Phenomenons Of Economics

People Respond To incentives

Incentives is  a way to attract more and more customer in business. Customer is very fond of places where they get extra in same cost.Customers are get better incentives they will respond to there more. lets understand with help of example, i like pizza so much so in my city there is pizza chain store . They give unlimited pizza meal in just 179 rupees, in  which 22 types of Italian starter, 3 types of exotic pizza and at the end dessert also. so here great incentive consumer are getting. 

Opportunity  cost 

opportunity cost is what you give up to get it. The cost we have given a because we are getting extra in other thing .So it is benefit to give up that cost. let me put one example here, once i was searching for hotels. I found two hotels one is with the cost of 1500 and other one is with cost of 1600 per day. In second hotel i was getting complimentary breakfast free. So i will choose second one hotel which have 1600 cost. Here 1500 will be my opportunity cost. 

Taste  and preference: Determinant of demand

Taste and preference in economics is what consumer like to use . whether it is related to trends or they want to use it. so it affects demand and supply both. This represent what actually customer want. Example, once at my schooling age there was a trend of FM radio set so that time it was in high demand. So FM radio was the taste and preference of that time. So taste and preference are always changes.

Supply is directly proportional to price 

Above heading is representing a phenomenon called law of supply.It means when price of commodity increases then supply of commodity is also increase and vice versa. So it is represent direct relationship between price and supply.Example, A.C. price is more in summer than winter. Here law of supply will apply.In  summer price will be higher so supply will be be more and in winter price will be low so supply will also be low. 

Elasticity of supply is greater than one 

Above condition comes when price changes but supply remain unchanged. we cannot increase supply just because of scarcity of resources .For example my brother have a fond of collecting antiques. price of antiques always be high and supply is always be low. This condition is called elasticity of supply. Elasticity is of supply is greater than one that good is called Elastic.