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
.
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
.
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