ohhh..!!!..wow..!! Economics is Everywhere..Everywhere is Economics!!

IMPLICIT COST:

Example 1

I visited Bahrain in May 2018 for my vacation, there visited many tourist’s places. But in one particular park, the localities there did not treat well the other country people. Me being prospective tourist would not like to visit Bahrain again.

By this Bahrain’s tourist revenue decreases. This is measured in Economic profit called implicit cost.

Example 2

I went to goa in the month of April 2018 with my cousins, it was a sudden plan. On the day of landing in Goa I just randomly booked a room nearby Vagator beach. We were completely satisfied with rooms and the way the hotel management treated us. So we decided next time if we visit Goa then for sure this hotel room is only booked.

Here the income of hotel increases.

EQUI-MARGINAL UTILITY:

Example 1

Total number of movies acted by one particular hero by certain time period. Actors to maximize the satisfaction, they spend time(expenditure) among all movies so as to equate their additional satisfaction (marginal utility) on the last day/week/month he spent for each movie.

Here price is non-monitory., that is time spent by actor.

MUmovie1       =    MUmovie2         =      . . . .

PRICEmovie1         PRICEmovie2

Example 2

 Number of assignments done by each student of IBA every week. To maximize their performance(satisfaction) the students spend a lot of time among all respective subject assignments so as to equate their extra performance on the last day he/she spent for each assignment. 

MUassignment1      =     MUassignment2       =    . . . .

PRICEassignment1          PRICEassignment2

Here price is the amount of time spent by a student.

RATIONAL PEOPLE THINK AT MARGIN:

Example 1

During my engineering last semester, a group friends went on a trip to Mangalore. On the way to Mangalore we visited some more tourist places (which was not planned before) so we got extra benefit without any extra expenditure.

Example 2

Group studies. If there are 10 concepts to study, there is group of 2 students. So each takes 5 concepts to study and later explain each other the other 5. So here the time(expenditure) spent is reduced, but there is extra benefit (learnt total 10 concepts)

PEOPLE RESPOND TO INCENTIVES:

Example 1

Relative Grading system in IBA. Here grades are given to student compared to score of other students. So students to get more score and better grades, they will perform well by compete with each other. Here grades are incentives that students respond.

Example 2

On some special occasions, Central mall releases some offers like for purchase of RS.5000 the customer will get some home appliances for free. So here customer responds to incentive (home appliances) and shop for RS.5000.

LAW OF DIMINISHING RETURNS:

Example 1

Diet, during the start of the dieting the weight loss will be more. As we start to reach towards ideal weight, the rate of weight loss will be lesser. Later, there is no reduction of weight loss but diet plan is same as in initial stage.

Example 2

During my engineering days I used to go to western dance classes. We were total of 12 students; the classes were very effective. After few months’ strength was increased to 25, now the effectiveness of class decreased. Output was decreased due to increase in number of students.

SUBSTITUTION EFFECT:

College fee and pocket money. If college fee is increased, then pocket money will be reduced and viva-versa. But if we don’t want to sacrifice the consumption then the income factor (parent’s income) effects here.