Related Disciplines: Law, Economics and Business Environment
This domain draws on business law, economics and the wider business environment. On law, understand the essentials of a valid contract: offer, acceptance, consideration, intention and capacity. Know the rules on breach and remedies, the distinction between conditions and warranties, and basic principles of agency, sale of goods and negotiable instruments. Company law questions test incorporation, the corporate veil, share capital and directors' duties.
Economics questions cover demand and supply, elasticity, market structures, and macroeconomic indicators such as inflation, unemployment and GDP. Know the tools of monetary and fiscal policy and their effects. Business environment questions test the impact of regulation, competition policy and globalisation.
Traps include confusing an invitation to treat with an offer, treating consideration as a moral obligation, and mixing price elasticity with income elasticity. In economics, candidates often confuse a movement along a demand curve with a shift in the curve. In law, remember that silence generally does not constitute acceptance.
Worked example: elasticity
If a 10% price rise reduces quantity demanded by 25%, price elasticity is 25/10 = 2.5, which is elastic. Rule of thumb: elasticity greater than one means demand is sensitive to price; revenue falls when price rises.