CT7 Business Economics: An Introductory Brief

CT7 is the paper code for Business Economics. Business Economics is a special branch of economics that bridges the gap between economic theory and business management and so helps relate economics to business issues and make a decision based on the same.

This subject helps in understanding the functioning of an economy at the micro and macro level. CT7 aims to introduce the core economic principles and how these can be used in a business environment to help shape behavior and decision making. All the concepts introduced in this subject are very useful when setting assumptions regarding elements of future experience while carrying out an actuarial valuation.

Here is a basic idea of what one can expect to study in CT7:

  • Introduces us to the concepts of micro and macroeconomics and how they differ from each other.
  • Describes how market equilibrium quantity and price are obtained and what impact changes in market demand and supply may have on the equilibrium position with the help of graphs.
  • Defines different types of elasticities of demand and supply and explains its effect on the workings of the market in the short and the long run.
  • Helps in understanding concepts like a marginal utility, cost, revenue, profit and graphs related to it; consumer surplus, adverse selection, moral hazard, opportunity cost, cost, revenue, profit, product differentiation and its types, marketing and its four P, advertising and its effects, pricing and the product lifecycle.
  • Tells us about the calculation of maximum insurance premium for an individual and the minimum insurance premium required by an insurer.
  • Helps in understanding the different types of market structure in depth.
  • Tells us about the different pricing strategies adopted by the firm.
  • Investigates the reasons for market failure and the types of government intervention that can be implemented to address this failure and how this intervention can help in increasing competition within a market.
  • Helps in understanding concepts like balance of payment, exchange rates and their interaction with each other, circular flow of income, four major macroeconomic objectives, Phillips curve.
  • Talks about how the level of national income is calculated and determined.
  • What is money, how is it created and how it affects interest rates and the economy?
  • Explores the relationship between unemployment and inflation.
  • Discusses the effect of demand and supply side policies on business and the economy.


Here I discuss the common doubts students have regarding CT7:

Q. What are the changes one can expect in CT7 under the 2019 curriculum?
Under the 2019 curriculum, CT7 will be referred to as CB2. As far as the syllabus goes, no change in content is expected. Also, it will continue to be a 3-hour exam.

Q. When should one appear for CT7?
As there will be no major changes in CT7 under the new curriculum, so one can either appear for it in September 2018 or can appear for it anytime after the implementation of the new curriculum.

Q. What additional books need to be read to prepare for CT7?
Though the study material provided by the institute mentioned a few other books that could be used as a reference but in my opinion the study material is very informative and should be sufficient for clearing the exam.

Q. Does CT7 require knowledge of any other CT paper?
No, CT7 can be done in isolation as it is not significantly dependent on any other CT paper.

Q. Is there any CT subject that might require some knowledge of CT7
Ans. Subject CT8 (Financial Economics) may require a person to know some concepts of CT7.

Q. How is the CT7 question paper structured
Ans. CT7 is one of the more wordy subjects with multiple choice as well as essay type questions. The question paper generally contains 26-30 multiple choice question of 1.5 marks each and around 6-10 long practical or theory questions.

To know more on how to prepare for actuarial science exams, click here.

You might also like More from author