Economics : 2009 : CBSE : [ Delhi ] : Set II

 Demand is said to be inelastic when proportionate change in quantity demanded is less than the proportionate change in price.

 Fixed cost (FC) is the cost which does not change at all with a change in the output in the short run. These costs have to be paid even when output is zero. It is also known as supplementary cost, for example, the cost of land and machinery.

 Downward movement along the supply curve takes place due to the fall in the price of a commodity, other factors remaining the same.

 Monopoly is a market situation dominated by single seller who has full control over price and output of the commodity.

Excess demand refers to a situation when aggregate demand is in excess of aggregate supply corresponding to full employment level. This leads to inflation in an economy or excess Demand, i.e., Ad > AS.

 Bank rate is the rate at which central bank discounts the bills of commercial banks.

 Involountary unemployment refers to the situation where people are able to work and are willing to work at the prevailing wage rate but do not find work.

Opportunity cost of a commodity is the cost of next best alternative available which has been sacrificed to produce that commodity.

 Borrowings are capital receipts because it creates a liability to the government.