Topics
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
Introductory Macroeconomics
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
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
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
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
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
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
Liberalisation, Privatisation and Globalisation : An Appraisal
Introductory Microeconomics
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
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
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
- Meaning
- Definition: Law of Variable Proportions
- Statement of the Law of Variable Proportions
- Assumptions
- Important Terms
- Table: Example (Applied to Agriculture)
- Stages of the Law
- Real-Life Application
- Key Points: Law of Variable Proportions
CISCE: Class 12
Meaning
- When we change the amount of one input (like labour) but keep another input fixed (like land), output changes.
- This change in output is studied by the law of variable proportions.
CISCE: Class 12
Definitions: Law of Variable Proportions
- “As the proportion of the factor in a combination of factors is increased after a point, first the marginal and then the average product of that factor will diminish.”
—Benham - “The law of variable proportion states that if the inputs of one resource is increased by equal increment per unit of time while the inputs of other resources are held constant, total output will increase, but beyond some point the resulting output increases will become smaller and smaller.”
—Leftwich - “An increase in some inputs relative to other fixed inputs will, in a given state of technology, cause output to increase; but after a point the extra output resulting from the same additions of extra inputs will become less and less.”
—Samuelson
CISCE: Class 12
Statement of the Law of Variable Proportions
- If you keep increasing the variable input (e.g., labour) for a fixed input (e.g., land), the total production goes up at first, then grows slowly, and finally can go down.
- Marginal product (extra output from one more unit) and average product (output per unit) also rise at first, but later start to fall.
CISCE: Class 12
Assumptions
- Technology stays the same.
- One input (like land) is fixed, the other (like labour) is varied.
- It must be possible to change proportions of inputs.
- All extra units of input are equally good.
CISCE: Class 12
Important Terms
- Total Product (TP): Total output produced.
- Average Product (AP): Output per unit of variable input.
Formula: \[AP=\frac{\text{Total Output}}{\text{Units of Input}}\] - Marginal Product (MP): Extra output from adding one more unit of input.
Formula: \[MP=\text{Change in Output}\div\text{Change in Input}\]
CISCE: Class 12
Table: Example (Applied to Agriculture)
| Units of Labour | Total Production | Average Production | Marginal Production |
|---|---|---|---|
| 0 | – | – | – |
| 1 | 20 | 20 | 20 |
| 2 | 50 | 25 | 30 |
| 3 | 90 | 30 | 40 |
| 4 | 120 | 30 | 30 |
| 5 | 140 | 28 | 20 |
| 6 | 150 | 25 | 10 |
| 7 | 150 | 21.3 | 0 |
| 8 | 140 | 17.5 | -10 |
CISCE: Class 12
Stages of the Law
- Stage 1: Increasing returns – TP, AP, and MP all grow fast.
- Stage 2: Diminishing returns – TP grows slowly, AP and MP fall, and MP hits zero.
- Stage 3: Negative returns – TP drops, MP goes below zero, and AP is still positive.
CISCE: Class 12
Real-Life Application
-
Adding more workers to a small kitchen helps at first, but after a point, too many workers make it crowded and output drops.
CISCE: Class 12
Key Points: Law of Variable Proportions
- Only one input is changed; others are fixed.
- First, output improves quickly.
- Later, output slows down and may decrease.
- Businesses use this law to find the best input mix.
