Tamil Nadu HSE First Year Economics key terms

The branch of economics that studies individual units such as a single consumer, a single firm, or one market, focusing on how prices and quantities are decided there.

The branch of economics that studies the economy as a whole, dealing with aggregates such as total output, general price level, employment and national income.

The value of the next best alternative given up when a choice is made; it is the real cost of using scarce resources in one use rather than another.

The situation in which available resources are limited relative to unlimited human wants, so that choices must be made about what, how and for whom to produce.

A curve showing the maximum combinations of two goods an economy can produce when all resources are fully and efficiently used, given its technology.

The principle that as a consumer takes more units of a good in a given period, the additional satisfaction from each extra unit falls, other things remaining unchanged.

The change in total satisfaction caused by consuming one additional unit of a good or service during a particular period.

A curve that joins all combinations of two goods giving a consumer the same level of satisfaction, so the consumer is indifferent among those combinations.

The statement that, other things being equal, quantity demanded of a good rises when its price falls and falls when its price rises, giving an inverse price-quantity relationship.

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

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 short-run principle that as more units of a variable input are added to fixed inputs, marginal product first rises, then falls, and eventually becomes negative.

The extra output produced when one more unit of a variable input, such as labour, is employed while other inputs are held constant.

Cost that a firm must bear in the short run even when output is zero, because it arises from fixed inputs such as machinery, rent or permanent staff.

The addition to total cost caused by producing one more unit of output; it equals the change in total cost divided by the change in quantity produced.

A market structure with many small sellers of an identical product, free entry and exit, and no single firm able to influence the market price.

A market structure in which a single seller supplies a product that has no close substitutes and faces barriers that keep other firms out.

The price at which quantity demanded equals quantity supplied, so the market clears and there is neither excess demand nor excess supply.

The practice of a seller charging different prices to different buyers for the same product, not justified by differences in the cost of supply.

The value of the extra output obtained by employing one more unit of a factor; it equals marginal physical product multiplied by the price of the output.

In factor pricing, the payment made to a factor of production that is in fixed supply; in everyday use, the payment for the use of land or property.

The minimum payment needed to keep a factor of production in its present use; any payment above this minimum is called economic rent.

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

The market value of all final goods and services produced within a country's geographical boundaries in a year, regardless of who owns the producing factors.

Gross national product minus depreciation on capital used up during production; it shows the value of output net of capital consumption.

The fall in the value of fixed capital assets such as machines and buildings due to wear and tear, age or obsolescence during a period.

The total stock of money held by the public at a point of time, usually measured as currency with the public plus demand deposits with banks.

The process by which commercial banks expand deposits by lending out a part of the deposits they receive, while keeping a fraction as reserves.

The proportion of a bank's net demand and time liabilities that it must keep as cash balances with the central bank.

The rate at which the central bank lends short-term funds to commercial banks against government securities, used as a tool of monetary policy.

The excess of total government expenditure over total receipts excluding borrowings in a year; it indicates how much the government must borrow.

The total amount owed by the government to internal and external lenders as a result of past borrowing to finance deficits.

A composite measure of development combining average income, life expectancy and education, used to compare welfare across countries.

The level of consumption expenditure per person that is considered the minimum needed to satisfy basic requirements; households below it are counted as poor.

The large rise in food grain output in India from the late 1960s, achieved through high-yielding seed varieties, irrigation, fertiliser and modern farming methods.

A measure of central tendency found by adding all observations and dividing the total by the number of observations; also called the arithmetic average.

The value of the middle observation when data are arranged in ascending or descending order; it divides the series into two equal halves.

The extent to which values in a series spread out around their average; common measures include range, mean deviation, variance and standard deviation.