ECONOMICS IN DAY TO DAY LIFE

CONCEPTS AND PRINCIPLES OF ECONOMICS

1.PEOPLE RESPOND TO INCENTIVES

An incentive is something that induces any person to perform certain work or act.

Example: When i was in 10th standard i had an extra class on saturday which i refused to go but as soon as i heard we will be getting extra marks and attendence too i was ready to go.

Another example is once i wanted to have a video game set which my mother promised to give only when i score good marks. To get  that video game as incentive i had to get marks.

2.SHIFT IN DEMAND CURVE 

Shift of a demand curve takes place only when there is a change in any non-price determinant of demand.

Example: I used to eat fast food item very rarely and going to cinema halls were very rare thing to happen but once my pocket money got increased after that these things started to occur on weekly basis. The demand for this increased as my pocket money.

Another example is i used to like to American nuts ice-cream a lot but due increase in sugar quantity of that product the taste was not that liked by me. There was a disliking factor for that ice-cream. As my taste and preferences changed the demand for that product got reduced. This shows leftward movement for demand curve. There will be shift in demand curve.

3.LAW OF DEMAND

This states that other things being equal if the price of a good increases quantity demanded decreases and when the price of a good decreases quantity demanded increases.

Example: While purchasing dresses from Myntra shopping app i experienced this law. I liked a dress but the price of it was too high for me to purchase. But once the price got decreased i ordered for the product.

Another example is of  V-Mart a shopping complex. They brought a very elegant show piece as a gifting item. It was liked by many customer and was demanded highly. The very next day the price of the item was increased and the customers refused to buy that item with that lot of price.

4.CONSUMER SURPLUS

It is difference between the price consumer is willing to pay and consumer actually pays. In simple term it can be called as bargaining.

Example: Last month i visited Jayanagar to purchase a pair of shoes. There the shopkeeper demanded a greater price then i was willing to pay but after bargaining i paid the amount which was decided by me.

Another example is the momos seller he asked  Rs.60 for a plate of momos but i disagreed to pay so. After few minutes of negotiations i paid him only Rs.50 for a plate. Even though i wanted to pay Rs.40.

5.DIMINISHING MARGINAL UTILITY

The more of a good that one obtains in a specific period of time,the less additional utility is derived from an additional unit of that product.

Example: I had a big pack of Dairy milk silk chocolate which i wanted to eat. The first bite for the chocolate created high satisfaction to me as i wanted to eat that. But now after every increasing bite of the chocolate was causing lesser satisfaction to me. And then there was a point where i did not wanted to eat the chocolate anymore.

Another example is that after coming  to home from sunny day outside i drank one glass of juice which provided me higher utility as i was in need of that. The second glass was a bit okay to consume as my maximum need was satisfied from the first glass. But when i was going to consume third glass of juice i was unable to drink it as my need was totally satisfied. Every additional unit gave more satisfaction.