1) LAW OF DEMAND
When the price of a good rises,the quantity demanded of the good decreases and when the price decreases ,the quantity demanded rises ,other things remaining equal.
example a) - I went to the market to purchase 5kg of onion but when i came to know that the price of the onion is increased by 50rs ,i bought only 2kg of onion.
b) I went to the D-mart to purchase bag but when i saw that it was available at a low price so i purchased 2bag.
2) PRICE ELASTICITY
It measures how much the quantity demanded responds substantially to changes in the price.
EXAMPLE a) If the gas prices increases by 60%, gas purchases fall by 25%.
b) If the kitkat price increases, people will switch to alternative type of chocolate bar.
3) INFERIOR GOODS
When the income increases ,demand decreases . An inferior good has a negative income elasticity of demand .
EXAMPLE -a) In case of transportation,when the income is low,people will ride a bus, but if income is more people will start buying a car.
b) when the income is more,we may substitute our Mcdonald's coffee to starbucks coffee but when it is low ,we substitute it to more affordable Mcdonald's coffee.
4)EQUILIBRIUM
Equilibrium is a point at which demand and supply intersect each other
EXAMPLE- me and my friend went to market to purchase footwear for which seller offered it at a higher price but after bargaining he gives exactly at the samr price which i wanted.
5)LAW OF DIMINISHING RETURN
As the use of an input increases (with other inputs fixed),a point will eventually be reached
at which the resulting additions to output decreases.
EXAMPLE- a) If a person consumes one chocolate it may satisfy a person's tooth.if a second chocolate is consumed,the satisfaction of eating second chocolate will be less.
b) If you drink one cup of tea,then the satisfaction level will be high but it will decrease as you drink more cup of tea.
When the price of a good rises,the quantity demanded of the good decreases and when the price decreases ,the quantity demanded rises ,other things remaining equal.
example a) - I went to the market to purchase 5kg of onion but when i came to know that the price of the onion is increased by 50rs ,i bought only 2kg of onion.
b) I went to the D-mart to purchase bag but when i saw that it was available at a low price so i purchased 2bag.
2) PRICE ELASTICITY
It measures how much the quantity demanded responds substantially to changes in the price.
EXAMPLE a) If the gas prices increases by 60%, gas purchases fall by 25%.
b) If the kitkat price increases, people will switch to alternative type of chocolate bar.
3) INFERIOR GOODS
When the income increases ,demand decreases . An inferior good has a negative income elasticity of demand .
EXAMPLE -a) In case of transportation,when the income is low,people will ride a bus, but if income is more people will start buying a car.
b) when the income is more,we may substitute our Mcdonald's coffee to starbucks coffee but when it is low ,we substitute it to more affordable Mcdonald's coffee.
4)EQUILIBRIUM
Equilibrium is a point at which demand and supply intersect each other
EXAMPLE- me and my friend went to market to purchase footwear for which seller offered it at a higher price but after bargaining he gives exactly at the samr price which i wanted.
5)LAW OF DIMINISHING RETURN
As the use of an input increases (with other inputs fixed),a point will eventually be reached
at which the resulting additions to output decreases.
EXAMPLE- a) If a person consumes one chocolate it may satisfy a person's tooth.if a second chocolate is consumed,the satisfaction of eating second chocolate will be less.
b) If you drink one cup of tea,then the satisfaction level will be high but it will decrease as you drink more cup of tea.
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