TERMS OF ECONOMICS AND ITS EXAMPLES

DIFFERENT CONCEPTS OF ECONOMICS WITH EXAMPLES:~

LAW OF DEMAND - According to the law of demand, when the price increases then the demand decreases. 

For example 1 :- I have gone to KFC and I wanted to have a burger over there but when  I saw in the menu that they are offering 12 piece chicken wings for just Rs.299, I changed my mind and ordered chicken wings instead. I could see that the people were flooding because of this offer.

Thus, I observed that as soon as the price of the wings were decreased, there was a rapid in the demand.

Example 2 :- My mother went to purchase peas from the market .But on that day the price of the peas was much higher than the day before. So my mother changed her mind and bought other vegetables instead. Thus, it was observed that when the price of the peas was increased, the demand was decreased.

LAW OF SUPPLY - According to law of supply, when the price paid by a buyer for a particular product rises, then the sellers increase the supply of that particular product in the market.

For example 1:- There is a flood in my village and because of that the wheat fields were destroyed 

drastically. So there was a lack of wheat supply in the market. So, the price of the wheat was increased  tremendously as the people wanted more of that product.

PRICE ELASTICITY-  The first example is of price in elasticity. Price inelastic means the buying habits of the consumers remains constant irrespective of the increase or decrease in the change in the price of the product. The second example is of price elasticity. Price elasticity is when a change in price causes a drastic change in the demand of a particular product.

For example 1:-  Even if the price of the apple phone increases, I will still want to buy that product irrespective of the increase in the price because of the brand value attached to it. 

Example 2 :-  If the price of maggie is increased, I will rather purchase yippee or patanjali noodles  at cheaper price instead of paying higher price for maggie. Thus, the demand of maggie decreases. 

LAW OF MARGINAL UTILITY~ The more additional benefit  one gets from a product, a time will come when the utility of the additional benefit will decrease.

Example 1 :- I join a guitar class. For the first few months I regularly all the classes because I enjoy doing it. But with the passage of time my passion and enthusiasm began to decrease and I discontinued the class. 

Example 2 :- After returning to my home from the hostel, my mother cooked chicken dishes for me as I love it. But after certain time, my taste will change and I will not be willing to eat chicken any more.

MARGINAL RATE OF SUBSTITUTION- The rate at which one factor of production or a product can be substituted for other factors of production or a product when the output is constant.

Example 1 :- I like purchasing branded shoes. So I go for shopping and see that the price of Nike shoe has been increased. I bought Adidas shoe instead. So here I substituted and bought different brand of shoe at reasonable price while keeping the level of utility and satisfaction equal. 

Example 2 :- My father went to purchase KTM Bike of Rs 1 Lac but it was out of stock. So he went and bought Yamaha bike whose cost and feature was almost the same as that of the KTM bike. So it is seen that my father was ready to substitute because the level of utility he was going to get from either of the two bike is almost the same.