OPPORTUNITY COST
The next best option or alternative available to us is known as opportunity cost. It is the thing that is sacrificed or not selected.
For example -
1.) If a student decides to attend his extra classes instead of going for a concert ,the concert that he sacrificed is his opportunity cost.
2.) if a farmer decides to plant wheat, the opportunity cost would be any other crop that he could have planted like rice or pulses.
LAW OF DEMAND
The law of demand states that other things remaining constant, when the price of a good or service increases ,the quantity demanded for that product decreases.
For example-
1.) If the price of onion increases from Rs. 40 to Rs 60, the quantity demanded for onion goes down or decreases.
2.) If the price of apple decreases, the people who usually don't buy apples will also start buying it because of its reduced price thus leading to an increase in quantity demands of apple.
LAW OF SUPPLY-
The law of supply states that keeping other factors constant ,if there is an increase in price of a good in the market .the quantity supplied also increases.
for example-
1.) If the price of titan watch increases , the suppliers will be willing to sell more watches in order to maximize profit margins.
2.) If the price of oranges decreases in the market ,the suppliers will be unwilling to supply oranges into the market.
LAW OF DIMINISHING MARGINAL UTILITY-
It states that the more of a good that one obtains in a specified period of time , the less the additional utility derived from an additional unit of the good.
For example-
1.) If you are hungry and then you order a pizza , the first slice that you eat gives you maximum satisfaction and it will yield maximum utility .On the other hand, if you keep having pizza slices one after the other the additional utility derived from each additional unit of consumption of pizza keeps on decreasing.
2.)If you read a good novel for the first time, it gives you maximum utility and satisfaction ,but if you read the same novel again ,the marginal utility derived from it decreases.
CONSUMER SURPLUS-
It is the difference between what consumers are willing and are able to pay for a good or service and what they actually pay or spend to buy the good or service.
For example -
1.) A girl is willing and has the ability to pay Rs. 5000 for branded exclusive hand bag but she gets it at only Rs. 4000. Then Rs. 1000 is the consumer surplus that she derived with the purchase of this bag.
2.)A man is willing to pay Rs. 1000 for a wallet that he liked in a store but he gets it at Rs. 800 . In this case his consumer surplus is Rs. 200
The next best option or alternative available to us is known as opportunity cost. It is the thing that is sacrificed or not selected.
For example -
1.) If a student decides to attend his extra classes instead of going for a concert ,the concert that he sacrificed is his opportunity cost.
2.) if a farmer decides to plant wheat, the opportunity cost would be any other crop that he could have planted like rice or pulses.
LAW OF DEMAND
The law of demand states that other things remaining constant, when the price of a good or service increases ,the quantity demanded for that product decreases.
For example-
1.) If the price of onion increases from Rs. 40 to Rs 60, the quantity demanded for onion goes down or decreases.
2.) If the price of apple decreases, the people who usually don't buy apples will also start buying it because of its reduced price thus leading to an increase in quantity demands of apple.
LAW OF SUPPLY-
The law of supply states that keeping other factors constant ,if there is an increase in price of a good in the market .the quantity supplied also increases.
for example-
1.) If the price of titan watch increases , the suppliers will be willing to sell more watches in order to maximize profit margins.
2.) If the price of oranges decreases in the market ,the suppliers will be unwilling to supply oranges into the market.
LAW OF DIMINISHING MARGINAL UTILITY-
It states that the more of a good that one obtains in a specified period of time , the less the additional utility derived from an additional unit of the good.
For example-
1.) If you are hungry and then you order a pizza , the first slice that you eat gives you maximum satisfaction and it will yield maximum utility .On the other hand, if you keep having pizza slices one after the other the additional utility derived from each additional unit of consumption of pizza keeps on decreasing.
2.)If you read a good novel for the first time, it gives you maximum utility and satisfaction ,but if you read the same novel again ,the marginal utility derived from it decreases.
CONSUMER SURPLUS-
It is the difference between what consumers are willing and are able to pay for a good or service and what they actually pay or spend to buy the good or service.
For example -
1.) A girl is willing and has the ability to pay Rs. 5000 for branded exclusive hand bag but she gets it at only Rs. 4000. Then Rs. 1000 is the consumer surplus that she derived with the purchase of this bag.
2.)A man is willing to pay Rs. 1000 for a wallet that he liked in a store but he gets it at Rs. 800 . In this case his consumer surplus is Rs. 200
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