5 CONCEPTS ON ECONOMICS.

I.
Cost in economics: it is the profit or losses of any commodity that has value attached with it. From economics aspect cost is the value and price of commodity that determines its demand. The types of cost that are involved in the market are :

1. Variable Cost.
2. Fixed Cost.
3.Average Cost.
4.Average Fixed Cost.
5.Average Variable Cost.
6.Marginal Cost.

Examples:1. Price of a mobile is Rs 70,000. Its demand is less in Indian market compare to a similar mobile of price Rs20,000.

2. Price of a Gucci watch is Rs 45,000. Its demand is less compared to a watch of Rs 2000. Both provides the same utility but are given value by an individual to target different segment of consumers.

II.
Supply: it is the willingness and ability of the producers to offer the goods available in the market.
 It is depended on demand of the consumers. The more demand the more supply and vice versa.

Examples: 1. Xiaomi a manufacturer of mobile phone created launched a new product mi note 5 pro and created pre order portal and gets an order for 5000 smartphones. So 5000 is what the company has to supply.

2. union plastics took order of 5tons plastic bags. Here 5tons is what the company has to deliver.

III.

DEMAND: it is the want or requirement of a consumer and in exchange pays a price. Demand is dependent on price. The more price the less demand and vice versa. It also depends on type of commodity for necessity goods like rice sugar salt price doesn’t affect the demand but in case of normal goods like clothes its changes.

Example: 1. we buy prefer to buy a dell laptop over macbook.

2. we buy rice because it’s for daily consumption and there is no substitute for rice.

IV.

Indifference curve: Let us take two daily commodities like surf excel and Ariel. These two commodities come under washing powder and their usage is the same. Both are used for washing clothes and if one commodity is not available in the door step, customer will prefer the other one. The graph which represents that consumers have no preference for a particular product and if the product gets replaced still the utility remains the same is called INDIFFERENCE CURVE. The curve is also known as ISOQUANT CURVE.

Example: 1. Dell laptop and Hp laptop.

2. Close up and Colgate toothpaste.

V.

INCOME AND SUBSTITUTION EFFECT: Income is the ability of a consumer to make a purchase a commodity. Income plays a major role in the world economy. The more income the more purchase and the less income the less purchase.

Example: 1. Suppose you have a purchasing power of buying a maruti suzuki alto but you recently got a promotion and you choose not to buy an alto and move towards a better quality car Volkswagen polo. So from it we can contradict that income substituted alto.

2. you want to buy a Samsung mobile worth Rs 40,000 but you suddenly won a lottery and chose to buy an I phone.