1. Define price elasticity of demand.
Price elasticity of demand is a
responsiveness of quantity demanded due to change in price of a commodity.
2. Define fixed
cost
Fixed cost is the cost
of fixed factors which do not vary with the changes in output. [Example of fixed cost is rent]
3. Define variable
cost.
Variable cost is the
cost of variable factors which vary with the changes in output. Example of
fixed cost is rent. [Example of variable cost is electricity]
4. Define Gross
Domestic Product.
Gross Domestic product
may be defined as the total money value of goods and services produced in a
country for a given period of time. [This is an indicator used to measure the
standard of living of countries]
5. Define Balance of Payment.
Balance of payment is
the systematic recording of transaction of a country with rest of the world. [These
include Current account, capital account and financial account.]
6. Define market economy.
Market economy is an economic system in which all the
economic activities are owned and controlled by the private individual. [In
this system, prices are determined by the forces of market; demand and supply;
and people have self interest in this system. There is a very limited role of
the government in market economy.]
7. Define visible trade deficit.
Excess of imports of goods over imports is defined as visible
trade deficit. [Visible trade deficit will be recorded under current account
visible exports.]
8. Define economic growth.
Economic growth can be defined as an increase in the total
output of the country. [This may be in the form of increase in Gross domestic
product of the country which increases the benefits such as employment opportunities,
increase in income, and improvement in the living standard. etc.]
9. Define Trade
barriers.
Trade barriers are the restrictions faced by the
firms/countries importing goods and services.
10. Define
investment.
Investment is defined as an increase in the real stock of
capital goods.
11. Define the term entrepreneur.
Entrepreneur is the second human resource needed in the
production. The organizer, decision maker and risk bearer of the production
process.
12. Define economies of scale.
Economies of scale can be defined as an increase in the large
scale production as a result of decrease in long run average cost.
13. Define direct tax
Direct tax is a tax taken from income and wealth of the
people and profits of the businesses. The burden of direct tax cannot be
transferred to another. Income tax is a direct tax.
14. Define indirect tax.
Indirect taxes are tax taken from the spending of goods and
services. The burden of indirect tax can be transferred to another person. Sales
tax is an indirect tax.
15. Define inflation.
Inflation is defined as a consistent and persistent rise in
the general price level. [The value of money will decrease during this period.]
16. Define natural resource.
Natural resources are the resources gifted by nature. Land is
a natural resource. Land includes seas and rivers, forests and deserts etc.
17. Define public sector.
Public sector is a part of the economy where all the economic
activities are owned and controlled by the government.
18. Define mixed economy.
Mixed economies are economic system in which both private and
public sector operate side by side and work for the welfare of the people.
19. Define exchange rate.
The rate at which one currency is expressed in terms of
another is known as exchange rate.
20. Define specialization.
Concentration on one particular task or a part in the production
process is known as specialization. [Specialization occurs when the Division of
labour is introduced in production]
21. Define factors of production.
Factors of production are the resources used for production
of goods and services. They are land, labour, capital and entrepreneur.
22.
Define profit maximization
Method used by companies to increase the profits by increase
in the difference between total revenue and total cost.
23. Define labour
intensive production process.
Labour intensive production process is defined as using more
labours in relation to the capital in the production process.
24.
Define scarcity and opportunity cost.
Availability
of limited resources are not enough to satisfy the unlimited wants, this is
known as scarcity.
25. Define opportunity cost.
Opportunity
cost is defined as the next best alternative forgone in order to achieve the
better choice.