Economics – The scientific study of the allocation of scarce resources under unlimited and competitive use. See also: Econometrics/Demand/Supply/Scarcity
Economies of Scale – Reduction in average production costs due to increased output, higher internal production, a merger with another company, etc. Economics of scale work up to a certain level. After that level has been reached, smaller production facilities may prove to be optimal.
Elasticity – The percentage change in supplied or demanded quantities divided by the percentage change in price. See also: Pricing studies
Engel’s Law – As the income of a consumer rises, so the relative proportion of that income spent on food product declines. (this phenomenon produces greater levels of disposable income for luxury goods and services.)
Idle Time – hat time when, for whatever reason a machine, computer or employee is not productive.
Income Class – Syn: Income Group See: Income group
Income Elasticity – The percentage change in the quantities of a good consumed with 1% change in income.
Income Group – Syn: Income class
Subdivision of a sample according to the respondents’ gross or net incomes. Generally arbitrary.
Index of Business Activity – Syn: Business Barometer See:Business Barometer
Industrial Goods – Goods that are principally purchased for the direct and indirect production of other goods in contrast to goods that are intended for the end user. Industrial goods include machines, tools, accessories, components, parts, maintenance and repair equipment, raw materials and additional products (e.g., lubricating oil). Relatively few goods are exclusively industrial goods. The same article can often be at the same time an industrial good as well as a consumer good (e.g., lubricating oil).
See also: Consumer Goods
Inflation – A principal concept in economics: a situation in which purchasing power continuously exceeds the supply of goods and services. The result of this phenomenon is that incomes and prices rise while the value of the currency declines. The opposite phenomenon is deflation.
See also: Deflation/Consumer Price Index
Interdependent – Dependent upon one another. All Western economies are interdependent. Inflation, unemployment, recession in one country have influence upon the economies of other countries (for instance, exports to that country decline) See also: Elasticity
Luxury Goods – Expensive consumer durables See also: Expensive consumer durables
Macroeconomics – Modern economical analysis that is concerned with data in aggregate form rather than according individual components. The whole of economic life is put under study. Size form and function of economic practice in contrast to the individual parts.
Market – 1. The totality of powers and conditions within which buyers and sellers make decision resulting in a transfer of goods and services.
2. The total demand of potential buyers for a product or service.
3. A specific geographical or political unit (e.g., Paris, the U.S., or the E.E.C.) where products and services can be sold.
Market size – The size of a market according to such criteria as consumers, adults, households, owners or users of a product or service or brand in question. Determination of market size can be made by research or estimation (not based upon formal research).
Microeconomics – Modern economic analysis that is concerned with data in individual rather than aggregate form. It covers the study of individual enterprises instead of an aggregate of enterprises, the individual consumer rather than the whole consuming population, and the individual product rather than the whole industrial output. One is concerned here with the share of total output of industries, products and enterprises and the indication of uses, the relative prices of particular goods and problems of income allocation. See also: Economics/Macroeconomics
Monopoly – A market controlled by one supplier or a group of suppliers, thus enabling them to dictate prices, which are likely to be (unreasonably) high. Few monopolies exist as, except for state-owned companies, they are illegal. Also, in a free-market economy competitors never “sleep.” Monopolies exist among railways, postal services, telephone companies, some airlines with the exclusive right to a particular route, etc. See also: Oligopoly
Non-durable goods – Syn: Soft goods
Consumer products that have a short useful life, for example, clothing or shoes. These products are normally purchased only when consumer needs them. The usual criterion is that goods last no more than three years (though this is not fixed: a fur coat, for instance, last longer than three years). See also: Durable consumer goods
Oligopoly – A market situation in which there are many buyers but only a small number of suppliers.
See also: Monopoly
Perishable Goods – Products that remain saleable for only short time, such as flowers or fresh food. These goods need special treatment (e.g., refrigeration) and are dependent upon fast delivery and turnover.
Price elasticity – The percentage change in demanded or supply divided by the percentage change in price. See also: Elasticity
Productivity – Output per unit of input: it can be expressed in money, man hours or numbers.