Economics mainly Depends On The behaviour and the theories and ideologies based om those behaviour or around the behaviour.
Micro Economics is the study of interaction between two or more people or a small group of people.
For Example- The Interaction that I have with my suppliers and consumers for my business purposes.
1)People Face Trade – Offs: - It Can Basically be Defined as a situation in which you cannot decide as what to buy and what not to buy. In this we come across a situation where a consumer cannot decide between two products and then he dissolves to a situation in which the consumer buys one product and sacrifices the other product of trades off to the other product.
For Example: - One Day when I was in my office I got enquiry from two companies at the same time and could not decide which company to choose, one company had an order of 50,000 and payment terms was on the time of delivery but the second company had an offer of 5,00,000 but the payment will be done after 6 months, So I was in a dilemma to choose the company that gives payment on the same day as delivery or the company that has given a big order so according to my needs I will choose a suitable situation by applying Cost Benefit Analysis in which we measure the cost and the benefits that I will get. So at that time I Chose the second company because I had no cash crunch at that time and because payment was after 6 months I charged a high profit percentage.
For Example: - One day when I went to the mobile store to get a new phone and I could not decide which mobile to buy, all my friends said that i-phone X was the best mobile but I was thinking of buying one plus 6 so I was in a dilemma so I did a cost benefit analysis and decided to buy one plus 6 as it costs less and has almost all the features a mobile device should have whereas i-phone was very costly and just had the IOS experience.
2)Demand & Law of Demand: - Demand can be defined as the willingness of a consumer to buy products at different price when All other things remain constant.
Law of Demand can be defined as the inverse relationship between quantity demanded and price at a given time or a specific time or the willingness of a buyer or seller to buy or sell his product at a given time ceteris paribus is called as law of demand.
For Example: - In my Business I was selling a product which was not easily available in the market so the Quantity demand for that product was very high and so one day I decided to raise the price of that product and then the Quantity demanded for that product started to decrease rapidly, people started searching for different alternatives as that product was becoming very costly.
For Example: - One day I was taking a walk down my house lane and I saw there was a new restaurant which had opened and I saw that there were very few customers there so I became curious and looked at the menu and I saw that the price at which they were offering food was very high, Then after a month I saw that restaurant again and I saw that people were not getting seats to sit in the restaurant and had to wait in line so again I became curious and I saw that they had reduced their prices and were offering combo meals also so the Quantity demand for their product rose very high.
3)Supply: - Supply can be defined as the willingness and ability of producers to offer their products in the market for sale at various prices at a particular time.
For Example: - During the time of Durga puja people of Kolkata like me buy all kinds of products from the market and the producers take this opportunity to increase the price of their products because even if they increase their price the quantity supplied for their products does not decrease instead it increases, This is because consumers do not think of price when buying product at the time of any festival.
For Example: - In my business when price of one product rises or increases we are more interested to sell that product in order to maximise our profit as compared to those products in which price is low and profit is also low.
4)Consumer Surplus: - The Difference Between the price the consumer is willing to pay and the amount he actually pays is called as Consumer Surplus.
For Example: - One day I went to the nearest store to buy a product for which I was willing to pay Rs. 500 for the same. But the shopkeeper offered the price of Rs. 450 for that product so the difference between the two Prices i.e. Rs. 50 is my Consumer Surplus.
For Example: - One Day I decided to buy a new latest smartphone and I was willing to pay Rs. 40000 for it and so I started to look for many options of smartphone with the features I need and I came across one plus 6 and I decided to buy that phone and it costed me Rs. 35000, the difference between the two prices i.e. Rs. 5000 is my Consumer Surplus.
5)Budget Line: - It is a line which represents all possible combination of goods that can be purchased with a given income.
For Example: - One day some guests had come to my house and my mother gave me Rs. 100 and told me to buy samosa and sweets from the store. So I had Rs. 100 with me and I wanted to purchase samosa and sweets so if samosa costs Rs. 10 and sweets costs Rs. 20 then I can buy both in the given combination Below
Amount Rs.100
SamosaSweets
1 4
2 4
4 3
6 2
8 1
10 0
For Example: - One day there was a puja in my house and I had to buy fruits for the puja so I decided to buy apple and bananas for the same and for that I had a budget of Rs. 100, Apple costed me Rs. 10 and bananas costed me Rs. 5, So to buy both the fruits the combination is given below.
Amount Rs. 100
AppleBananas
1 18
2 16
3 14
4 12
5 10
6 8
7 6
8 4
9 2
10 0
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