Applied Economics

• Ceteris paribus assumption


  All related variables, except those that are being studied at the moment, are held constant
• Arc elasticity


  The value of elasticity is computed by choosing two points on the demand curve and comparing the percentage changes in the quantities and the prices on those two points
• Complements


  Goods which are used together
• Income


  Money that an individual or business receives in exchange for providing a good service or through investing capital
• Consumer's goods


  Goods which consumers use to satisfy their wants
• Cost of production


  Expenses incurred to produce the good
• Cross Price Elasticity of demand


  Measures how quantity demanded changes as the price of related good changes. Cross elasticity measures the responsiveness of the demand for a good to the change in the price of a substitute good or a complement
• Demand


  The willingness of a consumer to buy a commodity at a given price
• Demand function


  Shows how the quantity demanded of a good depends on its determinants, the most important of which is the price of the good itself
• Demand schedule


  Shows the various quantities the consumer is willing to buy at various prices
• Economic rent


  Payment made to or for a factor of production over and above the amount expected by its owner
• Economies of scale


  Savings that result from production over a wide range of output
• Gross Domestic Product


  Monetary value of all the finished goods and services produced within the country's borders in a specific time period, usually one year
• Gross Domestic Production


  All products produced by the resources in the economy in a given period
• Income Effect


  The situation in which the price of good changes the consumer's purchasing power or real income
• Technology


  Application of scientific knowledge in the methods of production
• Market Equilibrium


  The state wherein the quantity demanded is equal to the quantity supplied at a given price
• Oligopoly


  A market where a few sellers account for most of or total production
• Law of Demand - means all other related variables are held constant, there is an inverse relationship between price and quantity demanded
• Forms of Business Organization

  • Sole/Single Proprietorship
  • Partnership
  • General Partnership
  • Limited Partnership
  • Corporation
  • Cooperative
• Tools in Evaluating a Business


  • SWOT Analysis
  • Porter's Five Forces of Competitive Position Analysis
  • Environment Analysis
  • PESTEL Analysis