1. Utility
Utility is the satisfaction that people derived from their consumption activities. It is measured in terms of utils. ItIt is assumed that taste and preferences of people are fixed and given and play a large role in decision making and second it is assumed that people allocate their income to maximize their satisfaction or total utility.
Basically there are two types of utility:
Cardinal utility and ordinal utility
Cardinal utility is the utility where in the satisfaction derived by the consumer from the consumption of goods or services can be measured numerically. It is measured in quantitative terms.
The second one is ordinal utility. It is the utility where a utility derived from the consumption of goods or services cannot be expressed in numeric terms, instead ranking is given. It is qualitative in nature.
2. Taste and preferences:
Taste is what kind of products customers like and want to buy. Customer preferences is defined as what customer prefer and get maximum satisfaction at. Customer satisfaction can be measured by their satisfaction with a specific item compared to opportunity cost of that item. Since whenever you buy one item you forfeit the opportunity to buy a competing item.
3. Increasing returns to scale:
If all the inputs in the production process was doubled and if the output increases more than proportionately with an increase in the inputs then that will be termed as increasing returns to scale.
If the input is increased by 2 times but the output increases by 2.8 times then the form has increased return to scale.
4. People respond to incentives:
Incentives are something that induces are people to act. Rational people makes decisions by comparing the cost and benefit because they respond to incentives.
If price of iPhone decreases people will start buying that phone. Here low price is an incentive and people are responding to that incentive.
5. Law of supply:
So first let us know what is supply.
It is the willingness and ability of the producers to offer the goods in market for sale at various prices.
So law of supply is ,as the prices of a good Rises the quantity supply also rises. There is a direct relationship between the quantity supplied and the price of the good.
So as the price of a good rises, the firm's supply rises because the producers want to earn more profit by supplying more goods.
Utility is the satisfaction that people derived from their consumption activities. It is measured in terms of utils. ItIt is assumed that taste and preferences of people are fixed and given and play a large role in decision making and second it is assumed that people allocate their income to maximize their satisfaction or total utility.
Basically there are two types of utility:
Cardinal utility and ordinal utility
Cardinal utility is the utility where in the satisfaction derived by the consumer from the consumption of goods or services can be measured numerically. It is measured in quantitative terms.
The second one is ordinal utility. It is the utility where a utility derived from the consumption of goods or services cannot be expressed in numeric terms, instead ranking is given. It is qualitative in nature.
2. Taste and preferences:
Taste is what kind of products customers like and want to buy. Customer preferences is defined as what customer prefer and get maximum satisfaction at. Customer satisfaction can be measured by their satisfaction with a specific item compared to opportunity cost of that item. Since whenever you buy one item you forfeit the opportunity to buy a competing item.
3. Increasing returns to scale:
If all the inputs in the production process was doubled and if the output increases more than proportionately with an increase in the inputs then that will be termed as increasing returns to scale.
If the input is increased by 2 times but the output increases by 2.8 times then the form has increased return to scale.
4. People respond to incentives:
Incentives are something that induces are people to act. Rational people makes decisions by comparing the cost and benefit because they respond to incentives.
If price of iPhone decreases people will start buying that phone. Here low price is an incentive and people are responding to that incentive.
5. Law of supply:
So first let us know what is supply.
It is the willingness and ability of the producers to offer the goods in market for sale at various prices.
So law of supply is ,as the prices of a good Rises the quantity supply also rises. There is a direct relationship between the quantity supplied and the price of the good.
So as the price of a good rises, the firm's supply rises because the producers want to earn more profit by supplying more goods.
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