UPMSP Intermediate Economics - Code 136 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 resource is used for one purpose rather than another; it is the real cost of every choice.

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

A curve showing the maximum combinations of two goods an economy can produce with full and efficient use of its given resources and technology.

The satisfaction a consumer derives from consuming a good or service. It is subjective and is measured in utils under the cardinal approach.

As a consumer consumes more units of a good in a given period, the additional satisfaction from each extra unit falls, other things remaining constant.

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 graph plotting quantity demanded against price, holding other determinants constant; it normally slopes downward from left to right.

A change in demand caused by factors other than the good's own price, such as income, tastes, or prices of related goods, moving the whole curve.

A good whose demand increases when consumer income rises and decreases when income falls, so income and quantity demanded move in the same direction.

A good whose demand falls when consumer income rises, because buyers switch to better substitutes as they become richer.

The percentage change in quantity demanded divided by the percentage change in price; it measures how responsive buyers are to a price change.

A situation where the percentage change in quantity demanded exceeds the percentage change in price, so elasticity is greater than one in absolute value.

A situation where the percentage change in quantity demanded is smaller than the percentage change in price, so elasticity is less than one in absolute value.

A curve showing all combinations of two goods that give a consumer the same level of satisfaction, so the consumer is indifferent between them.

A line showing the combinations of two goods a consumer can buy by spending a given income fully at given prices.

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

The addition to total output resulting from employing one more unit of a variable input, other inputs held constant.

The long-run relationship between output and a proportional increase in all inputs; returns may be increasing, constant, or decreasing as scale expands.

The sum of total fixed cost and total variable cost incurred in producing a given level of output in the short run.

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

Cost that does not vary with the level of output in the short run, such as rent on a factory, and is incurred even when output is zero.

A graph showing the quantity of a good producers are willing to sell at each price, other things equal; it normally slopes upward.

Other things being equal, quantity supplied of a good rises with its price and falls when its price falls, giving a direct price-quantity relationship.

A market form with many small buyers and sellers, a homogeneous product, free entry and exit, and perfect information, so each firm is a price taker.

A market with a single seller of a product having no close substitutes, with strong barriers to entry, so the firm is a price maker.

A market with many sellers offering differentiated products that are close substitutes, with free entry and exit and some control over price.

The price-quantity point where quantity demanded equals quantity supplied, so there is neither excess demand nor excess supply in the market.

The money value of all final goods and services produced by a country's normal residents during an accounting year, counted without double counting.

The market value of all final goods and services produced within a country's domestic territory during a year, regardless of producers' nationality.

Gross domestic product plus net factor income from abroad; it measures output attributable to a country's normal residents wherever they produce.

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

The apex monetary authority of a country, such as the Reserve Bank of India, which issues currency and regulates banks and credit.

A financial institution that accepts deposits from the public and lends them out, thereby creating credit and adding to the money supply.

The ratio of a change in equilibrium income to the initial change in autonomous spending that caused it; it equals one divided by one minus the marginal propensity to consume.

The proportion of an additional unit of income that households spend on consumption, calculated as the change in consumption divided by the change in income.

The level of national income at which aggregate demand equals aggregate supply, so there is no tendency for output to change.

The excess of total government expenditure over total receipts excluding borrowings, showing how much the government must borrow in a year.

The excess of revenue expenditure over revenue receipts of the government, indicating borrowing needed to meet routine spending.

An annual statement of the estimated receipts and expenditure of the government for a financial year, used to pursue fiscal policy objectives.

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

The part of the balance of payments recording trade in goods and services plus primary and secondary income flows with the rest of the world.

The price of one currency expressed in terms of another currency, determined in the foreign exchange market by demand and supply.

A fall in the value of a domestic currency in terms of a foreign currency under a flexible exchange rate, making exports cheaper and imports dearer.

The strategy adopted in India from the late 1960s using high-yielding seed varieties, irrigation, and fertilisers to raise foodgrain output, especially wheat and rice.

Successive national development plans prepared by the Planning Commission from 1951, setting targets for growth, employment, and social sectors.

A situation in which all people at all times have physical and economic access to sufficient, safe, and nutritious food to meet dietary needs.