Principles Of Economics in Daily Life

Principles Of Economics in Daily Life

We often see restaurants like Pizza Hut, Dominos and many other offering unlimited meals from time to time. Due to which people get more attracted to these restaurants and often visits them. Hence as per the principle of economics, this concept is referred to as People Response To Incentives. As incentives are something which induces a person to act, therefore by seeing the unlimited meal offer people response to it positively as by paying only a minimum amount they can enjoy the unlimited food.

Nowadays we can see that families visiting the hill station as their holiday destination is more compared to religious places. In terms of Economics this concept can be explained as Principle of Diminishing Marginal Utility, because the more they visit the religious places within a specific period of time, the less additional utility they derive by visiting the religious places again and again. Hence the Marginal Utility gets diminishes over a period of time and therefore change their option as per their taste and preference and chooses to visit the hill station as their holiday destination.

Looking into the scenario of Indian IT Industry, its success is on account of their ability to offer products at low prices, we use the economic term Surplus in terms of both customers as well as producer. Here as the consumers need to pay a lower amount in compared to the amount which they expected, hence we can see the term Consumer Surplus, as there is a difference between the price the consumer is willing to pay and what he actually pays.  But at the same time, we can also see here that the producers will sell the products at a higher price if the consumers are buying it more. Thus the difference between the price producer is willing to sell and the price at which he actually sells is seen in this case. This is Producer Surplus.

There are various restaurants which offer diverse menus which include varieties of option in both depth and breadth, while there are others which offer only a few items on their menu. Hence it becomes difficult for customers to make choices. Here the economics term People Face Trade-Offs is used. We know that people make decisions on the basis of different ideas. Thus, in this case, we can see that as some restaurants are offering diverse menus while others are offering just a few items, therefore to get a particular item from one menu people might have to give up other items from a different menu.

We often see that due to unseasonal calamities such as flood, storms or due to an unseasonal shortage of some particular crop the price of the product affects the demand as well as its supply. This concept in economics refers to Price Mechanism where as per the demand and supply, the prices of goods are determined. Therefore we can see that due to natural calamities the production may be low but yet the demand is the same, which will further led to an increase in price.