Economic Concepts in Our Daily Life

MEANING OF UTILITY:

Simplest Meaning of "Utility" is "Usefulness".In economics utility is the capacity of a commodity to satisfy human needs.In the present situation,utility has been called as "Expected Satisfaction" where we will get from the simplest things which will happen in our day to day life.Sometimes Expected Satisfaction may be less or equal to or more than what we want.

PRINCIPLE OF DIMINISHING MARGINAL UTILITY:

Example 1:

Let us assume if a person is feeling Hungry.At that time he is having fruits or any junk food with him.But the way he shows interest while eating the first thing from the fruit basket is high and it keeps on decreasing for the second time because there will be less satisfaction or the interest showed by him  for the second thing decreases is called "Principle of Diminishing marginal Utility".

Example 2:

If we are fond of sweets or chocolates but while we are eating at that time we used to take one or two and after sometime it is keep on decreasing the interest among them is called "Principle of Diminishing Marginal Utility".

UTILITY DIMINISHES OVERTIME:

Example 1:

Suppose if a person wanted to buy a I-phone .He is going to check what are the present trending one's but he won't go for the old one(or)previous model.Here the time period of that particular  product(i.e.I-Phone) is a time constraint.Here we can observe the "Utility Diminishes Overtime".

Example 2:

If we want to buy a Residential flat or any empty land/site whether he/she may going to check where are the present areas which are more popular and within that area and the time constraint of that area like the popularity of that area is observed.

CONSUMERS ARE NOT IDENTICAL:

Example 1:

Every person is having different tastes and different preferences for such a single product.If a person likes coffee and some other like fruit juice or any other thing.Here the tastes of consumers differs from person to person.That is the "Consumers are not identical".

Example 2:

Different Consumers have different kind of tastes.No one is going to have similar taste.If we take an example between Gold and Clothes.Some people usually invest their amount on Gold and some are interested to buy clothes.So like this consumers are identical in their paths and thinking.

INDIFFERENCE CURVE:

An Indifference Curve is a graph that shows a combination of two goods that give a consumer equal satisfaction and utility,thereby making the consumer indifferent.

Example 1:

When we go to Absolute Barbecue for unlimited buffet,they used to ask us about Is there any Birthday in a batch when a group of people went there.If we told them then they are going to provide a small pastry and they are going to celebrate the birthday by playing a music and dance.So by taking this as an example the enjoyment and the food where it is an unlimited buffet both got satisfied.

Example 2:

If we went to a mall for shopping along with kids,kids usually won't allow us to do shopping.So in Shopping malls there will be a playing zone for kids,where they can play lot more games they want and we can shop whatever we want in the meanwhile time.So with this example we can say that both shopping for us and the play time for kids both got satisfied.

EQUI-MARGINAL PRINCIPLE:

Equi-Marginal Principle is known as the principle of maximum satisfaction.For maximize utility, consumers allocate their incomes among goods so as to equate the marginal utilities per rupee.

Example:

 

Marginal Principle is applied in the allocation of the resources in the way of production.If we take any manufacturing industry they used to separate into 3-4 Departments like Feeder,Finishing,Quality and Ware House.In Feeder and Finishing we need so many people compared with the Quality and Warehouse.So it all depends on how these resources are allocated as per the people who are working there.