Topics
Demand
- Introduction to Microeconomics and Macroeconomics
- Microeconomics
- Macroeconomics
- Macroeconomics Vs Microeconomics
- Introduction to Demand
- Meaning of Demand
- Features of Demand
- Types of Demand
- Determinants of Demand
- Demand Function
- Quantity Demanded and Demand
- Law of Demand
- Demand Schedule
- Demand Curve
- Individual Demand Curve to Market Demand Curve
- Slope of the Demand Curve
- Linear Demand Curve
- Reasons for the Downward Slope of the Demand Curve
- Importance of the Law of Demand
- Exceptions to the Law of Demand
- Movement Along the Demand Curve
- Change in Demand – Shift in Demand Curve
- Difference Between Extension and Increase in Demand
- Difference Between Contraction and Decrease in Demand
- Cross Price Effects
- Relationship Between Income and Demand
- Impact of Tastes and Preferences on Demand for a Commodity
- Industry Demand Vs Firm Demand
- Concept of Utility
- Cardinal Utility Analysis / Marginal Utility Analysis
- Types of Marginal Utility
- Total Utility and Marginal Utility
- Forms of Utility
- Features of Utility
- Relationship Between Total Utility and Marginal Utility
- Law of Diminishing Marginal Utility
- Exceptions of the Law of Diminishing Marginal Utility
- Importance of the Law of Diminishing Marginal Utility
- Consumer's Equilibrium through Cardinal Utility Approach
- Law of Equi-Marginal Utility
- Exceptions of the Law of Equi-marginal Utility
- Importance of the Law of Equi-marginal Utility
- Ordinal Utility Analysis/Indifference Curve Analysis
- Indifference Schedule
- Indifference Curve
- Indifference Map
- Marginal Rate of Substitution (MRS)
- Assumptions of Indifference Curve Analysis
- Properties of Indifference Curves
- Price Line or Budget Line
- Consumer's Equilibrium through Indifference Curve Approach
- Comparison of Utility Theory and Indifference Curve Theory
- Consumer's Equilibrium through Indifference Curve Approach
- Relationship Between Marginal Rate of Substitution and Marginal Utility
Microeconomic Theory
Theory of Income and Employment
- Introduction to Theory of Income and Employment
- Basic Model of Income Determination
- Aggregate Demand and Its Components
- Desired (Ex Ante) and Effective Demand (Ex Post)
- Propensity to Consume or Consumption Function
- Propensity to Save - Saving Function
- Relationship Between Consumption and Saving Functions
- Derivation of Saving Function
- Investment Expenditure
- Private and Public Investment
- Induced and Autonomous Investment
- Determination of Equilibrium Income and Output
- Concept of Aggregate Demand and Aggregate Supply
- Saving-investment Approach
- Investment Multiplier
- Investment Multiplier Defined
- The Multiplier Mechanism
- Graphic Presentation of Multiplier
- Derivation of Multiplier Formula
- Solved Numerical Problems on Propensity to Consume and Save, Equilibrium Income and Multiplier
- Meaning of Full Employment and Voluntary Unemployment
- The Concept of Full Employment
- Voluntary and Involuntary Unemployment
- Excess Demand
- Measures to Correct the Excess Demand
- Deficient Demand
- Measures to Correct Deficient Demand
- Deficient and Excess Demand and Business Cycle
- Aggregate Demand in a Three - Sector Economy
- Features of the Consumption Function
- Shifting of the Consumption Function
- Importance of the Consumption Function
- Gross Investment and Net Investment
- Paradox of Thrift
- Variables
- Partial and General Equilibrium
- Static Analysis
- Comparative Static Analysis
- Dynamic Analysis
- Difference between Static and Dynamic Analysis
- Psychological Law of Propensity to Consume
- Measures to Raise Propensity to Consume
- Importance of Investment
- Static Multiplier
- Dynamic Concept of Multiplier
- Limitations of Multiplier
- Leakages of Multipler
- Importance of Multiplier
- Types of Multiplier
- Balanced-Budget Multiplier
- Unemployment Associated with Full Employment
- Inflationary Gap
- Foreign Trade Policy
Elasticity of Demand
- Introduction to Elasticity of Demand
- Meaning and Types of Elasticity of Demand
- Price Elasticity of Demand
- Classification of Price Elasticity - Degrees of Price Elasticity of Demand
- Methods of Measuring Price Elasticity of Demand
- Percentage or Proportionate Method
- Total Expenditure Method
- Point Method (Geometric Method)
- Arc Elasticity of Demand
- Revenue Method
- Numerical Problems of Price Elasticity of Demand
- Factors Affecting Price Elasticity of Demand
- Importance of Elasticity of Demand
- Income Elasticity of Demand
- Types of Income Elasticity of Demand
- Importance of Income Elasticity
- Cross Elasticity of Demand
- Туpes of Cross Elasticity of Demand
- Limitations of Cross Elasticity of Demand
- Importance of Cross Elasticity of Demand
Supply
- Concept of Supply
- Individual and Market Supply
- Distinction Between Supply and Stock
- Determinants of Supply
- Supply Function
- Law of Supply
- Supply Schedule
- Supply Curve
- Derivation of Market Supply Curve From Individual Supply Curves
- Explanation of the Law of Supply
- Time Period and Supply
- Exceptions to the Law of Supply
- Movement Along the Supply Curve Or Expansion and Contraction of Supply
- Shift of the Supply Curve or Change in Supply
- Expansion of Supply and Increase in Supply
- Contraction of Supply and Decrease in Supply
- Elasticity of Supply
- Meaning and Types of Elasticity of Demand
- Price Elasticity of Supply
- Categories (Degrees) of Elasticity of Supply
- Measurement of Elasticity of Supply > Percentage Method
- Measurement of Elasticity of Supply > Geometric or Point Method
- Determinants of Elasticity of Supply
- Importance of Elasticity of Supply
Money and Banking
- Introduction to Money and Inflation
- Concept of Money
- Features of Money
- Barter system
- Difficulties of Barter System of Exchange
- Evolution of Money
- Qualities of Good Money
- Modern Forms of Money
- Functions of Money
- Primary Functions
- Secondary Functions
- Contingent Functions
- Importance of Money
- Supply of Money
- Measures of Money Supply
- Inflation
- Types of Inflation
- Introduction to Banking System
- Types of Bank
- Functions of Commercial Bank
- Central Bank
- Functions of Central Bank
- Methods of Credit Control by the Central Bank
- Quantitative Methods of Credit Control by the Central Bank
- Qualitative Methods of Credit Control by the Central Bank
- Difference Between the Central Bank and the Commercial Banks
- Role of Banks in the Economy
- Indian Monetary System
- Constitutents of Money Supply
- Reserve Bank of India's Approach of Money Supply
- Factors Affecting Money Supply
- Commercial Banks
- Process of Credit Creation by Commercial Banking System
- Factors Affecting Credit Creation
- High Powered Money
- Classification or Structure of Commercial Banks in India
- Components of Money Supply
- Evolution of Central Bank
- Need for a Central Bank
- Importance of Central Bank
Balance of Payments and Exchange Rate
Market Mechanism
- Introduction to Market Mechanism
- Basic Concepts of Equilibrium and Equilibrium Price
- Equilibrium Price and Quantity in a Competitive Market
- Changes in Equilibrium
- Effects of Changes (Shifts) in Demand on Equilibrium Price and Equilibrium Quantity
- Effects of Changes (Shifts) in Supply on Equilibrium Price and Equilibrium Quantity
- Effects of Simultaneous Changes (Shifts) in Demand and Supply
- Some Special Cases of Equilibrium
- Importance of the Element in the Determination of Price
- Applications of Tools of Demand and Supply Price Control
- Mаximum Price Legislation or Price Ceiling and Rationing
- Minimum Price Legislation or Floor Price
- Important Areas of Applications of Tools of Demand and Supply Curves
- Meaning of Perfect Competition
- Assumptions and Conditions of Perfect Competition
- Pure and Perfect Competition
- Time Element in the Theory of Price Determination
- Determination of Equilibrium Prices
- Normal Price and Law of Returns
- Comparison between Market Price and Normal Price
- Practical Applications of Tools of Demand and Supply Analysis
Concepts of Production
- Concept of Production
- Product
- Factors of Production
- Production Function
- Short-run and Long-run
- Features of Production Function
- Types of Production Functions
- Some Basic Concepts - Total, Average and Marginal Physical Products
- Relationship between Average Product (AP) and Marginal Product (MP)
- Relationship between Total Product (TP) and Marginal Product (MP)
- Returns to a Factor - Laws of Returns to a Variable Factor
- Law of Variable Proportions
- Statement of the Law of Variable Proportions
- Assumptions of the Law of Variable Proportions
- Illustration of the Law of Variable Proportions
- Three Stages of Production
- Explanation of the Law of Variable Proportions
- Stages of Operation and the Decision to Produce
- Conditions Or Causes of Applicability
- Applicability of the Law of Variable Proportions
- Changes in Production
- Returns to a Factor or Law of Returns
- Law of Variable Proportions and Returns to Scale Compared
- Variation of Output in the Long Run - Returns to Scale
- Scale of Production
- Concept of Indivisibility
- Economies of Scale
- Diseconomies of Scale
Public Finance
National Income
Cost and Revenue
- Introduction to Cost of Production
- Money Cost Or Accounting Cost / Explicit Cost
- Economic Cost
- Opportunity Cost
- Real Cost
- Private and Social Cost
- Fixed Cost and Variable Cost
- Different Cost Concepts
- Total Cost Curves
- Average Cost Curves
- Marginal Cost (MC)
- Relationship between Average and Marginal Cost
- Long-Run Cost Curves
- Long-run Average Cost (LAC) Curve
- Long-run Marginal Cost (LMC) Curve
- LAC Curve U-shaped - Economies and Diseconomies of Scale
- Numerical Problems Long-run Cost Curves
- Revenue Concepts
- Behaviour of Revenue Under Different Market Structures
- Relationship Between Total, Average and Marginal Revenues Under Perfect Competition
- Relationship Between Total, Average and Marginal Revenue Under Imperfect Competition
- Significance of Revenue Curve
- Numerical Problems of Revenue
Main Market Forms and Equilibrium of a Firm
- Concept of Market
- Market Structure
- Factors Determining Market Forms
- Perfect Competition
- Features of Perfect Competition
- Pure and Perfect Competition
- Monopoly
- Features of Monopoly
- Monopolistic Competition
- Features of Monopolistic Competition
- Oligopoly
- Features of Oligopoly
- Monopsony
- Features of Monopsony
- Duopoly
- Characteristics of Duopoly
- Bilateral Monopoly
- Other Forms of Market
- Factors Determining Market / Extent of Market
- Demand Curves of Firms under Different Market Forms
- Comparison between different forms of market
- Difference Between Imperfect Competition and Monopolistic Competition
- Firm : An Economic Entity
- Profit Maximisation Objective
- The Definition of Profits
- Rules for Profit-Maximisation
- Producer's (Firm's) Equilibrium: Total Revenue and Total Cost Approach
- Producer's (Firm's) Equilibrium: Marginal Revenue and Marginal Cost Approach
- Short-run Equilibrium
- Long-run Equilibrium
- Firm is a Price Taker, Not a Price Maker
- Equilibrium of Industry
- Difference Between Firm and Industry's Equilibrium
- Meaning of a Producer
- Producer's Equilibrium under Perfect Competition
- Determination of Price and Equilibrium Under Monopoly
- Monopoly Equilibrium and Laws of Costs
- Price Discrimination or Discriminating Monopoly
- Price and Output Discrimination Under Discriminating Monopoly
- Measures of Monopoly Power
- Nature of Demand and Cost Curves
- Equilibrium Price and Output under Monopolistic Competition
- Group Equilibrium in Monopolistic Competition
- Product Differentiation
- Selling Costs
- Equilibrium with Selling Costs
- Price and Output Under Oligopoly Indeterminate
- Price and Output Determination under Oligopoly
- Price Rigidity-Sweezy's Kinky Demand Curve Model or Equilibrium under Independent Action
- Reasons for Price Stability
- Cournot's Model
- Collusive Oligopoly
- Mergers
CISCE: Class 12
Introduction
A change in demand means people want to buy more or less of a product at each price because something other than the product’s own price changes. The whole demand curve either shifts right (increase) or left (decrease). This is different from movement along the curve, which only happens if the product’s own price changes.
CISCE: Class 12
Law of Demand vs. Change in Demand
| Aspect | Law of Demand | Change in Demand |
|---|---|---|
| Meaning | As price increases, quantity demanded decreases, and vice versa—assuming other factors stay constant. | Shift of the entire demand curve due to changes in factors like income, tastes, or prices of other goods (not price itself). |
| Visual/Chart | Movement along same demand curve | Shift to a new demand curve |
| Example | Price falls, you buy more | Your income rises, you buy more at every price |
CISCE: Class 12
Types
1) Increase in Demand: The demand curve shifts right; at any given price, people buy more.
Example: When income rises, at ₹100/kg, the household buys 2 kg (up from 1 kg).
2) Decrease in Demand: The demand curve shifts left; at the same price, people buy less.
Example: If income drops or trends change, buy only 1 kg at ₹100/kg (down from 2 kg).
CISCE: Class 12
Main Causes
1) Change in consumer income (normal goods: income ↑, demand ↑; inferior goods: income ↑, demand ↓)
2) Change in tastes, fashions, or preferences
3) Change in prices of related goods:
- Substitute goods (e.g., if Pepsi becomes expensive, Coke demand may increase)
- Complementary goods (e.g., fall in price of smartphones may increase demand for mobile apps)
4) Change in population size
5) Expectation of future price increases
CISCE: Class 12
Real-Life Application
- More students in a city → School uniform demand increases
- Social media trend for a product → Suddenly everyone wants it, even if the price is unchanged
- Summer heat → Higher demand for ice cream at all price points (seasonal demand shift)
- New job/income raise → People buy better branded goods, not just more of the same.
CISCE: Class 12
Key Point Summary
- Change in Demand = Curve Shifts: Caused by factors like income, taste, population, and related goods' prices (not the product's own price).
- Law of Demand = Movement Along Curve: Only own price changes, all else constant.
- Increase in Demand: The Entire curve shifts right (more at each price).
- Decrease in Demand: The Entire curve shifts left (less at each price).
