Economics and Business Environment
What this domain tests
Economics and Business Environment tests microeconomics, macroeconomics and the Myanmar business context. You should be able to explain demand and supply, elasticity, market structures, national income, inflation, unemployment, fiscal and monetary policy, trade and exchange rates.
Core rules
- A movement along the demand curve follows a price change; a shift follows income, tastes, expectations or prices of related goods.
- Price elasticity of demand measures responsiveness: elastic demand means quantity changes proportionally more than price.
- Market structures range from perfect competition to monopoly, oligopoly and monopolistic competition.
- GDP measures output at market prices; real GDP adjusts for inflation.
- Fiscal policy uses government spending and taxation; monetary policy uses interest rates, reserve requirements and money supply.
- Exchange rate changes affect exports, imports and foreign-currency debt.
Worked example
Demand elasticity is −2. A firm cuts price by 10%. Quantity demanded rises by approximately 20%. If original revenue was MMK 1,000,000, new price is 90% and new quantity is 120%, so new revenue = 1,000,000 × 0.90 × 1.20 = MMK 1,080,000. Revenue rises because demand is elastic. If demand were inelastic, the same price cut would reduce revenue.
Traps
- Confusing a shift in demand with a movement along the curve.
- Using nominal GDP to compare output across years without deflating.
- Assuming inflation hurts every group equally; borrowers and lenders are affected differently.
- Treating a currency depreciation as always good for the economy.