1 - What is Marginal Cost?
-
Adding
of extra cost for producing more additional unit of existing product or
service.
-
It
is computed in situations where the break-even point has been reached.
-
Marginal
cost is variable cost it’s includes labor cost and material cost, plus an
estimated portion of fixed cost such as promoting, distribution, and selling expenses.
-
Marginal cost is important factor in economic
theory. Companies which looks for profit maximization they have to match or
balance with Marginal Cost (MC) equals to Marginal Revenue (MR).
For example –
-
Our
IBA College has given us new HP laptop by adding new extra 4 GB RAM with extra
Marginal Cost for better performance and better utility.
-
My
elder brother has bought a new bike in Rs. 80000/- with additional supporting accessories
of Rs. 10000/- by paying some extra marginal cost.
2
-
Incentives Effect in economics
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Incentives
are something that motivates people to act. People always response to
incentives. An incentive is type of rewards to both buyers and sellers. An
incentive is usually money. An incentive for buyers is the reward of saving
money. An incentive for sellers is an increase in profit and sales.
For Examples –
-
Whenever
I come to know that reliance trends clothing store is giving some good offers
or giving some good incentives in apparel. I visit to buy cloth at that time
only.
-
My
father bought a new car, when he heard about Hyundai motor is giving an exchange
offer i.e. bring your old car and take new car with the payment of some amount.
3
– The Income elasticity of demand
-
The
income elasticity of demand is measurement of changes in quantity demanded for
a certain good, as changes in consumer income.
-
It is calculated
Percentage change in quantity demanded
Income elasticity of demand = ___________________________________
Percentage change in income
-
Inferior
goods have a negative income elasticity of demand: as consumer income rises it
lead to buy fewer inferior goods, like people buy cheaper margarine instead of
butter.
-
Normal
goods have a positive income elasticity of demand: as income rise more goods
are demanded at each price level, like tobacco product, haircut and
electricity.
For examples –
-
My
uncle works in Tech Mahindra
4 - Relationship between Consumers and Producers
CONSUMERS :-
The consumer is the one who pays something to consume goods and services produced.PRODUCERS :-
Producer who provides goods and services to their consumers and produce products according to consumer's needs,demands, and desires.RELATIONSHIP :-
Producers and consumers are connected by trade and prices. Fluctuation of supply and demand is depend upon the relationship between producers and consumers in a given market.DIFFERENT TYPE OF CONSUMERS :-
- Seasonal consumers- Personal consumers
- Organisational consumers
- Impulse consumers
- Needs based consumers
- Discount driven consumers- Habitual consumers.
TYPES OF PRODUCERS :-
- Agricultural producers (primary)
- Industrial producers (secondary)
- Service producers (tertiary)
- Seasonal producers.
- Industrial producers (secondary)
- Service producers (tertiary)
- Seasonal producers.
For examples -
- I purchase my whole grocery stuff from DMart only. I am a Consumer as well as customer and DMart supplier is a seller and producer too.
5 - Equilibrium in Economics
In
economics, economics equilibrium is a situation in which supply and demand are
balanced and in the absence of external influences the (equilibrium) values of economic variables will not change and the market price is also
relevant towards buyers.
For Example -
Suppose
a XYZ company is willing to sell their laptops at 30000/-. But buyers are not
willing to buy at that price in the market. So company will bring down the
price to 25000/- at which laptops will get sold.
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