Economics and Commercial Geography
This domain combines elementary economics - wants, utility, demand, elasticity, factors of production - with the commercial geography of India: where crops, minerals and industries are located and why. Expect short definitional answers plus location-based questions.
Core concepts
- Law of demand: other things equal, quantity demanded rises as price falls. A price change causes movement along the curve; income, taste or substitute-price changes shift the curve.
- Factors of production and rewards: land–rent, labour–wages, capital–interest, entrepreneur–profit.
- Sectors: primary (agriculture, mining), secondary (manufacturing), tertiary (services).
- Location factors: raw material, power, water, transport, market, labour, climate, government policy.
India-specific facts to memorise
- Crops: rice - West Bengal; wheat - Uttar Pradesh; sugarcane - Uttar Pradesh; cotton - Gujarat and Maharashtra; jute - West Bengal; tea - Assam.
- Minerals: iron ore - Odisha, Chhattisgarh, Jharkhand; coal - Jharkhand, Odisha; mica - Jharkhand, Andhra Pradesh.
- Industries: cotton textiles - Mumbai and Ahmedabad; jute - Kolkata; iron and steel - Jamshedpur, Bhilai, Rourkela.
Worked example
A seller cuts price from ₹10 to ₹8 and sales rise from 100 to 150 units. Percentage change in quantity = (150 − 100)/100 × 100 = 50%; percentage change in price = (8 − 10)/10 × 100 = −20%. Ignoring the sign, elasticity = 50 ÷ 20 = 2.5. Since 2.5 > 1, demand is elastic, and revenue rises from ₹1,000 to ₹1,200 - a price cut pays when demand is elastic.
Traps that cost marks
- Calling a price fall an "increase in demand" instead of an extension of demand.
- Reporting elasticity as −2.5 and then comparing it wrongly; use the absolute value.
- Swapping jute (West Bengal) with cotton (Gujarat–Maharashtra).
- Listing location factors without linking them to the specific industry asked about.