Some Useful Terms Of Economics

Capital Cost :

(i) The cost of field development and plant construction and the equipment required for industry operations.
(ii) The cost which is neccesary for initial stage in any project .

Re-Current Cost :

That cost which is neccesary for maintaining and continue any project after the completation.

Financial Cost :

Financila cost represent the rate of return required by investors which provide a compony with funds.

Shadow Price :

Shadow price is the change in the objective value of the optimal solution of an optimization problem obtained by relaxing the constrant by one unit.

Efficiency :

The ratio of the output to the input of any system.

Collective Goods :

Collective goods (or social goods) are defined as public gods that could be deliverd as private goods but are usually delivered by the government for various reason including social ploicy and fiance from public funds like taxes.

Public Goods :

Public goods are goods or services that can be consumed by the several individual simultaneosly without diminshing the value of consuption to any one of the individuals.

Exrenalities :

An externalities occurs when the action of consumers or firms directly affect the wellbeing of other consumers or the production capabilities of other firms other than through the price mechanism of the market.

Opportunity Cost :

The cost of an alternative that must be forgone in order to pursue a certain action.

Profit-Maximization :

Profit maximization is the process by which a firm determines the price and output level that returns the greatest profit.

Diminishing Returns :

This economic law states that, other factors remaining unchanged, the successive closes of labour and capital in agriculture result in increase in production but a diminishing rate.

Missing Market :

A missing market is a sitution in microeconomics where a cometative market allowing the exchange of commodity would be pareto efficient , but no such market exists.

Market Power :

In economics, market power is the ability of a firm to alter the market price of a good or services. A firm with market power can raise prices without losing all customers to competitors.