CSS Economics Past Paper 2026

Questions

1. Q. 2

   “Scarcity leads to economic choices.” Pick one of the famous principles of economics and explain this concept using a graph. Give an example of an economic decision you made and what you gave up when you made your choice.

2. Q. 3

   “No monopoly firm can operate at a loss in the long run; this poses a dilemma for the regulatory agency: either it must abandon its goal of marginal cost pricing, or the government must subsidize the monopoly forever, or allow the firms to opt for two-tier pricing systems.” Discuss this statement with the help of an appropriate diagram of price regulation for a natural monopoly, and calculate the profits before and after the price regulation of natural monopolies.

3. Q. 4

   Define aggregate demand and aggregate supply curves. The long-run equilibrium of the economy is found where the aggregate demand curve crosses the long-run aggregate supply curve. What will happen to this long-run equilibrium when the aggregate supply curve shifts?

4. Q. 5

   Milton Friedman’s Quantity Theory of Money is considered better by some economists than the Keynesian Liquidity Preference Theory. Compare and contrast the theories and justify your view.

5. Q. 6

   What does the Trade Theory of Comparative Advantage postulate? What factors does this theorem identify as the fundamental determinant of comparative advantage and trade?

6. Q. 7

   How are the Gini Coefficient and the Lorenz Curve related? Use an example to illustrate how these two can be used as a summary measure of equality and inequality in a nation’s distribution of income.

7. Q. 820 marks

   Write short notes on any TWO of the following: (10 each)  Harrod Domar Growth Model  Pros and Cons of CPEC  Laffer Curve

Standard FPSC instructions

Printed on this and every CSS paper.

• Part-II is to be attempted on the separate Answer Book.
• All the parts (if any) of each question must be attempted at one place instead of at different places.
• Write Q. No. in the Answer Book in accordance with Q. No. in the question paper.
• No page/space be left blank between the answers. All the blank pages of the Answer Book must be crossed.
• Extra attempt of any question or any part of the attempted question will not be considered.