Economics Class 12 ISC (Science) CISCE Topics and Syllabus

• Demand 
  • Demand

  1.  Demand Curve and the Law of Demand
  2. Deriving a Demand Curve from Indifference
  3. Curves and Budget Constraints 
  4.  Normal and Inferior Goods 
  5.  Substitutes and Complements 
  6.  Shifts in the Demand Curve 
  7. Movements along the Demand Curve and Shifts in the Demand Curve
• Factor Affecting Demand 
• Market Demand 
• Demand Function 
• Movement Along and Shifts in the Demand Curve 
• Demand Curve and Its Slope 
• Determinants of Demand 
• Derivation of Demand Curve 
• Diminishing Marginal Utility 
• Law of Equi-marginal Utility 
• Conditions of Consumer's Equilibrium Using Marginal Utility Analysis 
• Cardinal Approach (Utility Analysis) 
  • Measures of Utility

  1. Total Utility
  2. Marginal Utility
  3. Law of Diminishing Marginal Utility
• Ordinal Approach (Utility Analysis) 
  • Indifference curve
  • Marginal rate of substitution (MRS)
  • Law of Diminishing Marginal Rate of Substitution
  • Indifference Map
• Meaning of Utility 
• Total Utility and Marginal Utility 
• Relation Between Total, Average and Marginal Product 
• Consumer's Equilibrium 
  • Meaning of Consumer's Equilibrium
• Properties of Indifference Curve 
• Indifference Curve 
  • Features of Indifference Curve:

  1. Indifference curve slopes downwards from left to right
  2. Higher indifference curve gives greater level of utility
• Indifference Map 
  • Marginal Rate of Substitution 

meaning, factors affecting demand; Demand function; Law of Demand; derivation of demand curve; movement and shift of the demand curve; exceptions to the Law of Demand.
Law of Diminishing Marginal Utility, Law of Equimarginal Utility, consumer’s equilibrium through utility approach (Cardinal) and indifference curve analysis (Ordinal).

The concept of demand: meaning. A demand function to be specified incorporating the determinants of demand. Diagrams should be used in explaining the Law of Demand, reasons for downward slope of demand curve, its derivation using demand schedule.

Derivation of market demand curve from individual demand curve.

(a) Cardinal Utility Analysis: meaning of utility, total utility, marginal utility, relationship of TU and MU, Law of Diminishing Marginal Utility (schedule and diagram, Only assumptions to be taught, criticisms not required), Consumer’s equilibrium – one commodity (schedule and diagram), Law of Equimarginal Utility (statement, schedule) and conditions of consumer’s equilibrium using marginal utility;
(b) Ordinal Utility Analysis: Indifference Curve – its meaning and properties (including MRS and DMRS), indifference map, consumer’s budget line, Consumer’s equilibrium – condition (to be explained with the help of a diagram).

• Elasticity of Demand 
• Type of Elasticity of Demand 
  1. Price Elasticity of Demand
  2. Income Elasticity of Demand
  3. Cross Elasticity of Demand
• Measurement of Elasticity of Demand 
  • Geometric Method
  • Percentage-change Method
  • Point Method
  • Total Expenditure Method
• Degrees of Elasticity of Demand 

meaning, types of elasticity of demand, measurement of elasticity of demand; factors affecting elasticity of demand.

Various methods of measurement of the elasticity of demand: point method - percentage method, expenditure method and geometric method. (Numericals required on percentage method only). The cross and income elasticity of demand must be explained. Degrees of elasticity of demand to be explained. Use diagrams wherever necessary.

• Concept of Supply - Supply Schedule and Supply Curve 
• Difference Between Stock and Supply 
• Determinants of Supply 
• Supply Curve and Schedule 
  • Supply Curve and Its Slope
  • Supply Schedule
• Measurement of Price Elasticity of Supply - Percentage-change Method 
• Measurement of Price Elasticity of Supply - Geometric Method 
• Movements Along and Shifts in Supply Curve 

meaning; difference between stock and supply; determinants of supply; Law of Supply; movement and shift of the supply curve; elasticity of supply.

Difference between stock (actual supply) and supply (intended supply) with the help of relevant examples. A supply function should be specified and explained. Law of Supply, supply schedule and supply curve. Derivation of market supply curve from individual supply curve. Movement and shift of the supply curve, exceptions to the Law of Supply.Elasticity of Supply: Meaning and measurement of elasticity of supply by percentage method and geometric method.

• Market Equilibrium 

  Equilibrium, Excess Demand, Excess Supply

  • Market Equilibrium: Fixed Number of Firms
  • Market Equilibrium: Free Entry and Exit
• Market Disequilibrium 
• Effects of Shifts in Demand and Supply 
• Equilibrium Price 
• Simple Applications of Demand and Supply 
• Price Ceiling 
  • Maximum and Minimum
• Price Floor 
• Rationing with Help of Demand and Supply Curves 

Equilibrium and disequilibrium; Equilibrium price and effect of changes in demand and supply on the equilibrium price. Simple applications of tools of demand and supply.
A basic understanding of the concept of equilibrium. The effects of changes in demand and supply - both along the curves and shift of the curves to be explained. Basic understanding of Price control, rationing, Price ceiling and Floor price with the help of demand and supply curves.

• Production Function 
  • Meaning
  • Short-run Production
  • Long run Production
• Production Function - Long-run 
• Production Function - Short-run 
• Concept of Production 
• Returns to a Factor 
• Law of Variable Proportions 
  • Assumptions
  • Total Product (TP)
  • Average Product (AP)
  • Marginal Product (MP)
  • Stages of Production: Stage I, Stage II and Stage III
• Average and Marginal Physical Products 

Concept of production and production function (short run and long run production function), returns to a factor, total, average and marginal physical products; Law of Variable Proportions and its three stages.
A production function (concept only). Law of Variable Proportions: statement, assumptions, schedule (for the purpose of understanding and not for testing), diagram and explanation to the three stages

• Basic Concepts of Cost 
• Short Run Cost Curve and Long Run Cost Curves 
• Meaning of Revenue 
• Total, Average and Marginal Revenue 
• Relationships of Marginal Revenue and Total Revenue 
• Concept of Producer's Equilibrium 
  • Meaning of Producer's Equilibrium
  • Producer's Equilibrium Conditionsin Terms of Marginal Revenue-marginal Cost.
• Cost - Fixed Cost 
• Cost -variable Cost 
• Cost - Total Cost 
• Cost - Average Cost 
• Cost - Average Variable Cost 
• Cost - Marginal Cost 
• Relationship Between Average Variable Cost and Average Total Cost and Marginal Cost 
• Concept of Opportunity Cost 

Basic concepts of cost; fixed cost, variable cost, total cost, marginal cost and average cost – their relationships; opportunity cost; short run and long run cost curves. Revenue: meaning; average revenue, marginal revenue and total revenue and their relationships under perfect competition and imperfect competition, Producer’s equilibrium.

Basic concepts – private cost, economic cost, social cost, money cost, real cost, explicit cost, implicit cost.
Cost concepts – Fixed cost, variable cost, total cost, marginal cost, average cost with schedule and diagram; relationship between average cost, marginal cost, total cost (only concepts of long run and short run cost curves, derivations not required). Opportunity cost – meaning only. Difference between accounting cost and opportunity cost.

Revenue – Average revenue, marginal revenue, total revenue – concepts and relationships under perfect competition and imperfect competition. Producer’s equilibrium (Profit maximization goal) – meaning; conditions:
(a) TR and TC approach along with diagram
(b) MR and MC approach along with diagram.

• Features of Perfect Competition 
• Features of Monopolistic Competition 
• Features of Oligopoly 
• Forms of Market 
• Features of Monopoly 
• Meaning of Monopsony 

perfect competition, monopolistic competition, oligopoly, monopoly, monopsony; characteristics of the various market forms; equilibrium of a firm in perfect competition under short run and long run.
Features of perfect competition, monopolistic competition, oligopoly, monopoly and monopsony (meaning only). Equilibrium of a firm in perfect competition under short run (explanation and diagram, shut down point and break even point) and long run (diagram not required).

• Meaning of Money 
  • Meaning of money
  • Kinds of money
• Function of Money - Primary Function 
  • Medium of exchange
  • Measure of value
• Function of Money - Secondary Functions 
• Function of Money - Contingent Function 
• Meaning of Supply of Money 
  • Meaning of Money Supply
  • Determinants of Money Supply
• Meaning of Inflation 
  • Meaning, demand pull and cost push

meaning, functions of money, supply of money.
Meaning, kinds of money, functions of money (primary, secondary and contingent) to be explained; supply of money (only meaning of M1, M2, M3 & M4).

• Function of Commercial Banks 
• High Powered Money 
• Money Creation Or Credit Creation by the Commercial Banking System 
• Definition - Central Bank 
• Regulatory Role of the Central Bank 
• Function of Central Bank - Bank of Issue 
• Central Bank Function - Banker's Bank 
• Central Bank Function - Controller of Credit 
• Central Bank Function - Goverment Bank 
• Repo Rate and Reverse Repo Rate 
• Cash Reserve Ratio (CRR) 
• Statutory Liquidity Ratio (SLR) 
• Open Market Operations 

functions of commercial bank; high powered money, credit creation by commercial banks; Central Bank: functions.
Basic understanding of the functions of commercial banks, credit creation process with limitation. The regulatory role of the Central Bank, its functions and the way it controls the flow of credit needs to be explained. A brief mention may be made of quantitative CRR, SLR, Bank Rate policy (reporate and reverse reporate) and Open Market Operations) and qualitative methods

• Concept of Balance of Payments Account 
  • Meaning of Balance of Payments Account
  • Components of Balance of Payments Account
  • Causes of disequilibrium and how the disequilibrium can be corrected.
• Concept of Foreign Exchange Rate 
  • Meaning of Foreign Exchange Rate
  • Meaning of Fixed and Flexible Rates and Managed Floating
  • Determination of Equilibrium Foreign Exchange Rate
• Determination of Exchange Rate in a Free Market 
• Depreciation 
  • Meaning
  • Definition
  • Importance
  • Useful life of the asset
  • Depreciable assets
• Devaluation of a Currency 
• Concepts of Appreciation 

meaning, components;
foreign exchange – meaning, determination of exchange rate (Flexible).
Balance of Payment - Meaning and components; Causes of disequilibrium and how the disequilibrium can be corrected;

Foreign Exchange Rate – meaning, meaning of fixed and flexible exchange rate, determination of exchange rate in a free market. Concepts of depreciation, appreciation, devaluation and revaluation (meaning only).

• Meaning of Fiscal Policy 
• Instruments of Fiscal Policy 
• Meaning of Public Revenue 
• Direct and Indirect Tax 
• Meaning of Taxes 
  • Types of Taxes

  1. Direct Tax
  2. Indirect Tax
• Types of Taxes 
• Meaning of Public Expenditure 
• Importance of Public Expenditure 
• Meaning of Public Debt 
• Public Debt - Redemption 
• Meaning of Deficit Financing 

meaning and instruments of fiscal policy.
Meaning and instruments of fiscal policy – Public Revenue: Meaning, taxes (Meaning
and types), difference between direct and indirect taxes; Public Expenditure: Meaning and importance; Public Debt: Meaning and redemption; Deficit Financing: meaning

• Meaning of Government Budget 
• Components of Budget 
  • Capital Budget
  • Expenditure
  • Reciept
  • Revenue Budget
• Types of Budget - Union 
• Types of Budget - State 
• Measures of Government Deficit Or Surpluses 
  1. Revenue Deficit
  2. Fiscal Deficit
  3. Primary Deficit
• Deficit Budget - Primary Deficit 
• Implications of Revenue Deficit, Fiscal Deficit, Primary Deficit 

meaning, types and components.
Meaning and types of Government budget – union, state; components – revenue and capital. Concept of deficit budget: revenue deficit, fiscal deficit, primary deficit – their meaning and implications.

• Circular Flow of Income (Two Sector Model) 
• Circular Flow of Income (Three and Four Sector Models) 
  • leakages
  • injections

A simple model explaining the circular flow of income with two, three and four sector models with leakages and injections.

• Aggregates Related to National Income - Gross National Product (GNP) 
  • GNP at factor cost and market prices
• Aggregates Related to National Income - Net National Product (NNP) 
  • NNP at factor cost and market prices.
• Gross and Net Domestic Product (GDP and NDP) 
  • GDP and NDP at the market price and factor cost
• Concepts and Definition of NY 
• Aggregates related to National Income - Private Income 
• Aggregates Related to National Income - Personal Disposable Income 
• National Disposable Income (Gross and Net) 
• Parameters of Development - per Capita Income 
• Real GDP and Nominal GDP 
  • GDP and Welfare
  • GDP as an indicator of economic welfare

Concepts and definition of NY, GNP, GDP, NNP, private income, personal income, personal disposable income, National Disposable Income and per capita income; relationship between the income concepts.

A brief understanding of the mentioned national income aggregates is needed. The concepts of GNP and NNP should be explained both at factor cost and market prices, real GDP and nominal GDP, National.

Disposable Income (Gross and Net), GDP and Welfare, GDP as an indicator of Economic welfare.

• Methods of Calculating National Income - Value Added Or Product Method 
• Methods of Measurement of National Income 
  • Income Method 
  • Expenditure Method 
• Simple Numericals Based on All the Methods 
  • Value Added or Product method
  •  Expenditure method
  • Income method
• Precautions and Difficulties of Measuring National Income Method 
  • Precautions

  • Product Method
  • Income Method (Factor Earning Method)
  • The Expenditure Method (Outlay method)

  • Difficulties

  • Transfer payments
  • Difficulties in assessing depreciation allowance
  • Unpaid services
  • Income from illegal activities
  • Production for self-consumption and changing price
  • Capital Gains 
  • Statistical problems

product or value-added method; income method and expenditure method with simple numericals based on them.
Simple numericals based on all the methods to be covered for better understanding of the concept. Precautions and difficulties of measuring National Income for each method.