Economics uses some special words. If you know them before you start, every paragraph of the chapter will make sense. Each term below has a simple meaning and a daily-life example.
Learn them in different ways
Practise these words with Flashcards, the Match game or search them in the Glossary.
All key terms
| Term | Easy meaning | Example |
|---|---|---|
| Market | Any place or system where buyers and sellers meet to trade. | Empress Market, Daraz app, stock exchange |
| Buyer / Consumer | The person who pays money to get something. | You buying a burger |
| Seller / Producer / Firm | The person or business that makes or sells things. | A poultry farmer, KFC |
| Good | A physical thing you can touch. | Rice, phone, car |
| Service | Work done for you (not a thing). | Haircut, tuition, doctor visit |
| Price (P) | The money paid for one unit of a good. | Rs. 500 per kg of chicken |
| Quantity (Q) | How many units (kg, tons, pieces). | 20 kg, 10 tons |
| Demand | Wish to buy + money to buy + willingness to pay. | You want a phone AND have money AND will pay |
| Quantity demanded | The exact amount people buy at ONE particular price. | At Rs. 400, 20 kg is demanded |
| Supply | The amount sellers offer for sale at a price. | Farmer brings 300 tons to market |
| Stock | Goods produced but kept in store, not offered for sale. | 700 tons kept in warehouse |
| Schedule | A table showing prices and quantities. | Price 500 → 10 kg; 400 → 20 kg |
| Curve | A graph line drawn from the schedule. | Downward demand line D |
| X-axis / Y-axis | Horizontal line (Quantity) / Vertical line (Price). | In economics, Price is always on the Y-axis |
| Ceteris paribus | Latin: “other things remaining the same.” We change only ONE thing and keep all else fixed. | Only price changes; income, taste stay same |
| Inverse relationship | When one goes UP, the other goes DOWN. | Price ↑ → quantity demanded ↓ |
| Direct relationship | Both go UP together or DOWN together. | Price ↑ → quantity supplied ↑ |
| Substitute | A good used instead of another. | Tea vs coffee; butter vs margarine; Pepsi vs Coke |
| Complement | Goods used together. | Car and petrol; tea and cups; printer and ink |
| Normal good | Demand goes UP when income goes up. | Branded clothes, meat |
| Inferior good | Demand goes DOWN when income goes up (negative income effect). | Cheap low-quality bread, local bus |
| Income | Money a person earns. | Monthly salary |
| Purchasing power | How much your money can buy. | Rs. 1,000 buys less when prices rise |
| Equilibrium | Balance point where quantity demanded = quantity supplied. | QD = QS = 10 tons at Rs. 30 |
| Surplus (excess supply) | More goods offered than people want to buy (QS > QD). | Unsold mangoes at end of day |
| Shortage (excess demand) | People want more than what is available (QD > QS). | Sugar shortage, long queues |
| Input / Raw material | Things used to make a product. | Cotton for cloth, steel for cars |
| Cost of production | Total money a firm spends to make goods. | Wages + raw material + electricity |
| Indirect tax | Tax put on goods (e.g. sales tax) – raises the seller's cost. | GST on products |
| Subsidy | Money help given by government to producers – lowers cost. | Fertilizer subsidy for farmers |
| Perishable good | Spoils quickly, cannot be stored long. | Milk, fruit, vegetables |
| Durable good | Lasts long, can be stored. | Motorbike, printer, mobile phone |
| Price floor (minimum price) | Lowest legal price set by government. | Wheat support price, minimum wage |
| Price ceiling (maximum price) | Highest legal price set by government. | Government-fixed price of flour |
| Buffer stock | Goods the government buys and stores to keep prices stable. | Govt wheat stored in godowns |
| Opportunity cost | The value of the next best thing you give up. | Money spent on storing wheat could have built a school |
| Elasticity (basic idea) | How strongly quantity reacts to a price change. Inelastic = reacts very little. | Salt demand is inelastic |
| Cartel | A secret group of sellers/buyers who agree together to control prices (often illegal). | Sugar mills agreeing not to buy cane |
| Hoarding | Keeping goods off the market on purpose to raise price later. | Hiding cotton/sugar in stores |
| E-business | Buying, selling, and sharing business info through the internet. | Daraz, Amazon, Foodpanda |
| Brick-and-mortar | A physical shop/building business. | A shop in a mall |