Business Studies / Social Sciences
What the Business Studies / Social Sciences domain tests
This domain samples economics, business, accounting, and social-science reasoning. It tests definitions in use, simple quantitative analysis, and the ability to distinguish evidence from opinion.
Core rules and concepts
- Demand and supply curves shift only when a non-price determinant changes; a price change is a movement along the curve.
- Price elasticity of demand measures responsiveness: percentage change in quantity divided by percentage change in price. Use absolute value for “elastic” or “inelastic.”
- The accounting equation is assets = liabilities + equity. Revenue is not profit; profit subtracts costs.
- Opportunity cost is the value of the next best alternative, not all alternatives.
- In social research, check sampling, question wording, and correlation versus causation.
Worked example
A 10% price rise reduces quantity demanded by 20%. Find price elasticity of demand. Reasoning: elasticity = (−20%)/(+10%) = −2. Taking absolute value gives 2, so demand is elastic. Total revenue likely falls because the quantity effect outweighs the price effect. If quantity fell only 5%, elasticity would be 0.5 and demand would be inelastic.
Traps that cost marks
Using the new value rather than the original as the percentage-change base, confusing elasticity with slope, mixing assets with revenue, and assuming a statistically significant result is practically important.