33 ECONOMICS (ELECTIVE)

APPENDIX A (Outlines of Test) PAPER A: Basic Mathematics and Microeconomics PAPER !: Macroeconomics and Economic Development of Pakistan Tot"l: A$$en%i& ' (S(ll"'i "n% )ou*ses of *e"%in+) P"$e* , A SECTION - I !ASIC MAT.EMATICS 1/01NCTION AND E21ATIONS:
(i) Function: Relation Vs Function. Variables Constants nd Parameters. !"pes #f Function$ %inear nd &on'%inear( E)ponential nd %o*arithmic. +raphical Presentation #f Function. E)amples From Micro nd Macro Economics. (ii)Equation: E,uation Vs -dentities. .olution #f %inear/ 0uadratic nd .imultaneous E,uations. E,uilibrium nal"sis -n Economics $ Partial Market E,uilibrium ( %inear nd 0uadratic Models. E,uilibrium -n &ational -ncome.

1 1 #

#/ DERIVATIVES:
!he concept of derivative. !he concept of limit and its relevance to derivatives. .lope vs elasticit" of a Function. Rules of Differentiation$ Constant/ po1er/ .um/ Difference/ Product and 0uotient Function Rule. !he Derivation of Mar*inal 0uantities in economics. !he calculation of Elasticit" of Demand and .uppl".

3/ MAXIMA AND MINIMA O0 01NCTIONS:

#ptimum values vs E)treme Relative Ma)ima and Minima/ point of infle)ion/ Criteria for Relative Ma)ima and Minima. First order condition and second order condition. Constrained #ptimi2ation. Problems of optimi2ation in Economics$ Profit/ 3tilit" and Revenue Ma)imi2ation. Cost Minimi2ation. !he E,uilibrium of a Consumer and a Firm. !he least cost combination of -nputs.

SECTION II: MICRO ECONOMCIS 1/T.E NAT1RE AND IMPORTANCE O0 MICRO ECONIMICS:
Basic problems of Micro Economics !heor". !he Determination of #utput composition. !he llocation Resource. !he distribution of the Product and the Maintenance and E)pansion to the Productive capacit" of the econom". Market econom" and the treatment of basic economic problems. !he relative importance of market mechanism in capitalism/ socialism and -slamic Economics s"stem.

#/T.E T.EOR4 O0 CONS1MER !E.AVIO1R:

!he 3tilit" !heor" of Consumer Behaviour. -ndifference Preference nal"sis. -ndifference Curves nd Mar*inal .ubstitution. Consumer E,uilibrium. -ncome .ubstitution nd Price Effect #f &ormal/ -nferior nd +iffen +ood/ Derivation #f Demand Curve From Price'Consumption Curve. Revealed Preference !heor". Price -ncome nd Cross Elasticit" Demand nd !heir Measurement.

3/T.E T.EOR4 O0 PROD1CTION COSTS AND REVEN1ES:

!he Concept of Production Function. -so'0uant nd -so'Cost Curves. Mar*inal Rate of !echnical .ubstitution. #ptimal Combination of Resources. !he Cost and Revenue of Firm.

5/T.E T.EOR4 O0 0IRM !E.AVIO1R AND MAR6ET OR7ANI8ATION: (a) Pe*fe)t Co9$etition
ssumptions Competition. E,uilibrium of %on* Periods .uppl" Curve of Firm and -ndustr". Firm and -ndustr" durin* .hort and %on* Periods. .hort and

(') MONOPOL4:
!he &ature and E)tent of PuMs Monopol". .hort'Run and %on* E,uilibrium 3nder Pure Monopol". Dumpin* and Price Discrimination. 4elfare Effects #f Pure Monopolies.

(c) I9$e*fe)t Co9$etition:

Monopolistic competition and its main characteristics. .hort'run and lon* run E,uilibrium under monopolistic competition. Pricin* and output determination under oli*opol". Price leadership and cartels. -nefficiencies due to imperfect competition.

:/ PRICIN7 AND EMPLO4MENT O0 RESO1RCES:

!he Mar*inal Productivit" !heor" of Resource Pricin*. !he Modern !heor" #f Resource Pricin* nd Emplo"ment. !he Demand Curve of Firm 4ith #ne Variable Resource. !he Demand Curve of a Firm 4ith .everal Variable Resources. !he Market Demand Curve. !he .uppl" Curve of Resources. Resource Pricin* 3nder Perfect Competition/ Monopol" and Monopson".

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NOTE
(i).-n paper 6 6 four ,uestions 1ill be set from .ection'- and si) ,uestions from .ection'--. !he candidates 1ill be re,uired to attempt 78 ,uestions in all selectin* 73 ,uestions from section'- and 79 ,uestions from section'--. (ii) -n Paper :B; si) ,uestions 1ill be best from .ection'- and four ,uestions from .ection'--. !he candidates 1ill be re,uired to attempt five ,uestions in all selectin* three ,uestions from .ection'- and t1o ,uestions from .ection'--.

Recommended books:
(i) Chien*/ lpha C/ (Ii) =.Parr" %e1is (Iii) Fer*uson > +ould<s (Vi) +lahe/ Fred R. (V) Prof. bdul +hani Chaudhar" (Vi) Dr. Muhammad @ussain Chaudhar" AviiBM. @anif slam Fundamentals Methods of Mathematical Economics< 3rd Edition. : n -ntroduction of Mathematics !heor"; nd 9nd Edition. :Microeconomics !heor"; ? Edition. :Macroeconomics; 9nd Edition. :Rahber'e'Muashiat; :Economic !hoer"; :Economic !heor";

PAPER-!: MACRO ECONOMICS AND ECONOMIC DEVELOPMENT O0 PA6ISTAN SECTION - I MACRO ECONOMIC: 1/ A 0RAME - ;OR6 0OR MACRO ECONOMICS
Macro Economics Vs Micro Economics. Macro Economics. Macro Economic Problems$ 3nemplo"ment/ -nflation nd +ro1th.

#/ DETERMINATION O0 NATIONAL INCOM AND EMPLO4MENT (t<o se)to* E)ono9() (i) T=e Cl"ssi)"l T=eo*( of E9$lo(9ent:
.a"Cs %a1 of Market. **re*ate Demand and the 0uantit" !heor" of Mone". Real 4a*e Function. Classical Macro Economics ."stem/ its Dia*rammatic representa tion. De"nesian Criti,ue of the Classical ."stem.

(ii) 6e(nesi"n T=eo*( of In)o9e "n% E9$lo(9ent:

E,uilibrium %evel of &ational -ncome$ .avin* and -nvestment pproach( Consumption and -nvestment pproach. Relation Bet1een -nvestment and -ncome. -nvestment Multiplier. -nflationar" and Deflationar" +aps and Full Emplo"ment level.

3/ DETERMINANTS O0 NATIONAL INCOME (T<o Se)to* E)ono9() : (i) Consu9$tion:

Consumption and .avin* Functions. De"nesian Ps"cholo*ical %a1 of Consumption. Determinants of Consumption. E)planation of the #bserved Relationship bet1een consumption and -ncome Relative -ncome/ Permanent -ncome and %ife C"cle !heories of Consumption.

(ii) In>est9ent:
-nvestment and Capital/ Determinants of -nvestment. Mar*inal Efficienc" of Capital AMECB and Mar*inal Efficienc" of -nvestment AME-B. #ptimal %evel of -nvestment. !he Principals of cceleration.

5/ 7ENERAL E21ILI!RI1M IN T.E 7OODS AND MONE4 MAR6ET:

!he Derivation of -. Function in the +oods Market. !he .lope and position of -. Curve. !he Derivation of %M Function in the ' Mone" Market. !he Demand for and .uppl" of Mone". !he -nterest Rate. !he .lope of position of %M Curve. .imultaneous E,uilibrium in the *oods and Mone" Market. dEustments to1ards E,uilibrium.

:/ 0L1CT1ATIONS IN NATIONAL INCOME:

Business C"cles and their main Features.-nteractionof Multiplier and Measures. ccelerator. Counter'C"clical

?/ MONETAR4 IN0L1ENCE ON INCOME DETERMINATION:

Monetar" Polic"$ -ts &ature/ #bEectives and -nstruments. -nfluence of Monetar" Polic" on -ncome Determination Ab" affectin* CF-F+B. Mone" and -nflation/ .ta*flation.

@/ 0ISCAL POLIC4 AND INCOME DETERMINATION:

Fiscal Polic"$ -ts &ature/ #bEectives and -nstruments. !he -mpact of +overnment E)penditure/ !a)es and !ransfer Pa"ments in the E,uilibrium %evel of &ational -ncome.

A/ INTERNATIONAL TRADE AND INCOME DETERMINATION

!heor" of Comparative dvanta*e. Classical and @ackcher'#hlin !heor". Balance of Pa"ments. Dise,uilibrium and dEustment Policies. Devaluation and Revaluation. Depreciation and ppreciation of E)chan*e Rates. Determination of &ational -ncome in a Four .ector Econom". !he Forei*n !rade Multiplier and Chan*es in the %evel of -ncome.

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SECTION , II: ECONOMIC DEVELOPMENT O0 PA6ISTAN 1/T.E CONCEPT AND MEAS1REMENT O0 ECONOMIC DEVELOPMENT:
Main Features of Developin* Econom" 1ith .pecial Reference to Pakistan.

#/A7RIC1LT1RE AND IND1STR4$

Relative -mportance of *ricultural and -ndustrial .ectors in the Economic Development of Pakistan.

3/ECONOMIC DEVELOPMENT T.RO17. PLANNIN7:

&eed and Role of Development Plannin*. Market -mperfections and Price Distortions. .hort !erm/ Medium !erm and %on* !erm Plans. Formulation of #bEective tar*ets and .trate*" in Development Plannin*.

5/ECONOMIC PLANNIN7 IN PA6ISTAN:

Plannin* Machiner" in Pakistan. =ustification of Economic Plannin* in Pakistan. Factors Prohibitive in Effective Plannin* in Pakistan. Main Contours and Critic Evaluation of the %ast Five Gear Plan A.eventh Five Gear PlanB 1ith reference to .trate*ies/ #bEectives/ !ar*ets and chievements. Role of nnual Plannin* in Economic Development.

:/ RESO1RCE MO!ILI8ATION 0OR PLANNED ECONOMIC DEVELOPMEN IN PA6ISTAN : (i) 0in"n)i"l Resou*)es :
Domestic and Forei*n Resources of Pakistan. E)tent of PakistanCs Dependence on Forei*n Debt .ervicin* Problem. id and

(ii) .u9"n Resou*)es:

@uman Resource Mobili2ation in Pakistan. !he &eed and Role of Manpo1er Plannin*.

NOTE
(i).-n paper 6 6 four ,uestions 1ill be set from .ection'- and si) ,uestions from .ection'--. !he candidates 1ill be re,uired to attempt 78 ,uestions in all selectin* 73 ,uestions from section'- and 79 ,uestions from section'--. (ii) -n Paper :B; si) ,uestions 1ill be best from .ection'- and four ,uestions from .ection'--. !he candidates 1ill be re,uired to attempt five ,uestions in all selectin* three ,uestions from .ection'- and t1o ,uestions from .ection'--.

Recommended books:
(i) Chien*/ lpha C/ (Ii) =.Parr" %e1is (Iii) Fer*uson > +ould<s (Vi) +lahe/ Fred R. (V) Prof. bdul +hani Chaudhar" (Vi) Dr. Muhammad @ussain Chaudhar" AviiBM. @anif slam Fundamentals Methods of Mathematical Economics< 3rd Edition. : n -ntroduction of Mathematics !heor"; nd 9nd Edition. :Microeconomics !heor"; ? Edition. :Macroeconomics; 9nd Edition. :Rahber'e'Muashiat; :Economic !hoer"; :Economic !heor";