The word Economics comes from the greek word oikonomos, which means managing household. Economics is the using scarce resources efficiently. The society allocate their scarce resources through economics.
Five concept of Economics:-
1. Demand and Supply
2. Opportunity Cost
3. Incentives
4. Scarcity
5. Inflation and Deflation
1. Demand- It is defined as in what quantity and price a person is willing to purchase a product, given it's purchasing power.
Example- The price of mangoes during summer is low and so during summer my family's demand for mangoes is high.
Supply- It is the quantity of a product what a supplier or the market wants to offer at a price.
Example- I like Zara products and it is also liked by many people. So, Zara suppliers sell more products at high price.
2. Opportunity Cost- We have to give up something to obtain something. This Opportunity Cost.
Example-i) I chose IBA for my Post Graduate Program, which is Bangalore. Previously I used to live in Kolkata that is where my family lives. To pursue PGDM in IBA, I had to leave Kolkata and come to Bangalore.
ii) Students of IBA have live project as well as they have regular classes, but still some students miss their classes, even after knowing that there is a marks deduction for absentees. Here their opportunity cost is live project because this will help them in placements.
3. Incentives- Incentives are things that makes people respond in a positive way. This induces people to act. It act as an motivational driver.
Example-i) When i was in school, I was given an essay which was to written in 300-500 words. The teacher said that whoever writes the longest essay will be rewarded with chocolates. So now, all the students including me, who were earlier thinking of not writing or just writing 300 words are now in the competition of writing maximum words for the essay just for a chocolate.
ii) A guest comes to my house and I prepare the guest some food. I serve them the food cooked by me. After having the first bite of the food, the guest praises my food and this makes me prepare more dishes for the guest.
4. Scarcity- It Means that society has limited resources and therefore cannot produce all the goods and services people wish to have. Here the wants are unlimited but the resources are limited.
Example-i) I like having Chicken dishes, but during bird flu the availability of chicken is much less and demand is high in turn causing scarcity.
ii) As coal is used for generating electricity but over use of coal has resulted in scarcity of coal, but wants keep increasing.
5. Inflation- It occurs when the price of goods and services generally rises over a period of time in the economy. This is the phenomenon caused by high demand low price.
Example- When Maruti Suzuki launched Baleno, it was priced below ₹8,00,000, and my family thought of buying it, but with the success of the car, Demand for the car increased and Supply fell thus resulting in price to rise. This made us buy the car at a higher price.
Deflation- It occurs when the price of goods and services generally fall over a period of time in the economy.
Example- When the same company, Maruti Suzuki S-Cross was launched, it was priced above ₹10,00,000, but eventually the price fell resulting in less demand and more supply.
Five concept of Economics:-
1. Demand and Supply
2. Opportunity Cost
3. Incentives
4. Scarcity
5. Inflation and Deflation
1. Demand- It is defined as in what quantity and price a person is willing to purchase a product, given it's purchasing power.
Example- The price of mangoes during summer is low and so during summer my family's demand for mangoes is high.
Supply- It is the quantity of a product what a supplier or the market wants to offer at a price.
Example- I like Zara products and it is also liked by many people. So, Zara suppliers sell more products at high price.
2. Opportunity Cost- We have to give up something to obtain something. This Opportunity Cost.
Example-i) I chose IBA for my Post Graduate Program, which is Bangalore. Previously I used to live in Kolkata that is where my family lives. To pursue PGDM in IBA, I had to leave Kolkata and come to Bangalore.
ii) Students of IBA have live project as well as they have regular classes, but still some students miss their classes, even after knowing that there is a marks deduction for absentees. Here their opportunity cost is live project because this will help them in placements.
3. Incentives- Incentives are things that makes people respond in a positive way. This induces people to act. It act as an motivational driver.
Example-i) When i was in school, I was given an essay which was to written in 300-500 words. The teacher said that whoever writes the longest essay will be rewarded with chocolates. So now, all the students including me, who were earlier thinking of not writing or just writing 300 words are now in the competition of writing maximum words for the essay just for a chocolate.
ii) A guest comes to my house and I prepare the guest some food. I serve them the food cooked by me. After having the first bite of the food, the guest praises my food and this makes me prepare more dishes for the guest.
4. Scarcity- It Means that society has limited resources and therefore cannot produce all the goods and services people wish to have. Here the wants are unlimited but the resources are limited.
Example-i) I like having Chicken dishes, but during bird flu the availability of chicken is much less and demand is high in turn causing scarcity.
ii) As coal is used for generating electricity but over use of coal has resulted in scarcity of coal, but wants keep increasing.
5. Inflation- It occurs when the price of goods and services generally rises over a period of time in the economy. This is the phenomenon caused by high demand low price.
Example- When Maruti Suzuki launched Baleno, it was priced below ₹8,00,000, and my family thought of buying it, but with the success of the car, Demand for the car increased and Supply fell thus resulting in price to rise. This made us buy the car at a higher price.
Deflation- It occurs when the price of goods and services generally fall over a period of time in the economy.
Example- When the same company, Maruti Suzuki S-Cross was launched, it was priced above ₹10,00,000, but eventually the price fell resulting in less demand and more supply.
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