This is the simplest yardstick of economic performance. If one person, firm or country can produce more of something with the same amount of effort and. Economy terms with their definitions. Learn and know the meaning of these Economy terms by their definitions here at The Economic Times. Understanding Basic Economics Terms & Concepts - Chapter Summary. Get ready to learn more about basic terms and concepts of economics. Build your understanding of different economic systems with this chapter. Applications of economic scarcity and the function of choice.


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Given the academic nature of this article, I nevertheless included this as an indicator.

FDI which is a direct investment into the country from an entity in another country, either by setting up a new company or by way of a merger, acquisition etc. Part II — Click here to continue reading about the instruments of monetary policy in India. Leave your Whatsapp message or Email at rajat sanasecurities.

He has economic terms and concepts Indian markets for over a decade and is regarded for consistently identifying early stage investment opportunities.


Elasticity is defined as the change in quantity of the goods associated with a change in the prices. If quantity of the good does not change much with a change economic terms and concepts its prices, it is said to be inelastic onions need to be purchased even after the prices double as it is a basic necessity and there are no actual substitutes.

Marginal utility is the extra economic terms and concepts one gets from each additional unit of consumption.

Explanation of Basic Economic Terms Used in India

Taking a holistic example in lieu of an easier and obvious one — research proves that the money one earns contributes hugely towards average life happiness in the initial stages of getting those riches, but its role tapers off sharply as the income economic terms and concepts. The economists refer to this is as the law of diminishing marginal utility.

If an entity is really efficient in producing a commodity output to input ratio is highit has an advantage over another entity which is not that efficient in producing the commodity under consideration.

If I am good at making economic terms and concepts and you are good at making jam, it makes sense to do what we are good at and trade afterwards.

In short, creation of utility in any form is called production. This creation of utility may assume the form either of material goods or of services.

We have already learnt that economic terms and concepts many create different forms of utility, i.

Understanding Basic Economics Terms & Concepts - Videos & Lessons |

Creation of utility in any of these forms should be called production. Division of labour is a further step from specialisation by products, where specialisation by process is being sought to achieve maximum productive efficiency. The various agencies which collaborate in the processes of production are economic terms and concepts factors of production, productive services, inputs, productive resources, or simply resources or factors.

The way in which economists classify scarce resources is shown in Table 1. The factors of Production: For convenience, they can be classified under economic terms and concepts headings.

Important Economic Terms and Concepts - Definitions & Explanations PDF –

Land refers to all natural resources. Labour designates all human efforts, physical or mental, exerted for a economic terms and concepts. Capital stands for man-made objects designed to aid the other factors in producing goods and services. The office building of a company, the taxicab, machinery, and raw materials are all capital.

Economy Terms and Definitions

The entrepreneur is, briefly, the businessman, who organizes the productive processes and assumes the risks associated with modern business.

The entrepreneur is economic terms and concepts with the firm. The firm is an organization for the purpose of producing and selling one or more articles for profit. The firm is a unit of production engaged in one or several productive processes; it is symbolized by and presided over by one responsible management at the top.

Economic Terms and Their Basic Concepts

A firm may operate in more than one plant. The firm sells goods and services; the consumer buys goods and services. The term consumer is not confined to a single person but extends to the consuming unit, the household.

A housewife makes the choice for the family when buying groceries and other articles.