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  KEY TERMS
 

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Economic cost
It is the same as opportunity cost. It is the cost foregone by taking an alternative decision or action.

Economic indicators
The facts and figures that present the real state of an economy. Like Gross Domestic Product, foreign reserves, etc.,

Economic union
An association of two or more countries for trade purposes, either to trade freely among each other or any such agreements relating to trade or national policies.

Economics
A science that studies the allocation of limited resources to satisfy the unlimited wants of consumers.

Economies of scale
When a firm gains cost advantage by mass production of goods and services

Economies of scope
When a firm gains cost advantage by production of various types of goods and services which are related with each other

Effective demand
Percentage of demand for goods and services which is supported by purchasing power to bring the demand into effect.

Elastic demand
Demand is elastic when the quantity of goods demanded is responsive to the change in prices of a commodity.

Elastic supply
When the price of a commodity gets affected due a change in the quantity of supply.

Embargo
A government decree prohibiting the foreign trade, either imports or exports either as a measure to protect domestic players or for security reasons.

Environmental scanning
The analysis of business environment so as to understand the implications of the same on a firm, industry or economy.

Equation of exchange
MV = PT (M-Amount of money circulated, V-Velocity of money circulated, P- average price level, T- Number of transactions). It shows the relation between the given variables. It forms the foundation of the Quantity theory of money.

Equilibrium
A situation in the market, where both the demand and supply or the opposite forces are at a perfect balance.

Equity
It refers to equality or fairness with regards to the distribution of wealth and other resources.

Equity market
A stock market. Where the trading of equities of various business firms takes place.

Exchange rate
It is the rate at which a currency can be exchanged for another. The expressed value of one currency in another.

Excise tax
A tax charged on goods manufactured and sold.

Externalities
Any cost or benefit which has to be borne that comes as a by product in the process of producing a good.

 

 

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