Economic concepts in our lives

Law of Demand

Do you think that If a vegetable vendor sells his items at a cost less than his competitor’s (but still maintains his profit margin), will he be able to take advantage?

The answer is a yes, he will be able to take advantage and sell more than others, we can relate this to the ”Law of Demand”. As the price of the items of the concerned vegetable vendor goes down the demand for his products goes up.

Changing Tastes and Preferences

When I was a kid I loved to watch cartoon, as I grew up my interest shifted from cartoon to friction serials, and gradually when I started having less spar time, my interest moved to movies, and I also found them more convenient.Finally now I watch short skits, short films and s mall stand-up comedy routines as a source of entertainment. These incidents can be related to the concept of ”Changing Tastes and Preferences of Consumers”.

Law of Diminishing Marginal Utility

I did my graduation in Kolkata and one or twice a month, while returning home from college, I used to visit The Victoria Memorial which was on the way. Initially I really liked visiting the place, but as time passed by, the satisfaction I derived from an additional visit went on decreasing. This happened because of “The Law of Diminishing Marginal Utility”.

Opportunity Cost

During one of my aunt’s engagement ceremony ,I and my family had to go to Delhi. We had the option of going by train or by boarding a flight. I really love the feeling of travelling by train, but on that journey we had selected the option of boarding a flight as a lot of time would be saved. This loss of the experience of a train journey in order to spend more time during the engagement by boarding a flight is called as the “Opportunity Cost”,

People respond to incentive

This often happens with me during shopping. Once during such an encounter I was shopping at an outlet looking out for casual t-shirts. The price quoted per t-shirt was Rs.700, but there was another offer stating that if I would buy three t-shirts, the overall discounted price would come down to Rs400 per t-shirt. After looking at the offer I instantly made a decision of purchasing . This change in my decision happened because “People  Respond to Incentives”.

Economics In Daily Life

Law Of Demand: Other things remaining constant, when the price of a commodity increases the demand of that product decreases.

Examples: There is a milk manufacturing companies naming Amul. Suppose customer A consumes a product of Amul. When the price increases, the consumers decreases using it and may transfer to another product.

People Respond To Incentives: It can be in point of the buyers and sellers. In both cases price and quantity is the main thing.

Examples: When I went to D-Mart, for buying biscuits and snacks. I always go for products which offers low price and the quantity is more, i.e my incentive as a buyer.

Utility: When people derive satisfaction when consumption of any product or service.

Examples: When I bought a MI phone, I was satisfied using it and its features overwhelmed me. The satisfaction I derived using the phone is my utility.

Marginal Utility: Marginal utility is the additional satisfaction a consumer gains from consuming one more unit of a good or service.

Examples: I went to a restaurant for having a pizza and after having the first slice the satisfaction I derive is the marginal utility.

Rational People think at a margin:  People want to derive most for the amount they are spending.

Examples: I went to a shop for buying an apple juice, and Tropicana was offering juice and a biscuit of RS.5, and the total price was RS.99 and Real was offering only juice for Rs.99. I bought Tropicana because it was offering something extra than Real, so as it was offering more I bought it.