Know Our life From Economics Point Of View

Law Of Demand :-

It is the inverse relationship between the price of a goods and the quantity .
Example:-

• In flipkart when big billion day come people do more shopping because, we get discount and prices are low.

• If we are going to market and see different type of apple with different rate like 100 rs/kg and 60 rs/kg. A buyer can willing and able to buy 2 kg of first one then customer can buy 4 kg of last one.

Law of Supply:-

 It says that when price goes up quantity goes up and vice-versa.
Example:-

• When any popular celebrity come for concert, price of ticket is high so event team provide more ticket for benefit.

• When price of  onion start decreasing the producer decrease the supply of onion in market.

Elasticity:-

It is a measure of the sensitivity of one variable to another.

Example:-

• When the price of Postpaid service  is increase we are switch to prepaid service.
• D Mart gives us discount that is benifbenef for us so many customers of Big Bazar are move to D Mart

Consumer Surplus:-

 It is the different between the price consumer willing to pay and consumer actually pay.
Example:-

• I want to buy new mobile and my budget is 10000. I search a mobile and I find a mobile of 10000. But I have to pay only 9000 because there was 10% off using SBI Credit card and that 1000 is consumer surplus.

• When we go to the  Reliance mall for buy product a  with certain budget and we see that Reliance giving 50% off in that product and we buy happily. That 50% off is the Consumer Surplus.

Producer Surplus:-

It is the difference between the producer is willing to sell and the price actually sold.
Example:-

• I want to sell my bike at 35 k for buy a new bike. After market research i find that the price of my bike is 40 k and I sold it at 40 k at Olx.com. Here 5000 is producer surplus.

• When we go to the market and ask a shopkeeper price about a shirt they say 1000 though they want sell it at 500 and after bargaining we buy it at 700. Here 200 is producer surplus.

A Brief Study On Consumer And Producer Surplus

Consumer Surplus- When a consumer has a definite price in his mind,but when he buys the product he actually buys it less than what he expected is known as consumer surplus.


Producer Surplus- When a producer wants to sell a product on a certain price but due to market demand the consumer is willing to buy the product on a higher price,this difference of the customer willing to buy the product and the amount in which the producer wanted to sell is known as producer surplus.

For example:Suppose Shyam went to buy a product to a certain producer,and the producer asks for a price of Rs.10000,but after bargaining he gets ready to sell the product for a amount of Rs.7000. So,here the consumer gets an amount of Rs.3000 as consumer surplus. And the price which the producer made the product or expecting at least Rs.5000 for the product but he actually got an amount of Rs.7000. This difference of Rs.2000 is the producers surplus. 

CONCEPT'S TO KNOW BEFORE YOU BARGAIN

 How many times have you faced a situation where you tried to bargain with a shopkeeper for a product and finally you were successful in bringing the quoted price down considerably or how many times have you come across a situation when you tried to do the same, but were not able to do it and finally gave up, cause the shopkeeper just would not lower the price after a certain amount.

It happens quite often isn’t it?

The terms associated with these instances are called as ‘CONSUMER SURPLUS’ and ‘PRODUCER SURPLUS’ respectively.

CONSUMER SURPLUS

We shall first see what consumer surplus is with the help of an example,

Suppose you are on a shopping spree and you land up at a store where you see the dress that you were madly searching around for hour’s , and when you spoke to the shopkeeper regarding the price , he quoted you ₹1200.Now after looking at the material and other factor’s you were willing to pay just ₹900 for it. Anything more than that would be a clear no .Accordingly you bring your bargaining skills into play and start at ₹600, even though you know that you can go up to ₹900. Finally after several minutes of justifications on your respective prices, the deal closes at ₹750.In this case the difference of the amount you were willing to pay (₹900) and the amount you actually paid (₹750) , that is ₹150 is the consumer surplus.

The amount OF MONEY THAT a buyer is willing to Part off for a good or service minus the amount the buyer actually pays to acquire that good.

Now that we know what consumer surplus is, can it happen to the producers too?

Well it is very much possible , this phenomenon is called as ‘PRODUCER’S SURPLUS’. Let us understand with an example.

PRODUCER SURPLUS

Producer’s surplus comes from the point of view of the seller. Suppose you are the owner of a hardware store. People approach you regularly for various tools. One such a person had come to buy a hammer. You quoted him a price of ₹ 450. The cost that you had paid to purchase it was ₹300. Therefore if a customer bargains for a price that is more than ₹ 300 , you will be willing to sell or you will not come below the cost price at all.

At this point after a long discussion the customer agrees to purchase the hammer at ₹ 400.This excess amount of ₹ 100 over the cost price of ₹ 300 is what is known as the “PRODUCER’S SURPLUS”.

THE AMOUNT which A SELLER IS PAID FOR A GOOD or service excluding THE SELLER’S COST OF PROVIDING IT or the cost price.

These two concepts are needed to be understood by both the customer as well as the seller in order to make the most out of the respective  situations they are in.

Economic Measure Of Consumer Benefit

MEANING OF CONSUMER SURPLUS

Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. It measures the benefit buyer receives from participating in a market.

For understanding it clearly we take one example :-
Suppose you are going for a shopping and your budget is Rs.15,000. But when you reached to mall you saw a huge discounts and offers on clothing and products that you have to buy and the same thing for which you have willing to pay Rs.15,000 you actually paid Rs.10,000 . So (rs.15,000-rs.10,000)Rs.5,000 is consumer surplus .