MANAGERIAL ECONOMICS

GLOSSARY
1. Economics
It is a social science. It is study about the choice-making behaviour of the people.
2. Managerial Economics
Integration of economic theory with business practice.
3. Micro Economics
It studies the behaviour of the individual units and small groups of such units.
4. Macro Economics
It deals with the behaviour of the large aggregates in the economy.
5. Economic Model
It is an analytical approach used to estimate economic consequences.
6. Demand
The quantity of a good or services that consumers are willing and able to purchase at
various prices
7. Demand Schedule
It is a table or a chart which shows the relationship between price and demand of a
commodity
8. Elasticity of Demand
It denotes Measure of the rate at which demand changes in response to the change in
prices.
9. Supply
The quantities of a commodity or service which a seller is willing and able to offer for
sale at various prices during a given period of time.
10. Elasticity of Supply
It is a measure of the degree of responsiveness of supply to the change in price
11. Production
It is an economic activity, which is directed to the satisfaction of the wants of the people.
12. ISO Quants
 It represents all those combinations of inputs, which are capable of producing the same
level of output.
13. Opportunity cost
It is the loss of earnings due to lost opportunities
14. Sunk cost
That are not affected or altered by a change in the level or nature of business activity.
15. Out-of-Pocket
The items of expenditure, which involve cash payments or cash transfers-both recurring
and non-recurring are known as out-of-pocket costs.
16. Economies of scale
Economies of scale are advantages that arise due to large-scale production
17. Perfect Competition
Market is one in which the number of buyers and sellers is very large.
18. Monopoly
It is a market situation in which there is only one seller of a product with barriers to entry
of others.
19. Price discrimination
Charging different prices from different customers or for different units of the same
product.
20. Gross Profit = Total revenue-Total cost
21. Net profit = Gross profit-Opportunity cost
22. National Income
It is the money value of all the final goods and services produced by a country during a
period of one year.
23. GDP
It is the money value of all final goods and services produced in the domestic territory of
a country during an accounting year.
24. NDP=GDP-Depreciation
25. GNP= GDP+NFIA
26. Domestic Income= National Income-Net Income earned from abroad
27. Per capita Income= National income/ population
28. Inflation- value of money is falling i.e prices are rising
29. Deflation- value of money is rising i.e prices are falling
30. Balance of Payment- systematic record of all economic transactions between the
residents of the reporting country and residents of foreign countries during a given period
of time.