GLOSSARY

1. Economics:- It the branch of knowledge which is concerned with production, consumption and transfer
of wealth.
2. Business Economics:- The use of economic analysis to make business decisions involving the best
use of an organization’s scarce resources.
3. Micro economics:- It is basically the study of behavior of different individuals and organizations within
an economic system. Here the focus is on a small number of group of units rather than all the units
combined.
4. Macro economics:- It is the study of the overall economic phenomena of the economy as a whole,
rather than its individual parts. Accordingly, in Macro Economics, we study the behavior of the large
economic aggregates.
5. Positive Economics:- It is the branch of economics that concerns the description and explanation of
economic phenomena. It focuses on facts and cause and effect relationships.
6. Normative Economics:- It is that part of economics that expresses value judgements about economic
fairness or what the outcome of the economy or goals of public policy ought to be.
7. Economic System:- An economic system refers to the sum total of arrangements for the production
and distribution of goods and services in a society. It includes various individuals and economic systems.
8. Capitalist Economy:- An economic system in which all means of production are owned and controlled
by private individuals for profit.
9. Socialist Economy:- An economic system where the resources are allocated according to the
commands of a central planning authority and market forces have no role to play in the allocation of
resources.
10. Mixed Economy:- An economic system which depends on both markets and governments for allocation
of resources. The aim is to include the best features of both Capitalist and Socialist Economy.
11. Demand:- The various quantities of a given commodity or service which the consumers would buy in
one market during a given period of time, at various prices, or at various incomes, or at various prices
of related goods.
12. Market demand:-It is defined as the sum of individual demands for a product at a price per unit of time.

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13. Elasticity of demand:- It is defined as the responsiveness of the quantity demanded of a good to
changes in one of the variables on which demand depends. More precisely, elasticity of demand is the
percentage change in quantity demanded divided by the percentage change in one of the variables on
which demand depends.
14. Inferior goods:- Inferior goods are those goods whose quantity demanded decreases with the increase
in money income.
15. Price elasticity:- It expresses the response of quantity demanded of a good to a change in its price,
given the consumer’s income, his tastes and prices of all other goods.
16. Income Elasticity:- It is the degree of responsiveness of quantity demanded of a good to changes in
the income of consumers.
17. Cross Demand:- It refers to the quantities of a commodity or service which will be purchased with
reference to changes in price, not of that particular commodity, but of other inter-related commodities,
other things remaining the same.
18. Cross Elasticity:- A change in the demand for one good in response to a change in the price of another
good represents cross elasticity of demand of the former good for the latter good.
19. Advertisement Elasticity:- Advertisement elasticity of sales or promotional elasticity of demand is the
responsiveness of a good’s demand to changes in firm’s spending or advertising. The advertising
elasticity of demand measures the percentage change in demand that occurs given a one percent
change in advertisement expenditure.
20. Demand forecasting:- It is the art and science of predicting the probable demand for a product or a
service at some future date on the basis of certain past behaviou patterns of some related events and
the prevailing trends in the present.
21. Producers goods:- Producers goods are those goods which are used for the production of other goods-
either consumer goods or producer goods themselves.
22. Consumer goods:- Those goods which are used for final consumption.
23. Utility:- Utility is the anticipated satisfaction by the consumer, and satisfaction is the actual satisfaction
derived.
24. Total utility:- It is the sum of utility derived from different units of a commodity consumed by a consumer.
25. Marginal utility:- It is the addition made to total utility by the consumption of an additional unit of a
commodity.
26. Consumer surplus:- Is is defined as the excess of price that the the consumer is ready to pay from
which he actually pays.
27. Indifference curve:- It is a curve which represents all those combinations of two goods which give same
satisfaction to the consumer.
28. Indifference map:- A collection of many indifference curves where each curve represents a certain
level of satisfaction. In short, a set of indifference curve is called indifference map.

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29. Supply:- It refers to the amount of a good or service that the producers are willing and able to offer to
the market at various prices during a given period of time.
30. Elasticity of Supply:- It is defined as the responsiveness of the quantity supplied of a good to a change
in its price.
31. Equilibrium price:- The price at which the wishes of both the buyers and sellers are satisfied. At this
price, the amount that buyers want to buy and sellers want to sell are equal.
32. Production:- It is the organized activity of transforming resources into finished products in the form of
goods and services.
33. Land:- The term “land” is used in a special sense in economics. It does not mean soil or earth’s surface
alone, but refers to all free gifts of nature.
34. Labour:- The term labour means any mental or physical exertion directed to produce goods and
services.
35. Capital:- Capital is that part of wealth of an individual which is used for further production of wealth.
Capital is a stock concept which yields a periodical income which is a flow concept.
36. Entrepreneur:- A factor which mobilizes all other factor of production like land, labour, capital, and
combines them in the right proportion, initiates the process of production and bears the risk involved in
it.
37. Average product:- Average product is the total product per unit of the variable factor.
38. Marginal product:- Iit is the change in total product per unit change in the quantity of variable factor.
39. Isoquant:- An isoquant represents all those combinations of inputs which are capable of producing the
same level of output.
40. Cost analysis:- The study of behavior of cost in relation to one or more production criteria, namely, size
of output, scale of operations, prices of the factor of production and other relaveant economic variables.
41. Accounting costs:- Accounting costs relate to those costs which involve cash payments by the
entrepreneur of the firm. These are explicit cost and are the expenses already incurred by the firm.
42. Economic cost:- The cost which takes into account the explicit as well as the implicit cost is known as
Economic cost.
43. Social cost:- Social cost refers to the total cost borne by the society on account of a business activity
and includes private cost and external cost.
44. Fixed cost:- The costs which do not vary with the level of output upto a certain level of activity are
known as fixed cost.
45. Variable cost:- These costs are a function of output and hence vary with the production.
46. Marginal cost:- Marginal cost is the addition made to the total cost by production of an additional unit
of output.
47. Market:- Amarket is a collection of buyers and sellers with a potential to trade. The actual or potential
interactions of the buyers and sellers determine the price of a product or service.

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48. Perfect competition:- It is a type of market which is characterized by many sellers selling identical
products to many buyers.
49. Monopoly:-It is a situation where there is a single seller and many buyers. The product sold does not
have any close substitutes.
50. Monopolistic competition:- This type of market is characterized by many sellers selling differentiated
products to many buyers.
51. Oligopoly:-There a few sellers selling competing products to many buyers.
52. Average revenue:- It is the revenue earned per unit of output. It is nothing but the price of one unit of
output.
53. Marginal revenue:- It is the change in total revenue resulting from the sale of an additional unit of the
commodity.
54. Price discrimination:- It is a method of pricing adopted by a monopolist to earn abnormal profits. It
refers to the practice of charging different prices for different units of the same commodity.
55. Cartel:- Cartel refers to a group of firms that explicitly agree to coordinate their activities.
56. Business Cycle:- The rhythmic fluctuations in aggregate economic activity that an economy
experiences over a period of time are called business cycles or trade cycles. A typical business cycle
has four distinct phases namely Expansion, Boom, Contraction, Trough.

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