1. OPPORTUNITY COST
Opportunity
cost is the next best alternative foregone. Scarcity
is the basic problem of economics. Therefore, we are concerned with the best
use and distribution of these scarce resources. Wherever there is scarcity
there we are forced to make choices.
Example 1
One day I
have gone to a famous hotel and there I was forced to make a choice in between
limited veg thali and unlimited non-veg thali, where both of them costs 500
each and I got only 500 in my pocket. Then I choose unlimited non-veg thali,
the opportunity cost is the limited veg thali which is supplied in limited
quantity.
Example 2
Once
I have been into a situation where I had to choose between whether to buy a JBL
Bluetooth speaker or a Phone where both of them are same price. Then I choose
to buy phone rather than buying JBL Bluetooth speaker as phone can be used for
using internet as well playing music and other functions and instead of JBL
Bluetooth speakers I can make use of other company Bluetooth speakers which
costs less. Here opportunity cost is the Bluetooth speakers I cannot afford to
buy.
2. DEMAND
Demand is the want or desire to possess a good or
service with the necessary goods, services, or financial instruments necessary
to make a legal transaction for those goods or service.
In general, demand is the quantity of goods or services
that people are willing or able to buy at a given price. Price of the goods,
Income of the consumers, Price of substitutes and complementary goods, Tastes
of the people and expectations are the five determinants of demand.
Law of demand is the relationship between the quantity
demanded at a given price while all other factors remain constant. If the price
of a commodity rises, then the quantity demanded decreases and vice versa. In
economics it is known as the ceteris paribus, which means the quantity demanded
for a good or service is inversely related to price.
Example 1
Once I went to market to purchase 1kg of onions. There I
came to know that the price of onions has been decreased to half, therefore I
bought 2kgs rather than buying 1kg. Here due to the decrease in price of
commodity I demanded for more quantity.
Example 2
Once I went to a retail shop to purchase 5 Maggie packets which costs 10/-
each. There I found that price of the Maggie has been increased to 12/- and I
got only 50/- with me. So, I bought only 4 packets rather than buying 5
packets. This is because of the increase in the price of the commodity and
demand for the commodity has been decreased.
3. SUPPLY
Supply is the total amount of a
given product or service that is available for purchase at a set price. This
component of economics may seem unclear, but you can find examples of supply in
everyday life situations.
Example 1
Wheat
is very plentiful over the year & there is more wheat than people would
normally buy.to get rid of the excess supply farmers need to lower the price of
wheat & thus the price will low for everyone.
Example 2
Many new, unskilled workers come to city & all the
workers are willing to take jobs at a low wage because there are available
jobs, the excess supply of workers drives wages downwards
4.MOBILITY OF INPUTS
There
are some inputs which can be moved and some which cannot be.
If
kalanikethan shop owner wants to shift his shop from JP nagar to Jaya nagar, he
can only shift the goods in it but not the building.
Example 2
There is famous dosa bandi in Hyderabad called ramki bandi. He started with a
hotel, later to expanded his business, he updated himself to food trucks which
can be moved easily to everyplace.
5.PRICE MECHANISM (GOODS MARKET):
Price mechanism is the system
where the law of demand & supply determines the prices of commodity &
the changes there itself. it is the buyers & sellers who actually determine
the price of a commodity.
Examples 1
Whenever there is shortage of Apple, the demand increases. The price gets
increased automatically like about 150 rupees for 1kg. Then the demand
decreases, many people stop buying and supply increases because of increase in
the price. This happens until the demand and supply comes to same level.
Example 2
Whenever there is shortage of electricity
especially in rural area, the demand increases. Then people will pay 2000
which is more compared to base price. Then the demand decreases, people stop
buying and supply increases because of increase in the price. This happens
until the demand and supply comes to same level.
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