Topics
Introduction
- A Simple Economy
- Central Problems of an Economy
- Concepts of Production Possibility Frontier
- Organisation of Economic Activities
- Positive and Normative Economics
- Microeconomics and Macroeconomics
Introductory Macroeconomics
Introduction
- How Macroeconomics Differs from Microeconomics
- Representative Goods and Sectors
- Macroeconomic Agents and Government Role
- Emergence of Macroeconomics
- Context of the Present Book of Macroeconomics
Indian Economy on the Eve of Independence
- Introduction to Indian Economy on the Eve of Independence
- Low Level of Economic Development Under the Colonial Rule
- Agricultural Sector in India
- Industrial Sector
- Foreign Trade of India
- Demographic Condition
- Occupational Structure
- Infrastructure
National Income Accounting
- Meaning of Economic Wealth and Final Goods
- Stocks, Flows, and Depreciation
- Capital Formation, Trade-off & Circular Flow of Income
- Circular Flow of Income and Methods of Calculating National Income
- Output Method/Product Method
- Expenditure Method
- Income Method
- Factor Cost, Basic Prices and Market Prices
- Some Macroeconomic Identities
- National Disposable Income
- Private Income
- National Income Aggregates
- Real GDP and Nominal GDP
- GDP and Welfare
Indian Economy 1950-1990
Indian Economic Development
Theory of Consumer Behaviour
- Consumer Behaviour: The Problem of Choice
- Basic Concepts of Microeconomics > Utility
- Cardinal Approach (Utility Analysis)
- Derivation of Demand Curve in the Case of a Single Commodity
- Ordinal Utility Analysis/Indifference Curve Analysis
Production and Costs
- Production Function
- Basics of Production Theory
- Variation of Output in the Short-Run Returns to a Factor
- Relation Between Total, Average and Marginal Product
- Law of Variable Proportions
- Average and Marginal Physical Products
- Changes in Production
- Cost - Fixed Cost
- Cost -variable Cost
- Behaviour of Cost in the Short - Run
- Relationship Between Average Variable Cost and Average Total Cost and Marginal Cost
- Concept of Opportunity Cost
- Marginal Revenue
- Producer's Equilibrium
- Law of Supply
- Market Supply Schedule
- Distinguish between Stock and Supply
- Determinants of Supply
- Movements Along and Shifts in Supply Curve
- Measurement of Elasticity of Supply
- Methods of Measurement of National Income
- Cost Concepts > Marginal Cost
- The Law of Diminishing Marginal Product
- Shapes of Product Curves
- Costs in Long Run Period
- Returns to Scale
Money and Banking
- Concept of Money
- Functions of Money
- Demand for Money and Supply of Money
- Money Creation by Banking System
- Limits to Credit Creation and Money Multiplier
- Policy Tools To Control Money Supply
- Demand and Supply for Money : A Detailed Discussion
- The Transaction Motive
- The Speculative Motive
- Various Measures of Supply of Money
- Legal Definitions: Narrow and Broad Money
- Demonetisation
Liberalisation, Privatisation and Globalisation : An Appraisal
Introductory Microeconomics
Determination of Income and Employment
- Aggregate Demand and Its Components
- Consumption
- Consumption and Saving Propensities
- Investment
- Determination of Income in Two-sector Model
- Determination of Equilibrium Income in the Short Run
- Macroeconomic Equilibrium with Price Level Fixed
- Effect of an Autonomous Change in Aggregate Demand on Income and Output
- The Multiplier Mechanism
- Paradox of Thrift
- Equilibrium Output and Employment
The Theory of the Firm Under Perfect Competition
- Concept of Market
- Market Equilibrium
- Determination of Market Equilibrium
- Effect of Simultaneous change in Demand and Supply on Equilibrium Price
- Perfect Competition
- Imperfect Competition
- Classification of Market Structure
- Oligopoly
- Market Forms - Perfect Oligopoly
- Market Forms - Imperfect Oligopoly
- Equilibrium Price
- Applications of Tools of Demand and Supply Price Control
- Price Ceiling
- Price Floor
- Revenue Concepts
- Profit Maximisation Objective
- Determinants of a Firm’s Supply Curve
- Market Supply Schedule
- Price Elasticity of Supply
Human Capital Formation in India
Market Equilibrium
- Simple Monopoly in the Commodity Market
- Other Non - Perfectly Competitive Markets
Government Budget and the Economy
Rural Development
Employment: Growth, Informalisation and Other Issues
- The Nature and Importance of Work in Society
- Workers and Employment
- Participation of People in Employment
- Self-employed and Hired Workers
- Employment in Firms, Factories and Offices
- Growth and Changing Structure of Employment
- Informalisation of Indian Workforce
- Concept of Unemployment
- Government and Employment Generation
Open Economy Macroeconomics
- Open Economy and Its Linkages
- Concept of Balance of Payments
- Current Account
- Capital Account
- Balance of Payments Surplus and Deficit
- Foreign Exchange Market
- Foreign Exchange Rate
- Determination of the Exchange Rate
- Merits and Demerits of Flexible and Fixed Exchange Rate Systems
- Managed Floating Exchange Rate System
Environment and Sustainable Development
Comparative Development Experiences of India and Its Neighbours
- Comparative Development Strategies: India, China, and Pakistan
- Developmental Path - a Snapshot View
- Demographic Indicators
- Gross Domestic Product and Sectors
- Indicators of Human Development
- Development Strategies - an Appraisal
- Returns to a Factor
- Definitions: Law of Returns to Scale
- Returns to Scale
- Table: Stages of Returns to Scale
- Types of Returns to Scale
- Returns to a Factor vs Returns to Scale
- Law of Variable Proportions
CISCE: Class 12
Returns to a Factor
Definition:
Returns to a factor mean how output changes when only one input (like labour) is changed, while others (like land) stay the same. It applies to the short run.
Types of Returns to a Factor
- Increasing Returns: Each new unit of the variable factor increases output more than the previous unit.
- Constant Returns: Each unit increases output by the same amount.
- Diminishing Returns: Each new unit increases output less than the previous one.
Example
On a fixed field, hiring more workers initially increases crop yield quickly (increasing returns). Eventually, more workers do not help as much, and yield rises slowly (diminishing returns).
Definitions: Law of Returns to Scale
- "The term returns to scale refers to the changes in output as all factors change by the same proportion." — Koutsoyiannis
- "Returns to scale relates to the behaviour of total output as all inputs are varied and is a long run concept." — Leibhafsky
CISCE: Class 12
Returns to Scale
Definition:
Returns to scale mean how output changes when all inputs (like labour and capital) are increased together by the same proportion. It applies to the long run.
Types of Returns to Scale
- Increasing Returns: Output grows more than the rise in inputs.
- Constant Returns: Output grows in the same proportion as inputs.
- Diminishing Returns: Output grows less than the rise in inputs.
Example
If a bakery doubles all its workers and ovens, and output grows much more than double, that's increasing returns to scale.
CISCE: Class 12
Table: Stages of Returns to Scale
| Labour | Capital | % Change Inputs | Output | % Change Output | Stage |
|---|---|---|---|---|---|
| 1 | 3 | - | 15 | - | Increasing |
| 2 | 5 | 100% | 35 | 200% | Increasing |
| 3 | 7 | 50% | 65 | 100% | Increasing |
| 4 | 9 | 33% | 85 | 33% | Constant |
| 5 | 11 | 25% | 105 | 25% | Constant |
| 6 | 13 | 20% | 115 | 10% | Diminishing |
| 7 | 15 | 10% | 125 | 9% | Diminishing |
| 8 | 17 | 14% | 130 | 4% | Diminishing |
CISCE: Class 12
Types of Returns to Scale
1. Increasing Returns to Scale: Output rises more than inputs.
- Example: If you double labor and capital, and output becomes more than double, this is increasing returns.
- Reason: Efficient specialization, better division of labor.
2. Constant Returns to Scale: Output increases in exact proportion to inputs.
- Example: Doubling all inputs gives exactly double output.
- Reason: Scale economies and diseconomies balance out.
3. Diminishing Returns to Scale: Output rises less than inputs.
- Example: All inputs doubled, but output increases by less than double.
- Reason: Inefficiency, management challenges.
CISCE: Class 12
Returns to a Factor vs Returns to Scale
| Returns to a Factor | Returns to Scale |
|---|---|
| Only one input | All inputs |
| Short run | Long run |
| More labor, same land | More labor and capital together |
| No change in scale | Scale changes |
CISCE: Class 12
Law of Variable Proportions
- The Law of Variable Proportions explains how output changes when only one factor of production (like labor) is changed, keeping other factors the same (short run).
- Returns to Scale show how output changes when all inputs are increased together in the same proportion (long run).
