RELATING LIFE WITH ECONOMICS.

Real life example of different concept of economics

1. OPPORTUNITY COST :-  when we compromise on something to get another something or to achieve something that we want. The opportunity cost is what we compromise . We encountered a lot of real life situation which shows us the opportunity cost. I am citing some of the example here.

1.       After completing my graduation my friends decided to go for a tour. Everyone is so excited for this tour as we are making our first tour with my friends after this long hectic schedule and this time I am badly needed a mobile as my mobile is not working good. So my father gave me a option that either you go for a tour or you opt for mobile that you want. Finally I choose to buy a mobile instead of going to that tour with my friends. So I have to made compromise on my tour planning with my friends, which was a opportunity cost to me.

2.       Being a great fan of marvel, I used to see all the movies of marvel. So last year when my semester exam was there the long awaited movie of marvel “infinity war” got released. My exam was just having 4 days to go. So at that time I only have two option but I choose to study for the exam by compromising on my favourite movie. So the movie was a opportunity cost to me.

2. CONSUMER AND PRODUCER SURPLUS :-  The consumer surplus and producer surplus is the difference between the lowest price and the price you willing to pay or sell respectively. We experience a lot of example in everyday life which shows us the consumer and producer surplus. Some of the example are

1.       Once I went to buy a shirt where the written price of the shirt was 1400. But looking at the shirt I guessed the it will cost maximum of 1000. As my friend have a same shirt. So I started bargaining. So I started from 500. The shopkeeper was not ready at that price so after bargaining I bought the particular shirt on 800. Where I got a benefit of 200 which is a consumer surplus. After coming back my friend told me that actual price of the shirt is 600. So the seller got rs 200 as benefit which was a producer surplus.

2.       Same thing happens to my friend when he went to buy a mobile phone. Online the mobile is cost around 10000rs. By fiend bought that mobile from a local shop at rs 10500. He told me that the seller was charging 12000 for that mobile. Where my friend has maximum willingness to pay rs 11000. Therefor the seller got a 500rs producer surplus and my friend got 500rs consumer surplus.

3. CARDINAL AND ORDINAL UTILITY :-  The representation of utility in a form of number is called cardinal utility where as in from of rank is called ordinal utility. We have encounter a lots of example in real life which gives us a brief about cardinal and ordinal utility. Some of the example are

1.       In our college when the exam result comes out some people got higher marks and some got less marks/ on basis of that the list is prepared. One who got highest mark secure the 1^st position where one who have minimum mark secure the last position. Therefor the marks an individual obtain in the examination is cardinal utility. And the rank one obtain is cardinal utility.

2.       When I want to market I usually prepare a list of items that I have to brought from market. The list usually contains some product and the quantity. On the basis of the usage some items are more important and some of the items are less important. So I used to put them in order of importance that order is ordinal utility where as particular product and the particular amount is cardinal utility.

4. PRICE ELASTICITY DEMAND :-  This is denoted as the % change in quantity demanded upon percentage change in price.

We encounter some real life example on this particular conept.

1.       I used to fond of quality walls ice cream more specifically the cone ones. Which was cost around 30 rs before. This was one of the most selling ice cream product at that time. Suddenly the company increases the price from 30 rs to 50 rs which made the demand of the ice cream less. I got some other option also to go for because I was not ready to pay such a big amount on that product. This shows us price elasticity demand.

2.       The price of apples if we consider in the winter is quite reasonable. Where as in the summer the price of apples goes high as this is a seasonal fruit. As the price goes high people reluctant to buy apples. Which is also an example of price elasticity demand.

4. DIMINISHING OF MARGINAL UTILITY :-  The more of a good consumed in a specific period of time, the less an additional utility derived from an additional unit of good. A lots of example are there which shows us the diminishing the marginal utility.

1.       I have a crave for ice cream. When I tried my first candy it was satisfactory but when I tried the 2^nd choclate immediate after the 1^st one the satisfaction level goes down and the 3^rd one also lower the satisfaction. This shows the diminishing the marginal utility.

2.       When I first visited a park near my house I got a real cheerful moment. It was a wonderful experience. As I started visited there frequently this became same to me and I can’t get enough satisfaction from there.