Hey there, so this time i am going to write about economic concepts and i will attach it by real life based examples.
So lets first start with "Law of Demand".
LAW OF DEMAND
So law of demand says when price of goods increases, quantity demand of that particular goods decreases. And at the same time, on other hand, when price of goods decreases, quantity demand of that particular goods increases.
So it's common in our life, Right! we reduce our quantity demand when we find price in increasing order.
lets take example of the same.
1. There is a shop of samosha in my home town (Bihar), and i was fond of eating samosha there, not only me, many people used to come to have samosha there because of its unique and tasty taste. But one day shopkeeper increases the price of samosha due to increasing price of potato. So i stated eating less quantity. and at the same time demand of potato also went down.
2. follow to my above example, after few weeks Price of potato again got normal as well as price of samosha. hence i start consuming samosha in more quantity.
PRODUCER SURPLUS
Producer surplus mean difference between price producer is willing to sell and the in price actually sold.
For example,
1. you estimated you will get 200 for your particular product, but when you actually go to market and willing to sell it you find more than your initial estimated value say 400. so here you get 200 extra for your product, so 200 will be surplus it is actually called producer surplus.
2. let me take my recent real example. I wanted to sell my laptop 2 weeks before because i got a new laptop from my college. so i estimated price of my laptop 19000 and give ads on olx for sale, but i putted 21000 price there. and i got a customer and after negotiation, he agree to take it at worth of 20000. so here i got 1000 extra for my product which is surplus (Producer surplus).
CONSUMER SURPLUS
Consumer surplus mean difference between price consumer is willing to purchases and the in price it actually paid.
For examples,
1. You are planning to spend 500 for a particular product (which you are willing to pay) and you get that product in worth of 400. mean 100 is surplus (consumer surplus).
2. Before some days, i decided to buy shoes and i asked my father to give me 1500 for shoes.
but on day of purchasing i get that shoes in 1267 only on amazon. so i was so happy because i had gotten surplus of 233.
LAW OF EQUI - MARGINAL UTILITY
According to Alfred Marshal,"if a person has thing which he can put in two uses,then he will divide between both in such way that it has same marginal utility in all.
In simple words we cam can say, when get a chance to purchases two or more things we usually purchases in such way that we get same satisfaction in all.
For example
1. when you go for shopping, instead of purchasing similar products/brands. you go for different products because it give you same level of satisfaction(marginal utility) in purchasing.
2. Last sunday i missed to go for dinner at santripti at time, so decided to go grocery to eat somethings. i had 50 rupees with me that time and i decided to spend total money.
so instead of purchasing same things i went for different items, which had same marginal utility for me. hence i spend my total money and i got higher satisfaction.
INCOME ELASTICITY OF DEMAND
lets take example of the same.
1. There is a shop of samosha in my home town (Bihar), and i was fond of eating samosha there, not only me, many people used to come to have samosha there because of its unique and tasty taste. But one day shopkeeper increases the price of samosha due to increasing price of potato. So i stated eating less quantity. and at the same time demand of potato also went down.
2. follow to my above example, after few weeks Price of potato again got normal as well as price of samosha. hence i start consuming samosha in more quantity.
PRODUCER SURPLUS
Producer surplus mean difference between price producer is willing to sell and the in price actually sold.
For example,
1. you estimated you will get 200 for your particular product, but when you actually go to market and willing to sell it you find more than your initial estimated value say 400. so here you get 200 extra for your product, so 200 will be surplus it is actually called producer surplus.
2. let me take my recent real example. I wanted to sell my laptop 2 weeks before because i got a new laptop from my college. so i estimated price of my laptop 19000 and give ads on olx for sale, but i putted 21000 price there. and i got a customer and after negotiation, he agree to take it at worth of 20000. so here i got 1000 extra for my product which is surplus (Producer surplus).
CONSUMER SURPLUS
Consumer surplus mean difference between price consumer is willing to purchases and the in price it actually paid.
For examples,
1. You are planning to spend 500 for a particular product (which you are willing to pay) and you get that product in worth of 400. mean 100 is surplus (consumer surplus).
2. Before some days, i decided to buy shoes and i asked my father to give me 1500 for shoes.
but on day of purchasing i get that shoes in 1267 only on amazon. so i was so happy because i had gotten surplus of 233.
LAW OF EQUI - MARGINAL UTILITY
According to Alfred Marshal,"if a person has thing which he can put in two uses,then he will divide between both in such way that it has same marginal utility in all.
In simple words we cam can say, when get a chance to purchases two or more things we usually purchases in such way that we get same satisfaction in all.
For example
1. when you go for shopping, instead of purchasing similar products/brands. you go for different products because it give you same level of satisfaction(marginal utility) in purchasing.
2. Last sunday i missed to go for dinner at santripti at time, so decided to go grocery to eat somethings. i had 50 rupees with me that time and i decided to spend total money.
so instead of purchasing same things i went for different items, which had same marginal utility for me. hence i spend my total money and i got higher satisfaction.
INCOME ELASTICITY OF DEMAND
Income Elasticity Of Demand says, ratio of the percentage change in the quantity demand with the percentage change in income.
Ey = Percentage change in quantity demand/Percentage change in income
Percentage change in quantity demand =
New quantity demand (^Q)/ Original quantity demand(Q)
New quantity demand (^Q)/ Original quantity demand(Q)
For example:-
1. when income level of particular family increases, that family tend to increase their consumption level and viva-versa. Hence Quantity demand increase or decrease with changes occur in income level.
2. During my graduation, when i used to have limited pocket money with me, i was able to full fill my needs only from that limited money. but when i started taking home tuition, my income increased. hence my consumption power also increased along with increasing in my income.
TYPES
There are 3 types of Income Elasticity Of Demand, Which are Following.
1-- Positive Income Elasticity Of Demand.
3-- Zero Income Elasticity Of Demand.
2-- Negative Income Elasticity Of Demand.
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