Economic Concept linked to real life experiences

People Face Trade-offs:

          The basic concept of People Face Trade-offs is that to get something we want, we have to sacrifice something. Giving importance for a particular product or service and so sacrificing the other product or service.

Example 1: I stopped eating all unhealthy foods that I like to eat because I start concentrating on my running race for zonal level.

Example 2: To do MBA and for a better carrier I left my job in TCS.

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 1: I visit a mall for buying one Levis Shirt and I saw Crocodile is giving 50% off on clothes so I buy two shirts from Crocodile instead of one shirt.

Example 2: As Vaishanavi hotel gives 10% offer for IBA students, so on every weekends I prefer Vaishanavi hotel than any other hotel.

Law of Demand:

         We can say that, Demand and quantity are interrelated. When price of a product increases, quantity demand of the product decreases and when the price decreases the quantity demand increases.

Example 1: I eat at least 5 biriyani from hotel at a rate of Rs.100 per plate, but when they increased the price to Rs.150 I reduced my consumption to 3 biriyani a week.

Example 2: 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.

Marginal Utility:

      It is the extra benefit that the consumer gets that consuming the extra unit of the product. Additional satisfaction derived from the consumption from one additional unit.

Example 1: I was very hungry last week and went out to eat chaat items with my friends I ordered a samosa chaat, I ate a first bite of it was very satisfying and then I was willing to have another after having that I was more satisfied than I was before

Example 2: I went out with my friends to have KFC Chicken we ordered a bucket, after having one piece fried chicken I lost the interest to have another piece.

Availability of close substitutes:  

                                    

    The goods with close substitutes have more elastic demand than other products, because consumers easily change their mind to buy substitute products. When a substitute product with same quantity of less price always attracts the consumers to purchase. Increase in price of one product leads to increase in the demand of other product.

Example 1: After my dinner I went to grocery to buy Sprite and I saw 7up with less rate than Sprite and give the same taste. So I purchased 7up.

Example 2: One day I went to purchase a Jeans, While searching for it I figure out trousers are cheaper than jeans, so I purchased trousers.