IAI CB1 study plan

Map the circular flow of income and explain, with examples, how market, mixed and planned economies answer the what/how/for-whom questions.

Derive a production possibility frontier and use it to demonstrate opportunity cost, increasing marginal opportunity cost and the gains from specialisation and trade.

Construct a budget constraint and an indifference map, then locate and interpret the utility-maximising consumption bundle, including corner solutions.

Decompose a price change into income and substitution effects and state the different predicted outcomes for normal, inferior and Giffen goods.

Distinguish positive from normative statements and identify where ceteris paribus and marginal reasoning are being used in a passage of economic argument.

Distinguish the short-run production function and the law of diminishing marginal returns from long-run returns to scale, using a numerical example for each.

Derive TC, TVC, TFC, AC, AVC and MC from a production and cost table, and explain the shape and intersections of each curve.

Explain the long-run average cost envelope, economies and diseconomies of scale, and the difference between internal and external economies.

Apply the MR = MC profit-maximisation rule and the shut-down condition to decide output in the short run and long run.

Link marginal cost to the individual firm's supply curve and explain how elasticity of supply responds to time and factor mobility.

Compare the assumptions and predicted outcomes of perfect competition and pure monopoly, and derive short-run and long-run equilibrium for each.

Illustrate and quantify the deadweight loss of monopoly, and evaluate regulation options for a natural monopoly including average-cost pricing and rate-of-return regulation.

State the three conditions required for price discrimination and work through first-, second- and third-degree examples including peak-load pricing.

Explain how contestability, sunk costs and entry barriers modify the conduct and performance of firms in a given market.

Analyse monopolistic competition and oligopoly, including kinked demand, collusion, cartel instability and the prisoners' dilemma payoff matrix.

Evaluate pricing strategies such as cost-plus, limit pricing, predatory pricing and two-part tariffs against profit and welfare criteria.

Revisit the model-building ideas from domain 1 and state the assumptions and limitations behind each of the diagrams already drawn.

Identify competition-policy and regulatory arguments in a short case description and recommend an intervention with justification.

Compute GDP by income, expenditure and output approaches, and distinguish nominal from real GDP, GDP from GNP and national from domestic product.

Derive the simple and extended multiplier and calculate the effect of a change in autonomous spending, tax rate or marginal propensity to import.

Build an AD-AS diagram and use it to trace the short-run and long-run effects of demand and supply shocks, including the output gap.

Explain the functions of money, credit creation by banks and the transmission of central bank policy through interest rates, asset prices and credit conditions.

Distinguish demand-pull from cost-push inflation, measure unemployment on the main definitions, and explain the short-run and long-run Phillips curve.

Evaluate fiscal policy instruments, automatic stabilisers and the size of the multiplier against crowding-out, Ricardian equivalence and supply-side objections.

Compare conventional and unconventional monetary policy tools, and assess the case for rules versus discretion given lags, credibility and time inconsistency.

Explain the transmission channels of policy and identify policy lags, then apply them to a described recession or inflationary episode.

Assess supply-side policies, including labour-market reform and investment incentives, on output, inflation and the natural rate of unemployment.

Apply comparative advantage and the Heckscher-Ohlin reasoning to a two-country two-good numerical example, and evaluate tariffs, quotas and subsidies on welfare.

Construct a balance of payments and explain how the current, capital and financial accounts interact under fixed and floating exchange rate regimes.

Explain exchange-rate determination including purchasing power parity, interest-rate parity and overshooting, and distinguish spot from forward rates.

Describe the role and functions of financial markets and intermediaries, and evaluate market efficiency against behavioural-finance evidence on anomalies and bubbles.

Explain how credit cycles, leverage, asset-price shocks and contagion transmit between the financial sector and the real economy, and outline the regulatory response.

Consolidate all five domains into a single one-page formula and diagram sheet that you can reproduce from memory.

Sit two full timed mock papers under exam conditions and record the score, time per question and question type for every item.

Rework every item in the error log until you can explain, without notes, why the correct answer is correct and each distractor is wrong.

Practise three exam-style evaluative conclusions, each stating a judgement, two supporting arguments and one condition under which the judgement would fail.