Economics and Business Studies
Core concepts
Economics covers scarcity and choice, supply and demand, elasticity, market structures, market failure, macroeconomic indicators (GDP, inflation, unemployment), and government policy. Business studies covers the business plan, costs and revenue, break-even analysis, marketing mix, financing, and financial statements.
Traps examiners set
- Shifting along versus shifting of a curve: a price change moves along the demand curve; income or preference changes shift it.
- Confusing turnover with profit, and gross with net profit.
- Elasticity interpretation: inelastic demand means raising price raises revenue; elastic demand means it lowers revenue.
- Break-even errors from omitting fixed costs or mixing units.
- Real versus nominal values when comparing across years.
Rule of thumb
For any market question, state which determinant changed, whether it shifts supply or demand, and the resulting effect on equilibrium price and quantity. For break-even, use break-even quantity = fixed costs ÷ (price − variable cost per unit).
Worked example
A firm has fixed costs of €60,000, a price of €20, and variable cost of €12 per unit. Contribution per unit is €8, so break-even is 7,500 units. If the price rises to €22, contribution becomes €10 and break-even falls to 6,000 units. Note the direction: higher contribution lowers the break-even quantity.
Exam technique
Show calculations step by step, use correct economic terminology, and interpret results in a sentence rather than leaving a bare number.