Friday, August 31, 2018

MY EXPERIENCE WITH CANTABIL

Its amazing to see that how principles of  economics applies in our day to day life. Cantabil deals with clothing items such as jeans, t-shirt, formals  for both girls  as well as boys. Cantabil always offers certain discount time to time. I prefer Cantabil mainly for jeans and shirts which is very affordable to me and gives me maximum satisfaction also. Two years ago when I was staying at Ranchi in hostel my mother came to meet me it was month of October we went for lunch in Church Complex. In Church Complex there are many shops like Bigshop, Saloni, Femina, Cantabil is also there and after completing our lunch while coming out of the complex my mother had seen a offer given by Cantabil  which is  Get Your Woolens In Half  Price , and took me inside to see the collection. we were not planned to buy woolens that time but by seeing that offer we responded to incentives . We both decided to by one  woolen cardigan which actual cost is Rs.1,400 but we got it  at Rs.700. This same thing happen with us before coming to Bengaluru also but we had gone to Cantabil for purchase a jeans for me. After selecting jeans when we reached to the billing counter owner asked me to check my mobile, whether I had received any message from Cantabil as i am a regular customer I had received some messege which offers us discount of flat 50%  and  by seeing that offer we again bought some extra t-shirt, shirt which we never planned to buy which shows we again responded to incentives offer by Cantabil.

The Cost of Something is what you give up to get it

                        THE COST OF SOMETHING IS WHAT YOU GIVE UP TO GET IT.

As people face Trade off , decision making requires Cost, Benefit analysis. It requires comparing of cost and benefits of alternative products and chosing the one which is more beneficialLy the cost of giving something.
For Example. After doing my B.COM. I had two options either to go for job or for post graduation. I chose Post Graduation over Job  so I gave up cost of Job in order to get Post graduation degree.
Rational consumer used to analysis the product and its opportunity cost. So, he choose the next best alternative. the one he chose requires the cost of something that he has to give up. For instance : The cost of pizza and Burger with Coke , the opposite would be the enjoyment of delicious pizza.
This concept is important for learning behaviour of consumer. Every Producer keep this concept in mind while analysing the Market. This concept applies in day to day life.


                                          Decisions requires comparing cost and benefits of alternative.

whether  to go to college or to work?
Whether to study or tu go on a date.?
Whether to go to to class or sleep in?




This concept depends upon many other factor also.
So Economists consider it as valid cost for decision making.

How Future Group Privilege Card acted as an Incentive for purchasing products

There is a concept/principle in Economics called People Respond to Incentive. This is because rational people think at the margin, they compare the cost and the benefits of their spendings. There is incentive from buyer’s point as well as from seller’s point. Incentives for buyers is the price, quality of the product, quantity of the product, satisfaction derived by consuming, brands, what extra feature they are getting with the product, location of the market, and the re-sale value of the product. Incentives for sellers is at what price they are willing to sell, how they are fulfilling the wants of the customer, how unique is their product, goodwill in the market, and profit making.
Everyone responds to incentives while making any decision. This can be best illustrated through my real life example of how the future group’s privilege card has acted as an incentive for buying products under its umbrella brand.
When I first went for shopping in one of the retail shop under future group, they offered for a privilege card free of cost in which points will be added every time I shop from any of the future group’s retail store. This made me subscribe for this privilege card because more we shop using this privilege card, the more points we will get which in turn will provide discounts on the products we purchase. Even if the retail store is offering a discount, the owner of this privilege card will get additional discounts by providing their privilege card’s details in the billing counter. So, every time I thought of purchasing any product which is available in any of the future group’s retail store, I don’t have think once, I just go and purchase and because of the additional discount I end up purchasing more products.

How income effects our necessities

Income Elasticity of Demand

              As the income of the consumer increases the quantity demanded also changes.Whether it is positive  (the quantity demanded increases) or negative (the quantity demanded decreases).

Positive Elasticity of Demand:

       Ex: At first  I had a 10k  mobile But  as the income of my father increased  I bought 25k mobile .Here as the income increases we opt for better things and the demand increases.

Negative Elasticity of Demand:

       Ex: When I am in school less pocket money is given to me so I used to buy small chocolates but when i am in college the pocket money is more so I used to buy whatever chocolates i like.Here as the pocket money increases i opt to buy big chocolates which are costly rather than small chocolates which cost less. 

Cost Minimization by Isoquant Curve

An isoquant line is a line which is drawn through the set of locus, where same quantity of output is produced while changing the quantities of two or more inputs.
So from the definition, we can say that the characteristic of isoquant curve is similar to indifference curve.
More the distance of isoquant curve from origin increase, more the output increase. The slope of an isoquant curve is denoted as MPL / MPc. By using the concept of isoquant curve, any factory can decrease their production cost.


From the above mentioned graph, we can see that a factory can get same level of output at point ‘A’ and point ‘B’ as both are situated at O0 isoquant line. But in point ‘A’, the factory invested more capital, less labour and in point ‘B’, less capital more labour.
Example: Many automobile factories in Germany, use robot instead of labour. For implementing robot, they invest more capital and use less labour. By doing this, they can keep their output same.

Disclaimer: Definition was taken from ‘Wikipedia’.

Saturday, August 25, 2018

Mid term taught me economics

After coming in IBA, it was quite time taking for me to get familiar with the course, as it was very different from my b.tech studies.
The sudden announcement of exam made me shocked because I was not at all prepared.
I started studying and before the announcement of exam date self study time was less than 2hours but after getting routine it was more than 4hrs, later it was near about 5 hours, finally it was whole night (~10hours) just one day before exam. That means,
With the decreasing duration before exam,my demand for study was increasing.
It was one week before my exam, friends were going for weekend outing and they invited me to join with them. After hectic six days I wanted some relaxation but exam was nearer. I faced Trade off.
If I join them it would be very enjoyable but if I stay in hotel I can prepare well for my exam,so I decided to opt for staying in hostel instead of going out. So, weekend outing is an opportunity cost for me here.
One night before exam I studied till 5 AM. Upto 2 AM, I was energetic and was able to memorize everything easily. Just after that I started feeling saturated and could able to memorize less no of things. With passing time I was studying but my capacity to memorize things were decreasing, finally I could remember nothing at 5 AM. Here 2 AM is a Margin. After that the rate diminishes. In economics we say diminishing rate of return.
As I was unable to remember things,I was very nervous and praying for at least 50 marks to be common but when I saw the paper,it was full marks i.e 100 common to me. Here (100-50)=50 marks is surplus to me.
Now waiting for my result. It's my assumption, according to ordinal measurement I'll see myself within top 30. Let's hope for the best.
Thank you.

FIVE SHADES OF ECONOMICS

RESPOND TO INCENTIVES~

Incentive is something that makes a person to act. Rational people compare the price of the particular product and then the benefit that they are going to get out of that product before making a purchasing decision. Then they react to incentives.
EXAMPLE- When the price of the food of a particular restaurant increases, then I am less likely to go there again even if I am the regular customer of that restaurant.

OPPORTUNITY COST~

The price of the next best alternative that we give up to choose one out of the given alternative is called opportunity cost. 
EXAMPLE- Imagine that there is a land and you can either build an apartment and give it on rent or can start a restaurant in that land.You prefer to start a restaurant. So the cost of the rent that you would have get if you would have build an apartment instead is called as opportunity cost.

SUPPLY CURVE~

Supply curve is a curve that shows a relation between the price of a product and the quantity of the product that the seller is willing to supply within a given period.
EXAMPLE- A seller named Ravi is selling dosa at an equilibrium price of Rs 50 and manage to sell 200 dosa per day. The increase in the quantity supply of dosa will shift the curve towards right side. If the price is reduced to Rs 40, the quantity demanded will increase to 400 per day. So the supply of dosa will be increases and Ravi has to supply as per the quantity in order to avoid supply shortage. A decline in the supple  of dosa will shift the curve towards the left. Similarly, if the price of the dosa increases to Rs 70, then the demand will decrease and so is the supply.

MARGINAL RATE OF SUBSTITUTION~

The rate at which an individual is ready to substitute a good for another good is called as marginal rate of substitution. 
EXAMPLE- I went to Mc Donald to have a burger. But unfortunately, it was closed on that day. So i went to Burger King instead and a burger. Here, the substitution that i did by having a burger from another place instead of Mc Donald is the marginal rate of substitution.

LAW OF DEMAND~

When the price of a particular good increases, then the quantity of that good decreases or shrinks as there is a fall in the demand of that particular good. This is known as law of demand.
EXAMPLE- I went to a sweet shop to buy 150 pieces of Kaju Katli for Rs 15 per piece. But the seller says that from the last two days, they have changed the price of all the sweets and now the cos of Kaj Katli has increased to Rs 25. So as I see that the price has been increased, so I will decide to buy only 100 pieces of it, thereby decreasing my purchase quantity. This is known as law of demand.

# 5 CONCEPT # OF #ECONOMICS.


·  ·       Circus artister /performers performing in multiple cities /events.

As you know that, circus artisters if continue to performing in the same cities marginal utility get diminished, due to law of marginal utility, in turn artistes get less money for each performance.


·      Lot of unseasonal price fluctuation happen in vegetable
It state the law of demand,As the price increases the ,the demand for the vegetable decreases, and if price decreases , thre demand for the vegetable increases.


·       Why do many young men  and women fancy themselves to participant in beauty contests.
The many young and women fancy themselves to participant in beauty contests.it Signify the TEST AND PREFERENCE, as all consumer choice are influenced by consumer taste.

·      Some hotels offer diverse menu both depth and breath whereas many others offer very few items on their menu.
Some hotels offer diverse menu both depth and breath whereas many other offer very few items on their menu.people face tradeoff and paradox of choice.by using this concept we come to point that every people has different choice.





TO MANY, INDIAN IT INDUSTRY SUCCESS IS ON ACCOUT OF THEIR ABILITY TO OFFER PRODUCTS AT LOW PRICES.
IT STATE THE LAW OF DEMAND,AS IT STATE THAT ON INCREASING THE PRICE OF THE  PRODUCT,THE DEMAND FOR THE QUANTITY DECREASES , AND THE  DECREASES IN THE PRICE INCRESES THE DEMAND FOR THE PRODUCT.

Economics and Experiences

To analysts, the industry will be able to take advantage through offering products at low prices.

Example: One plus offers phones at relatively low prices, my brother rather than buying a Samsung phone opted for a One Plus which offered the same specifications at lower prices.

Many Star Hotels routinely offer unlimited buffet meals.

Example: There was a newly inaugurated hotel in my city which offered an unlimited buffet for the 2nd and 4th Saturday of every month.

We see more and more domestic tourists visiting beaches rather that religious places as seen earlier.

Example: I made a plan with my friends to visit Goa, when I went to ask permission to my dad he was a bit sceptical and said to go to Tirupati or Shridi. He quoted there is nothing in goa other than a beach in temples you can find peace also seek blessings from the almighty.

We often see keen interest especially among young men and women to participate in fashion shows?

Example: One of my friends, who has a great physique and looked good. He was also a topper of my batch, but after BBA he opted to do modelling and skipped MBA as he thought modelling can earn him fame and recognition which in MBA he wouldn't have got it.

Often, unseasonal price fluctuations are observed in the case of Fruits.

Example: I went to buy apples from the market at ₹300/dozen. A few days later I went to the market again to buy apples but this time the shopkeeper said me the price of ₹380/dozen. On asked the reason the shopkeeper said that its been raining and the supply is reduced hence, high prize.
 




Exmaple of Economics Concepts

1.Law Of Demand:

Often,unseasonable price fluctuations are observed in case of fruits.

Explanation: The demand of the fruits gets drecease and the supply of the fruits may increase in the unseason time so that the prices of the fruits gets drecreases.

2. Opportunity Cost:

To analysts, indian industry will be able to take advaantage through offering products at low prices 

Explanation: People always a wantsto buy products with low cost and high quality.May that product is good for long term or not. Its a exmaple cost opportunity. 

3.Law Of Demand:

 What happen when price of oranges increases/decreases 


Explanation: Let us take an example if a consumer have Rs 50 he/she buys 10 oranges and if the orange rate decreases by Rs 40. He can buy 13 orange we can observe that when price increases the quantity demand decreases and vice versa.

4. People Respond To Incentives:


 Many star hotels routinely offer buffer meals.
Explanation: Providing buffer by star hotels at a rate of Rs 1200, in which people gets variety of  vegetable and breads instead of eating food of Rs 1200 with linited dishes. They provides some extra food to people so, it is a exmaple of people responds to incentives

5. Law Of Diminishing Marginal Utility

  we see more & more domestic tourists visiting beaches rather than religious places as seen earlier.

Explanation: The units of utility for going too religious place  may be gets drecases, thats why now they like to go on beaches because their units of utility may incease in the breaches

REALIZING THE LIFE WITH ECONOMICS.


In our everyday life we closely encounter a lots of daily happenings of different incident among which some of these are straightly have a connection with economical concept.


OPPORTUNITY COST
Last time I went to a restaurant for having some food. As the other restaurant this restaurant has lot of option or variety on the menu. Before going to the particular restaurant I have decided to have some biriyani most specifically chicken biryani.
 Once I reached there I got so many option there that I made a trade of of situation on selecting a particular product among them. Then I decided to go for a fish item with some rice. As someone suggested me about the fish item.
 So here I face the situation of making the opportunity cost to play a vital role. To have some of their signature dish or some other dish which is famous there, I made a compromise on my previous thought. Which was suppose to be a opportunity cost to me. I have left the intention or wish to eat the chicken biriyani to try some of their signature dish.

DIMINISHING OF MARGINAL UTILITY

I used to visit the nearest ice cream parlour for my favourite butterscotch. It was quite frequent. I never got bored of this. I used to think this was the only thing I love the most. But as the time goes on I started visited the more than once and every day, and I found that I have started losing my crave for the ice cream. That what I feel as a diminishing of marginal utility. As the day passes as I started consuming more unit of ice cream I felt diminishing of utility.

PRICE ELASTIC DEMAND

Price of agricultural product are mostly determind by supply and demand. The price fluctuation in such group are found each and every year. Price fluctuation of these variable are seasonal in variable. After the harvest period the price goes little lower in side, and in winter the price goes little high. Therefor consumer have to pay high to get this thing.  This is a pure case of price elasticity.

PEOPLE FACE TRADE OFF

Often I visited restaurant, once in a week. Last time I visited a restaurant it was a situation I encountered trade off. There was a menu which contain similar type of item with different name. as I have decided previously what I should have there but as soon as I reached there the length and the breadth of the menu has pushed me in to a trade off situation to select a item for that.

PEOPLE RESPONSE TO INCENTIVES

I can easily remember the last time I done shopping from online site. I have no need of buying a pair of shoe. As I have one. But one day I saw there was offer going on in online shopping portal . a huge discount was there on some selected shoe range. I bought one pair of that shoe. Though I don’t need one still I bought one pair of shoe. This was the response towards incentives, which make me buy those shoe although I have one. 

DAILY ECONOMIC


11. LAW OF DEMAND: The law of demand states that other things remain constant, price and quantity demanded of any good and services are inversely related to each other. When the price of the goods increases the demand of the good falls down. It also shows the behavior of the consumer when the price change in the market, assuming other factor affecting demand being constant.
     
      EXAMPLE: When there is sale in shopping mall we all run for shopping. 

j 2. UTILITY: The maximum satisfaction that we derive from consumption of any goods. It is the measurement of satisfaction that a consumer derives from the a particular product/goods.

       EXAMPLE: After having an ice cream I derieved maximum satisfaction.


33. OPPORTUNITY COST: A benefit, profit or value of something that must be given up to acquire or achieve something else. The cost of something which you give to get the other thing is opportunity cost.

      EXAMPLE: Ikea made a capacity of 9000 customers, but in the first day of launch there were 40000 customers therefore the rest 31000 customers were treated as opportunity cost of Ikea.

  4. INCENTIVES: People react differently when given incentives. Incentive is something that motivates human to do something or say perform something.

      EXAMPLE: When people go to shopping malls, they find a number of options which are incentives, thus, they do a lot of purchasing. 

  5. TRADE OFFS: Desire some attribute in product and missing some attribute, this is were people face trade offs. People choose among different things. They have to leave one thing, in order to get another one, that is trade-off. 

      EXAMPLE: While choosing among the food outlets people want to eat in are the trade offs they generally make. When they enter one, they will trade off with the other one.






Concepts of economics

Law of demand:-
It states that when the demand of the good rises and the price falls. With all other things keeping constant. There are other things that can effect demand beside price. They are price of related goods or services, income, tastes.

Law of supply:-
It states that when the price paid by buyers for a good rises then supplier increases the supply of the goods in the market.

Law of diminishing marginal utility:-
It states the marginal utility derived from the consumption of additional unit goes on diminishing keeping the other things constant.

Opportunity cost:-
It is the next best alternative while making a decision. A choice needs to be made between several alternatives.

Utility:-
It refers to the satisfaction that an individual recives from consumption of good and services.

principles of economics with real life examples


1.    1   Law of demand
Law of demand states that keeping all other things constant, when price of a good increases, quantity demanded for the particular good decreases. In other words, law of demand is an inverse relationship between price of a good and quantity demanded for that good.

Example: I am a regular consumer of KFC. But whenever it comes to their price, KFC charges a very high service tax with the bill which will crunch your pockets. Therefore I used to wait for the wednesday offers. KFC had some amazing offers on Wednesday which they would sell at half the price of the actual price. On other days the KFC 5 in 1 meal retails for Rs.209 inclusive of taxes, but on Wednesday it costs for only Rs 175. As a customer I would be more delighted to visit KFC at only Wednesdays where I can eat 2 meals at only Rs 350. Therefore whenever the meal costs me Rs 209 I only go for a single meal, but whenever I go to KFC on Wednesday I would have 2 meals with an extra crunch of chicken popcorn.

2.        2 People face trade- offs
To get something you want, you have to give up an opportunity cost for the same.

Example : There are two options available (a) either I can watch a movie or (b) I can go out with my friends. Both the options provide different net benefits. Option A : Movie has the net benefit of 600 units and option B : Going out with friends has a net benefit of 800 units.  The confusion to select an option is the trade off we experience. This is resolved using cost benefit analysis – which selecting the option with higher net benefit, hence we select Option B here as it offers a marginal benifit of 200 units , and the ost that we give up for the same “600 units” is the opportunity cost of selecting the option B.

3.Law of Diminishing Marginal Utility :
Law of diminishing marginal utility states that with the consumption of every additional unit of a good the additional utility derived from each successive unit decreases.

Example: I went to Dominos with my friends. I ordered one whole medium pizza for myself as I was very hungry. As soon as our order arrived I was the first one to jump into the pizza and when I had the first bite, It was a feast to my empty belly. I derived the maximum satisfaction as I was starving. Therefore I ate the first slice with utmost satisfaction.  When it came to the second slice, I was still hungry but not as till the first bite. But as soon as I came to the third slice I became a bit conscious as i felt as if my tummy was full. Therefore when it came to the 4th slice, i was totally full but still i didn't want to waste it therefore i ate it. This is where my marginal utility derived from the 4th unit went 0. after that when my friends forced me to eat the 5th slice, i completely refused to it as the condition of negative marginal utility was happening.

4  Law Of  Supply
Law of supply states that keeping all other things things constant when price of a good increases, the quantity of a good offered by the supplier also increases.\

Example: I used to go to Mad Over Donuts shop who used to offer some amazing donuts as well as cupcakes. As the name suggests, it was initially famous for the wide variety of donuts. After an year of it's launch in India it introduced cupcakes whose rice was initially higher. When we went to the shop we also wanted to try out the cupcake as it was freshly launched. When we had the first bite, the cupcakes were actually mouth watering and it was way better than the donuts they were offering. As a result, even it was sold at a higher price than the donuts, people usually came there for having cupcakes. As a result, they started producing more and more units of cupcakes and less units of donuts.

5 Utility

Utility refers to the satisfaction that we derive from consuming a particular good at a point of time.

Example: When we go and watch a movie, the satisfaction derived after watching the same is known as utility. The ratings we give to each movie is known as cardinal utility. After the ratings provided the movies of specific genre are ranked - the ranking done is an example of ordinal utility

Economic concepts and it's relations with practical examples

Law of demand : it states that when price of a particular product increases , the quantity demanded of that product decreases and vice versa.
Example : I used to buy 1 dozen bananas at Rs 100 but when the price drops down to 50 rupees I bought 2 dozen bananas.


Principle of diminishing marginal utility: the more of a good that one obtains in a specific period of time, the less the additional utility derived from an additional unit of the good.
Example: When i will first consume the Laddu the utility derived will be higher but as i increase my consumption of laddu ,the utility derived from it will decrease.

Production possibility curve- it is a hypothetical representation of the amount of two different goods that can be obtained by shifting resources from production of one good to another.
Example - I have a garden in my house. In that I have  grown various plants and flowers. But due to excessive rise in temperature of Lucknow, my plants got ruined. So I decided to grow my favorite vegetable for which I used production possibility curve for the best combination of crops to grow. I grew ladyfinger on 3/4th of the land and potato on the leftover land.

Inelasticity of demand: when the quantity demand doesn't change in proportion to price it is called demand elasticity.
Example - When the price of necessary goods changes, there is no or negligible effect of the quantity demanded. So when the price of TATA salt increased, my family brought the same quantity of salt what they used to bring earlier i.e. 1kg.


Shift in demand curve in realtion to substitute goods: when the price of substitute goods increases, quantity demanded for a given product increases.
Example: I used to buy lakme products but when the price of lakme product increases, i started buying Revelon product. With increase in price of lakme , the demand for Revlon product increased
.

Economic concepts in our lives


Law of Demand

Do you think that If a vegetable vendor sells his items at a cost less than his competitor’s (but still maintains his profit margin), will he be able to take advantage?
The answer is a yes, he will be able to take advantage and sell more than others, we can relate this to the ”Law of Demand”. As the price of the items of the concerned vegetable vendor goes down the demand for his products goes up.

Changing Tastes and Preferences

When I was a kid I loved to watch cartoon, as I grew up my interest shifted from cartoon to friction serials, and gradually when I started having less spar time, my interest moved to movies, and I also found them more convenient.Finally now I watch short skits, short films and s mall stand-up comedy routines as a source of entertainment. These incidents can be related to the concept of ”Changing Tastes and Preferences of Consumers”.

Law of Diminishing Marginal Utility

I did my graduation in Kolkata and one or twice a month, while returning home from college, I used to visit The Victoria Memorial which was on the way. Initially I really liked visiting the place, but as time passed by, the satisfaction I derived from an additional visit went on decreasing. This happened because of “The Law of Diminishing Marginal Utility”.

Opportunity Cost

During one of my aunt’s engagement ceremony ,I and my family had to go to Delhi. We had the option of going by train or by boarding a flight. I really love the feeling of travelling by train, but on that journey we had selected the option of boarding a flight as a lot of time would be saved. This loss of the experience of a train journey in order to spend more time during the engagement by boarding a flight is called as the “Opportunity Cost”,

People respond to incentive

This often happens with me during shopping. Once during such an encounter I was shopping at an outlet looking out for casual t-shirts. The price quoted per t-shirt was Rs.700, but there was another offer stating that if I would buy three t-shirts, the overall discounted price would come down to Rs400 per t-shirt. After looking at the offer I instantly made a decision of purchasing . This change in my decision happened because “People  Respond to Incentives”.

Economics amaze Me


Law of diminishing marginal utility
The law of diminishing marginal utility states that when we consume a good or service the marginal utility which we get decreases with each additional goods or services.

for example:

People love going to circus cause as it amazes them what a human being is worth capable of. The Circus artists perform multiple events because the utility what the audience derived diminishes every time he watches the same show.

Price mechanism for goods market
As the demand for goods increases there is a shortage of goods that is when demand for goods is greater than supply of goods. this results to the increase in price of the goods until there is an optimum supply of goods which is equal to the demand of goods.

for example:

Seasonal vegetables are always in demand. This high demand leads to shortage of seasonal vegetables. So as to decrease the demand of the seasonal vegetables the price rises until the demand is meet.


Opportunity cost
Opportunity cost is something which you give up when you face a tradeoff.

for example:

When you go to shop for buying a pair of shoes. And there you find  a very beautiful pair of shoes which you have always wanted but its cost is a little expensive.
So you decided that  you can manage somehow by decreasing few expenses for a month.
here the opportunity cost is the other thing which you sacrifice for the pair of shoes

Examples of economic concepts

1.law of demand
E.g: As the price of apples grew the demand of apples reduced.
2. Diminishing marginal utility
Eg:Music Industry ( the more number of time we listen a particular music in a specific period of time the less additional utility will be derived).
3.Mobility
E.g: when a boy leaves his job and goes to a new country for a new job is known as mobility.
4.Supply curve
E.g:when the price of apples grew the supply of the apples grew in the market.
5.Utility
E.g.:After studying at IBA for  more than one months I have learnt lots of concept on marketing.

Economics and various concepts

The concept of diminishing marginal utility states that the more of an item you consume within a given period of time the less utility you derive from each additional unit.

The law of demand states that when price of a product decreases the quantity of purchases increases therefore the sales volume will be higher.

Rational people think at margins states that while making choices people compare between the alternatives available and choose the one that gives more Marginal net benefit.

People respond to incentives states that when people are confronted with incentives they tend to react to it or try out the product.

The law of supply states that as prices increases the supply by the producer to the market also increases inorder to increase revenue.

FINALLY!!! No more Suspense...

Here are the solutions for economics mid-term paper:

Situation 1:
Many star hotels routinely offer unlimited buffet meals.

Economic concept: Diminishing Marginal Utility
The more of a good that one obtains in a specific period of time, the less the additional utility derived from an additional unit of the good.

Justification:
In unlimited buffet meals the star hotels offer unlimited food in some time period, but every additional food item consumed the satisfaction derived is decreased.

Example:
In my engineering 3rd year I visited The Black Pearl restaurant (unlimited buffet offered)

Situation 2:
Theatre artistes/performers performing in multiple cities/events.

Economic concept: Mobility of Inputs(Supply)
The ease which inputs can be relocated from one place to another.

Justification: Theatre artistes are mobile in nature which means can move from one place to another to showcase their performance.

Example: My cousin performs Arangetram (classical dance) in theatres in different locations(Bengaluru, Chennai, and more ) in India.

Situation 3:
Three prospective locations for a large retail outlet-location ‘A’ offers 750 net benefit units, location ‘B’ offers 900 net benefit units and location ‘C’ offers 850 net benefit units.

Economic Concept: Opportunity cost
The cost of something is what you give up to get it.

Justification: Retailer would select location ‘B’ because it has got Marginal benefit of 150 as compared to location ‘A’ and 50 as compared to location ‘C’.

Example: In 1995, my father wanted to start business (hotel) he had to choose between location ‘A’ (Bangalore road) and location ‘B’ (Parvathi nagar) in my native (Bellary). Finally, he chooses location ‘A’ because of more benefits and marginal net benefit from it.

Situation 4:
Increased usage of combination of skilled labour and technology is believed to result in increased output in manufacturing industries.

Economic concept: Increasing returns to scale
Output increases more than proportionately with an increases in the inputs increasing returns to scale.

Justification: When the qualitative inputs are increased like skilled labour and new technology, the outputs increases more than proportionally with inputs.

Example: Textile Industry in India can be Increasing returns to scale if the skilled labour is increased with better new technology.

Situation 5:
We often see keen interest especially among young men and women to participate in fashion shows.

Economic concept: People respond to Incentives
An incentive is something that induces a person to act.

Justification: In fashion show Industry young men and women respond to incentives like popularity, money, luxuries, remuneration.

Example: My junior from engineering college has completed her graduation but now she wants to go into fashion technology because she is more attracted to the popularity and income gains from it.



pratical economical life situations


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       1.   Opportunity cost

       Example: There are 3 shops which gave me a correct product that I want. Shops A, B, and C. So here I am face trade-offs. Net benefit units from shop A is 1000 and from B shop is 800 units and from C shop 850. So I am choosing Shop A because shop A gave me more benefits comparison to other shops. The opportunity cost choosing A is not being choosing shop B and C.
 
2.       Increased return to scale
 
Example: In a manufacturing industries when we want to increase the output we usages the combination of skilled labour and technology. That concept related to increased return to scale that believed that combination of skilled labour and technology helps to increase the output.
 
 
3.       Price Mechanism
 
Example: With the increase in demand even if price increases people will buy. When a particular fruit has its season the demand for that fruit increases. So people will be eager to buy. So vendor increase the price of that particular fruit. On the other hand, when the season for that fruit goes demand for that fruit also decreases. So the vendors decrease the price in order to entertain the cash flow.
 
 
4.      Law of Demand
 
Example: When the artists performing at different cities because of the increase in demand for their performance and according to law of demand is satisfaction of customers so that artists performing in different cities they are satisfying the demand of their fans.
 
 
5.       Marginal Utility
 
Example: People see more and more tourists places rather than religious places because they more satisfaction get from tourists places. The facilities provided at tourists places are more than religious place and if consumer experience these facilities in a tourists place then he prefer going to tourist places rather than to a religious place.
 
 
 

SOME GENERAL CONCEPT OF ECONOMICS



SOME GENERAL CONCEPT OF ECONOMICS
(a). Law of demand
We all know that the most important factor for survival for any industry is price of product. So, every industry will give extra focus on price of product and for determining the price of product law of demand work as a very helpful tool. Because law of demand tells us that as prices of product increases the demand of goods decreases and vice versa.

For Ex: When apple launch his new product they launch that at higher price but they keep on selling that product for up to two years or more with simultaneous decrease in price so that even after two years there is demand in good amount.

(b). Law of diminishing marginal utility
Most of us are fan of our mother’s hand made food and specially we are feeling very hungry. So, just imagine you are coming home and feeling so hungry and you found that your mother prepared your favourite food obviously you feel good. And even next day your mother made same thing you liked it but lesser than you liked earlier day. This happens because of Law of diminishing marginal utility as you are consuming more and more good or service our marginal utility will diminish after consuming every extra unit.

For Ex: All major sporting events like Olympics, Foot ball World cup happens only once in 4 years because if it will happen every year after a certain period of time every one start getting rid of it and they stooped watching it. But because this kind of sporting events happens only after 4 years so everyone have craze of it and in every next event some new population was added in crowed.

(c).Rational people think at margin
Whenever we bought any kind of good or service we always think about what extra benefits we are getting and that extra is known as margin and only because of this reason we always compare our purchased product with their substitute. So, that we can know what extra benefits we are getting.

For Ex: Now a days when we book any kind of ticket like flight, train, bus, movie we always book from that site who gives nice cash backs.

(d).Opportunity cost
Whenever we choose one thing or option out of two with the help of comparison then there is always an opportunity cost was there. Opportunity cost simply means the second best alternative. If you choose best alternative then second best alternative is your opportunity cost.

For Ex: I have option to buy something in 1000 rs and we can buy the same product with same quality in 1200 rs so we always buy in 100 rs but that 1200 rs is our opportunity cost.

(e). Consumer behaviour
Consumer behaviour is most important thing now a days for every business because without knowing how much consumer willing to pay we can’t decide the product’s price. And we assume that the preferences are not completed, transitive and not satiated. Interest and preferences are fixed for certain period of time but interest and preferences can change in long run.
For Ex: Earlier the favourite destination for couples is generally hill stations but as time changing the interest and preferences of consumer also changing and now the couples was going more to beaches at the place of hill stations.

Different Example Of Economics Concepts

Law Of Demand:-

  When the quantity of fruits decrease in the market the price of the fruit increase.

Law Of Supply:-

   When the price of onion increase the supplier increase the supply of onion in market.

Elasticity:-

  Inelastic :- Market value of iphone is soo high that people buy iphone at the high price also.
  Elastic:- If the price of one chocolate  increase people move on another chocolate.

Law Of Diminishing Returns:-

 We are using fertilizer for more production. But after certain amount of fertilizer, extra use of itiwill decrease the production.

Customer Surplus:-

 We go to market and ready to pay 500 for a product and we get at 300. Here 200 is customer surplus

  

NOTION OF ECONOMIC CONCEPTS


Law of diminishing marginal utility:
As a customer consumes more and more units of particular commodity, the utility for every successive unit derived from it goes on diminishing.
Example: on winter, I started taking creatine supplement at first I had 1 scoop but after 3 scoop my satisfaction from it starts decreasing .
People face trade offs :
It defines as to get something or fulfil a need we have to give up something we like inreturn. We have to sacrifice the most liked thing in order to get another one.
Example: one day I went to buy shoes in the market. there was a pair of puma shoe of 3000 and others were also in a range of 3000 but their quality was not that good so, I choose puma shoe for 3000.
Law of supply:
When the cost of good or product rises(increase), other various things remaining the same, its quantity also rises which is for sale and when the cost of product falls respectively its quantity for sale also falls(decreases).
Example: during rainy season I have gone to purchase umbrella it cost me little high because when the supply of the product increases price also increases.
Opportunity cost:
It refers to the estimated returns from the second best alternative use of resources that are foregone due to lack of resources such as cash in hand, wages, property.
Example:  every 2 months I used to get some pocket money from my elder brother.one day I have spent that money to buy a phone so I have to sacrifice my trip with my friends. the opportunity cost is the trip with my friends.
Utility:
It refers to the satisfaction obtained or expected to obtain from consumption of goods or services.
Example: imagine a boy is consuming 3 coke . from that the total number of satisfaction that he obtained is known to be utility.

LIFE FULL OF ECONOMICS


As we look into our daily life, we can see that, behind each and every spending and consuming behaviour of us, there is a concept of economics in it. How we take decisions to buy, how we spend, how much we spend, what benefits we get from that spending and are we satisfied from that spending? The changes in prices, in consumptions, in expenditures etc., all are related to one or the other concept or principle of economics. Let’s see some examples and which concepts of economics are involved it them:

1)PEOPLE FACE TRADE OFF:

For example, once my mother and I went to a buy a saree for my mother. That day, we actually spent 3 hours in the market just to buy a saree. We searched sarees in 5-6 shops. Then we finally got a saree of our choice. In this situation, we can see the very first principle of economics that is “People face trade-off”.

Trade-off means a decision that a customer take of buying one product and sacrificing other after comparing two or more goods that they want. In our situation, we have faced exactly the same confusion. All those saree shops were showing us the best quality saree with variety of colours and fabric from their collection. That was making us more confused. We were facing so much difficulties to come to a decision of choosing one saree among them. Few sarees were very good but were out of our budget. Then after searching in 5 to 6 shops we finally selected a saree under our budget after trading off of between so many sarees.

2)SUPPLY:

For example, we often get to hear about the news of live dance shows done by Bollywood celebrities. When the dates of these shows are out, the excitement level of people increases and ticket prices increases. Even at a high price, people are ready to buy the ticket. And the show organisers gain more and more profit. Then organisers are more willing to organise these dance performances to earn more and more profit.

Here in this case, we can see the concept of supply and its relation with price. Supply is the willingness and ability of the producer to offer to sale in the market. And supply and price has a direct relationship. When price increases, the quantity supplied also increases, and when price decreases, the quantity demanded also decreases. And in this case, as the price of dance shows ticket were increasing, the organisers were more willing to organise the shows.

3)INCREASING RETURNS TO SCALE:

For example, if a company increases the usage of skilled labour along with the technology, it is expected that there will be an increase in output in service industries.

Here, we can see the concept of increasing returns to scale. The increasing returns to scale concept says that output increases more than proportionately with the increases in the inputs. And in this case, skilled labours and technology are the inputs in production. And with the increases in their usage, the output is expected to be high.

4)COST BENEFIT ANALYSIS:

For example, if we want to open a mall. And there are 3 prospective locations namely A, B and C. Each location is offering us different net benefits. The net benefit units offered by location A, B, and C are 1000 net benefit units, 800 net benefit units and 850 net benefit units respectively. And now we have to the choose the location which gives us the highest net benefit.

Here we can see the concept of cost benefit analysis. For choosing the best location for our mall, we have to do the cost benefit analysis. As we can see, location A is giving us the maximum net benefit units of 1000, 150 more net benefit units from location C and 200 more net benefit units from location B.
So we will choose location A for the prospective location for our mall.

5)PEOPLE RESPOND TO INCENTIVES:

For example, Flipkart offers Flipkart fashion sale every year. In the sale, people get to receive thousands of variety of clothes and accessories with unbelievable discounts of 70%, 80% and even 90% on big brands. In this, we can see the economics principle of “People respond to incentives”.

By offering huge discount, Flipkart gives us incentives. And people positively respond to these incentives. And these sale becomes a huge success for Flipkart. People spend so much time shopping in these sale. These choose among the best and cheap product of good brands and gets the products in unbelievable prices.

Economics in my life

As my previous blog stated how companies use concepts of economics in their dealing, this time i'll be explaining my situations where economics came into play.
Lets start with:

LAW OF DEMAND
Higher price of good then lesser is the Quantity demanded and vice versa,in a defined time period.
Example: Petrol price, i used to drive 9 km to my college in Jaipur. Now whenever there is a hike in price i opt for pooling with someone or using public transport.Here when petrol price increases demand of petrol decreases. And when a low price is estimated ,we can see a long queue in front of petrol pumps.

UTILITY
Satisfaction derived from consumption activity.
Example: Mango season, the summer season. Satisfaction derived from the season's first mango tasted is utility to me.

LAW OF DIMINISHING MARGINAL UTILITY
As consumption increases the marginal utility derived from every additional unit keeps on declining.
Example: Now i will derive utility from that season's first mango. But as i start consuming more of mangoes the utility derived from each additional mango consumed will keep on diminishing i.e. Satisfaction will be less comparative to the first mango consumed.

OPPORTUNITY COST
In simple words, opportunity lost is opportunity cost.
Example: In IBA post lunch mess is closed on saturdays. The most buzzed restaurants, lets take two (i) Vaishnavi (ii) NH209
Now in vaishnavi a biryani will cost Rs.250 and in NH209 it will cost Rs.150.
Here from the choices NH209 is considered more of a valuable alternative choice .
It is important to note that opportunity cost is not only focused on monetary value but also time, pleasure, ambience etc.

LAW OF SUPPLY
Higher price of good results in higher quantity supplied.
Example: Cafe coffee day is the nearest hangout place from IBA, here the price of coffee is higher i.e. Rs.150 per cup. Still a number of customer including myself is attracted towards that high rated coffee.



Each action as some Economics


.Law of Demand:

       When the price for the product increases, the quantity demanded for the same decreases. Accordingly, when the price for the commodity decreases, the quantity demanded for the same increases. 
Assumption: All other factors remain constant (Ceteris Parabus).
Example: I used to have 10 Maggie packet per week when the price of Maggie goes high I reduced eating Maggie to 5 packets a week.

Diminishing Marginal Utility:
    
     As we increase the consumption of a commodity the utility derived from each additional unit decreases.
Example: As IBA was not allowing Non-Veg food, I was so eager to eat some non-veg on Saturday. I ordered for chicken tandoori, the first piece give me high level taste and I ate two more pieces but at the third piece I feel that the taste and my eagerness to eat chicken was not same as when I took the first piece.

People Respond to Incentives:

    People always respond to incentive because they want to save their money. An Incentive is something that induces a person to respond to money.
Example: As Vaishanavi hotel gives 10% offer for IBA students, on every weekends I go there with my friends than preferring any other hotels.

Utility:

    The satisfaction we get after using any product. It can be any type of product.
Example: Today, I went to KFC for having food, the satisfaction I get from having fried chicken is known as Utility.

Opportunity Cost:

  The benefit one misses by selecting some other alternatives is known as opportunity cost.
 Example: To study PGDM I give up my job in TCS

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