central bank and its functions
    • differentiate between central bank and commercial banks
    • explain the functions of a central bank.

Unit 8

Determination of Income and Employment

  • Aggregate demand and its components.
  • Propensity to consume and propensity to save(average and marginal)
  • Short–run equilibrium output; investment multiplier and its mechanism.
  • Meaning of full employment and involuntary unemployment.
  • Problems of excess demand and deficient demand; measures to correct them -change in government spending, availability ofcredit

Unit 9

Government Budget and the Economy

  • Government budget - meaning, objectives and components.
    • explain briefly the structure of government budget.
    • analyse the objectives the government budget exercise intends to achieve.
  • Classification of receipts - revenue receipts and capital receipts; classification of expenditure – revenue expenditure and capitalexpenditure.
  • Measures of government deficit -revenue deficit, fiscal deficit, primary deficit: their meaning.
  • list different types of deficits in a government budget.
  • explain the meaning of each type of deficit: revenue, fiscal and primary deficits
  • understand what each type of deficit indicates.

Unit 10

Role of Government

  • Fiscal Policy, Policies to check market failure.
    • understand that government undertakes its economic activities through the budget making and that such an exercise is called fiscal policy.
    • explain the tools of fiscal policy
    • explain what role each tool plays
    • define market failure
    • explain the policies government adopts to check market failure.