LAW OF DIMINISHING MARGINAL UTILITY

It states that for every additional unit of product that we consume the marginal utility derived diminishes.

Example 1- I would like to take an example of barbecue nation. BBQ nation is an Indian restaurant owned by BBQ nations hospitality Ltd. BBQ nation offers wide variety of appetizers and one of the main idea they came up with is introducing buffet system with unlimited starters and main course offerings now with unlimited tagline of Rs 999 people tend to fill up there tummies with starters itself now consuming first plate of starter it gives a sense of satisfaction and the people order for more. Now there comes a point where people realize that with additional consumption of each late satisfaction derived from each plate diminishes and there comes a point where marginal utility becomes 0.

CONSUMER EQUILIBRIUM

It is the situation where a consumer obtains maximum satisfaction with the best possible combination of two goods with their given income.

Example 1- When reliance launched its first sim JIO, it came to the market with a bang offering free sims with unlimited calling and internet. As a consumer of Airtel, I was fascinated with buying jio sim. But Airtel was my official calling no. so I couldn’t afford to lose it as well. So what I came u with is I gave u recharging the data pack for Airtel and paid for only calling purposes. I used jio for data purposes. At this point I was the one who was deriving max satisfaction.

INCOME ELASTICITY OF DEMAND

Example 1- India' one of the top leading cosmetic brand body shop offers a wide range of body care Products. According to the economic times, an Indian business daily, the company cut down its prices by 20% to 30% to attract more of the price sensitive Indian consumers. 

Example 2- Amazon introduced with one of its premium features amazon prime which enabled the customers with free two day shipping service. Amazon introduced it in India at the same prices as that prevailing in US. But as the average real income of US is much more than that of average real income of that of India, Amazon lost its customers by 24% drastically as listed by an article in The Economic Times.

LAW OF DEMAND

Example 1- I would like to take an example of Zara. With the end of every season, Zara introduces a sale to complete with the stock.Therefore, it lowers own the prices of clothing as well as accessories. I go out with my friends and come out with a list of items which i didn't even think of to buy. But as as soon as the sale ends prices rise and again in place of buying 4 tops and 2 jeans, i go for 2 tops and 1 jeans.

Example 2- I used olive oil for cooking as well as personal use. I used to buy 10 L of Oleev active worth rs. 565 each. As the rices rose u to rs,. 625, i stopped buying 10 L instead i bought only 5 L of Oleev active and stopped using it for personal use.

TRADE OFFS

Example 1- With my given pocket money i could only watch Jumanji movie or i can eat Biryani from restaurant Marhaba. Now I face a difficulty in choosing one out of two options as i have not watched a movie since a decade and i also want to eat something good. This is the situation where i face trade off and not able to take a decision.