SOME GENERAL CONCEPT OF ECONOMICS

SOME GENERAL CONCEPT OF ECONOMICS

(a). Law of demand

We all know that the most important factor for survival for any industry is price of product. So, every industry will give extra focus on price of product and for determining the price of product law of demand work as a very helpful tool. Because law of demand tells us that as prices of product increases the demand of goods decreases and vice versa.

For Ex: When apple launch his new product they launch that at higher price but they keep on selling that product for up to two years or more with simultaneous decrease in price so that even after two years there is demand in good amount.

(b). Law of diminishing marginal utility

Most of us are fan of our mother’s hand made food and specially we are feeling very hungry. So, just imagine you are coming home and feeling so hungry and you found that your mother prepared your favourite food obviously you feel good. And even next day your mother made same thing you liked it but lesser than you liked earlier day. This happens because of Law of diminishing marginal utility as you are consuming more and more good or service our marginal utility will diminish after consuming every extra unit.

For Ex: All major sporting events like Olympics, Foot ball World cup happens only once in 4 years because if it will happen every year after a certain period of time every one start getting rid of it and they stooped watching it. But because this kind of sporting events happens only after 4 years so everyone have craze of it and in every next event some new population was added in crowed.

(c).Rational people think at margin

Whenever we bought any kind of good or service we always think about what extra benefits we are getting and that extra is known as margin and only because of this reason we always compare our purchased product with their substitute. So, that we can know what extra benefits we are getting.

For Ex: Now a days when we book any kind of ticket like flight, train, bus, movie we always book from that site who gives nice cash backs.

(d).Opportunity cost

Whenever we choose one thing or option out of two with the help of comparison then there is always an opportunity cost was there. Opportunity cost simply means the second best alternative. If you choose best alternative then second best alternative is your opportunity cost.

For Ex: I have option to buy something in 1000 rs and we can buy the same product with same quality in 1200 rs so we always buy in 100 rs but that 1200 rs is our opportunity cost.

(e). Consumer behaviour

Consumer behaviour is most important thing now a days for every business because without knowing how much consumer willing to pay we can’t decide the product’s price. And we assume that the preferences are not completed, transitive and not satiated. Interest and preferences are fixed for certain period of time but interest and preferences can change in long run.

For Ex: Earlier the favourite destination for couples is generally hill stations but as time changing the interest and preferences of consumer also changing and now the couples was going more to beaches at the place of hill stations.