The Investors Book

Definition: Demand forecasting refers to a scientific and creative approach for anticipating the demand of a particular commodity in the market based on past behaviour, experience, data and pattern of related events. It is not based on mere guessing or prediction but is backed up by evidence and past trends. Example: A printing press owner forecasts high demand for notebooks … [Read more...] about Demand Forecasting

Definition: Demand in economics can be defined as the quantity of a commodity which a customer who is willing and capable of paying for it, wants to acquire at the given market price within a given period. It acts as a base for the production of goods and services. A business forecast its sale and estimates the potential market by the demand which a product creates in the … [Read more...] about Demand in Economics

Definition: A market structure can be understood as a system for categorising the products and services offered by the firms, according to the nature and level of competition in the market. A 'market' in economics is an actual or virtual area where sellers and buyers communicate to carry out trade activities is known as a market in economic terms. Example: Krofet Market in … [Read more...] about Market Structure

Definition: Managerial economics is a stream of management studies which emphasises solving business problems and decision-making by applying the theories and principles of microeconomics and macroeconomics. It is a specialised stream dealing with the organisation's internal issues by using various economic theories. Economics is an inevitable part of any business. All the … [Read more...] about Managerial Economics

Definition: The law of diminishing marginal utility explains that with the consumption of each subsequent unit of a commodity, the satisfaction anticipated or derived from it goes on declining. The point at which the consumer no more feels the need for consuming a particular product is referred to as the 'Point of Satiety'. This is the point where the marginal utility curve … [Read more...] about Law of Diminishing Marginal Utility

Definition: Marginal utility (MU) is the utility acquired from consuming an additional unit of a commodity. Utility refers to the ability of a product to fulfil a person's need, want or desire, which keeps on diminishing as the following unit of a commodity is consumed. Formula of MU Though a utility cannot be measured in exact numbers, it is up to the consumer to represent … [Read more...] about Marginal Utility (MU)

Definition: A budget line is a straight line that slopes downwards and consists of all the possible combinations of the two goods which a consumer can buy at a given market price by allocating all his/her income. It is an entirely different concept from that of an indifference curve, though they are both are essential for consumer equilibrium. The two essential components of … [Read more...] about Budget Line

Definition: An indifference curve is a convex shaped curve depicting the graphical representation of the different combinations deriving the same level of satisfaction to the consumer by considering two commodities. It functions on the principle of the diminishing marginal rate of substitution (MRS). Example: A person went to the grocery store to buy cereals and … [Read more...] about Indifference Curve

Definition: Moral suasion is a step taken by the central bank for convincing and advising the commercial banks to adhere to the policies and act in the desired manner through general interaction. 'Moral' means defining one's code of conduct based on a clear distinction between right and wrong. 'Suasion' refers to the process of advising, convincing or influencing others without … [Read more...] about Moral Suasion