SSC CGL Economics · Microeconomics — Demand, Supply and Market Structure
Basic Concepts, Demand and Elasticity
Scarcity and opportunity cost, the production possibility frontier, kinds of goods and economies, public goods and free riders, indifference curves, and price elasticity of demand.
Why this matters
Ten questions in the bank: two from the 2023 shifts, one from the 2024 shifts and seven from the 2025 shifts, and nine of them EASY. Each one asks a single definition, so the definitions table is all there is to learn.
Concept 1 of 2: Scarcity, choice and kinds of goods
Definition
Choice:
- Lionel Robbins gave the scarcity definition of economics (1932).
- Opportunity cost: what the best option passed up was worth. It is not money spent.
- The production possibility frontier shows the most an economy can make of two goods; its slope shows the trade-off and opportunity cost. It says nothing about the government's budget.
Goods and economies:
- Capital goods: machines, tools and buildings, used to make other goods over many years.
- Marketable surplus: output left after the farmer's own needs. A growing one shows commercialisation of farming.
- A public good is non-excludable, so a person can use it without paying: that person is a free rider.
- A mixed economy has the private and public sectors side by side; India chose it after independence.
- In every economy the government frames laws and delivers justice.
Practise this conceptself-check · 3 quick reps
The same idea in a real exam question:
Example 1 · Microeconomics — Demand, Supply and Market Structure · Basic Concepts, Demand and Elasticity
Robbins, not Smith or Marshall
Concept 2 of 2: Indifference curves and price elasticity
Definition
Consumer choice:
- An indifference curve joins all bundles of two goods that give equal satisfaction.
- A budget line shows the bundles a consumer can afford; an isoquant is the producer's equal-output curve.
Price elasticity of demand:
- Above 1 the demand is elastic, below 1 it is inelastic, and at exactly 1 it is unitary.
- Use the sizes of the changes; the minus sign is dropped.
Price elasticity of demand
- Price elasticity of demand
Worked example
Practise this conceptself-check · 3 quick reps
The same idea in a real exam question:
Example 2 · Microeconomics — Demand, Supply and Market Structure · Basic Concepts, Demand and Elasticity
An isoquant is for producers
Summary — formulas & gotchas at a glance
A revision cheat-sheet for the formulas and gotchas above. Click any concept name to jump back to its full explanation.
Formulas (1)
- Indifference curves and price elasticity
Price elasticity of demand
Reference tables (1)
Watch out for (2)
- Robbins, not Smith or Marshall→ Scarcity, choice and kinds of goods
- An isoquant is for producers→ Indifference curves and price elasticity
Test yourself on a real paper
Sit a past SSC CGL paper, timed and marked the way the exam marks it. You see your score and every answer the moment you finish. Free to start.