CHSE Odisha Business Economics key terms

The application of economic theory and decision-making tools to business problems, helping managers choose among alternatives such as pricing, output and resource use under conditions of scarcity.

The branch of economics that studies individual units such as households, firms and single markets, focusing on prices, output and resource allocation at that disaggregated level.

The branch of economics dealing with economy-wide aggregates such as national income, general price level, employment and growth rather than individual markets or firms.

The value of the next best alternative forgone when a resource is committed to one use, measured by the benefit that the rejected option would have provided.

The condition in which available resources are limited relative to unlimited human wants, forcing individuals, firms and governments to make choices about what to produce and consume.

A decision rule comparing the additional benefit of one more unit of an activity with its additional cost, with the optimum reached where the two are equal.

A curve showing the maximum combinations of two goods an economy can produce with given resources and technology, illustrating scarcity, choice and opportunity cost.

The principle that, other things remaining constant, quantity demanded of a good rises when its price falls and falls when its price rises, giving an inverse price-quantity relationship.

A graph plotting quantity demanded against price, normally sloping downward from left to right to reflect the inverse relationship described by the law of demand.

The principle that, other things equal, producers offer larger quantities of a good as its price rises, producing a direct relationship between price and quantity supplied.

A graph showing the quantities producers are willing to sell at various prices, typically sloping upward because higher prices cover rising marginal costs of production.

The price-quantity combination at which quantity demanded equals quantity supplied, so that there is neither excess demand nor excess supply in the market.

A measure of how strongly quantity demanded responds to a change in price, calculated as the percentage change in quantity demanded divided by the percentage change in price.

A situation where the percentage change in quantity demanded exceeds the percentage change in price, giving a price elasticity coefficient greater than one in absolute value.

A situation where quantity demanded changes proportionally less than price, giving a price elasticity coefficient below one in absolute value, typical of necessities with few substitutes.

The responsiveness of quantity demanded to a change in consumer income, measured as percentage change in quantity demanded divided by percentage change in income.

The overall satisfaction a consumer derives from consuming a given quantity of a good, obtained by summing the marginal utilities of all units consumed.

The additional satisfaction gained from consuming one extra unit of a good, equal to the change in total utility divided by the change in quantity consumed.

The observation that as a consumer takes successive units of a good, each additional unit yields less extra satisfaction than the previous one, other things remaining unchanged.

A curve joining combinations of two goods that give a consumer equal total satisfaction, so the consumer is indifferent among all points on it.

The rate at which a consumer will give up one good to obtain one more unit of another while keeping total satisfaction constant, shown by the slope of an indifference curve.

A line showing all combinations of two goods a consumer can buy by spending a given income fully at given prices, with slope equal to the price ratio.

The combination of goods at which a consumer maximises satisfaction subject to income, reached where the budget line is tangent to the highest attainable indifference curve.

The technical relationship showing the maximum output obtainable from given quantities of inputs such as labour and capital, holding technology constant.

The short-run principle that adding successive units of a variable input to fixed inputs first raises, then lowers, marginal product of the variable input.

The behaviour of output when all inputs are increased in the same proportion, described as increasing, constant or decreasing depending on how output responds.

Expenditure that does not vary with the level of output in the short run, such as rent on a factory or salaries of permanent staff, and remains payable even at zero output.

The addition to total cost from producing one more unit of output, equal to the change in total cost divided by the change in quantity produced.

A market structure with many small sellers of a homogeneous product, free entry and exit, and no individual firm able to influence price, so each faces a horizontal demand curve.

A market with a single seller of a product having no close substitutes and with barriers preventing entry, giving the firm power to set price or output.

The practice of charging different buyers different prices for the same product for reasons not related to differences in the cost of supplying them.

The total money value of all final goods and services produced by a country's normal residents during a year, measured at market prices or factor cost.

The market value of all final goods and services produced within a country's geographical boundaries during a given period, regardless of who owns the factors of production.

Gross national product minus depreciation of capital, showing the value of output available after provision has been made for replacing worn-out capital.

The total stock of money held by the public at a point of time, commonly measured in narrower and broader aggregates that include currency and bank deposits.

A financial institution that accepts deposits from the public, lends to borrowers and creates credit, thereby participating in the expansion of the money supply.

A sustained rise in the general price level of goods and services, which reduces the purchasing power of money and is often measured by changes in a price index.

The use of government spending, taxation and borrowing to influence aggregate demand, output and employment, and to manage the budget position of the government.

An annual statement of the estimated receipts and expenditure of the government, showing whether the finances are in surplus, balanced or deficit.

The accumulated borrowings of the government from domestic and external sources, arising mainly from financing budget deficits over successive years.

The difference between the value of a country's exports of goods and its imports of goods over a period, excluding trade in services and transfers.

A systematic record of all economic transactions between a country's residents and the rest of the world in a year, covering current and capital accounts.

The price of one country's currency expressed in terms of another currency, determined in foreign exchange markets or fixed by monetary authorities.