Economicss Footings & A ; Definitions

1. Scarcity Principal –When people demand more things than the production of goods and services, state of affairs of scarceness occurs. Scarcity principal says that when the state of affairs of scarceness occurs, demand every bit good as monetary values of the trade good increases. Peoples besides purchase that trade good on the increasing rates because of their demand.

2. Cost-Benefit Principal –Cost-benefit analysis is used for the computation of fiscal benefits and costs of a undertaking. This chief explains the general manner of puting in to a undertaking. Investors invest in that undertaking which give a higher return than the cost. Main aim of this principal is to mensurate the profitableness of a undertaking.

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3. Economic Surplus –Economic excess can be defined as the benefit of the society. Surplus can be for the consumer or for manufacturer when they buy or sell some goods and services. When consumers pay lesser sum for a trade good than their willingness to pay, it is called consumer ‘s excess. Whereas, when manufacturer receives a higher sum than his willingness to sell, it is called excess for manufacturers.

4. Opportunity Cost –Opportunity can be defined as the cost of any determination that is measured with the following best alternate. The cost of giving an alternate because of other best alternate is called as the chance cost ( Wessels, 2000 ) .

5. Pitfalls –Can be defined as the unexpected troubles in the determination devising. But sometime one has to do the determination along with some known troubles in future.

Example- In the peak demand period for the merchandises and services of the company, I made a determination to increase in the on the job hours of the employees so that we can run into with the increasing demand of the clients. While I knew that it could do for a discontent among the employees. To get by with discontent of the employees I made a determination to increase in the rewards of the employee that was caused an addition in the overall cost of the production.

6. Microeconomicss –Microeconomicss is a portion of economic sciences in which a individual surveies, how persons and houses make determinations for the allotment of their limited resources. It explains the volume of production and monetary value of that production. It besides analyzes the consumer behaviour.

Macroeconomicss –Macroeconomicss is the other subdivision of the economic sciences that analyzes the behaviour of a national economic system. In macroeconomics a individual surveies about the GDP, unemployment rate, rising prices rate, etc. It explains in the long tally how the production capacity and the national income of an economic system addition ( Ahuja, 2007 ) .

7. Normative Economics –Normative economic sciences trades with what ‘ought to be ‘ and it has a moral or ethical position and goes beyond what a scientific discipline can province. Normative economic sciences efforts to alter the universe, by proposing policies that can increase economic public assistance ( The Certification for Financial Risk Professionals Worldwide, 2008 ) .

Positive Economics –Positive Economics is chiefly concerned with ‘what is ‘ . It is a societal scientific discipline and is capable to similar cheques based on grounds merely like any other scientific discipline. Positive Economics attempts to depict the universe the manner it is instead than suggesting or reding ways to better it or do it better ( Positive and Normative Economicss ) .


Ahuja, H. L. ( 2007 ) .Macroeconomicss, Theory and Policy. New Delhi: S. Chand & A ; Company Ltd.

The Certification for Financial Risk Professionals Worldwide. ( 2008 ) . Retrieved August 29, 2008, from hypertext transfer protocol: // letter=N

Positive and Normative Economics. Retrieved August 29, 2008, from hypertext transfer protocol: //

Wessels, W. J. ( 2000 ) .Economicss. Barron ‘s Educational Series