5 concepts of economics

1) FLEXIBILITIES OF INPUTS :

It means some inputs can be replaced and some cannot be replaced

eg1:  when we take a example of AIR INDIA flight , the pilot cannot be replaced , but the staff working in the flight can be easily replaced. 

eg2: Take an example of RAJINI KANTH movie , where he cannot be replaced by anyone , but the other characters can be easily replaced .

2) MOBILITY OF INPUTS :

There are some inputs which can be moved and some which cannot be.

eg1: If kalanikethan shop owner wants to shift his shop from JP nagar to Jaya nagar , he can only shift the goods in it but not the building.

eg2: NON MOBILITY INPUTS: Food trucks can be the best example.

There is famous dosa bandi in hyderabad called ramki bandi . He started with a hotel, later to expand his business he updated himself to food trucks which can be moved easily to everyplace

3) PRICE MECHANISM (GOODS MARKET) :

If the demand of the good increases then shortage occurs to the goods . when there is a shortage of the good, the price of the good automatically increases . Because of the increase in the price the demand gets decreased and supply gets increased . This is done until the demand and supply comes to same level 

 eg1: Whenever there is shortage of Onions the demand increases. The price gets increased automatically like about 150 rupees for one kg. Then the demand decreases , many people stop buying and supply increases because of increase in the price. This happens until the demand and supply comes to same level

eg2: Whenever there is shortage of Water in cities especially in summer  the demand increases. Then people choose water tanks which costs almost 1000 to fill the tank which is actually 400rs due to demand . Then the demand decreases , many people stop buying and supply increases because of increase in the price. This happens until the demand and supply comes to same level

4) CONSUMER SURPLUS :

Difference between the price consumer is willing to pay and the price he actually pays

eg1: I went to buy a pair of shoes . where my budget is 2500 rupees . I liked a shoe of NIKE which is almost 4500 . I started bargaining from 2000 . I could do it till 2300 . and the shop keeper agreed to give it for 2300 , where my surplus is about 200rs

eg2: I went to buy a Shirt . where my budget is 2500rupees . I liked a shirt of ARROW which is almost 4500 . I started bargaining from 2000 . I could do it till 2300 . and the shop keeper agreed to give it for 2300 , where my surplus is about 200rs

5. OPPORTUNITY COST

Definition: Opportunity cost is the next best alternative foregone.

Scarcity is the basic problem of economics. Therefore, we are concerned with the best use and distribution of these scarce resources. Wherever there is scarcity there we are forced to make choices.

Example1:  I had been to a restaurant and there I was forced to make choice in between limited non-veg biryani and unlimited veg biryani, where both of them costs 400/- each and I got only 400/- in my pocket. Then I choose unlimited veg biryani, the opportunity cost is the limited non-veg biryani which is supplied in limited quantity. 

exapmle2: I have been into a situation where I had to choose between whether to buy a laptop or a IPhone where both of them are same price. Then I choose to buy laptop rather than buying IPhone as I need laptop for study purpose and instead of IPhone I can make use of other company mobiles which costs less. Here opportunity cost is the IPhone I cannot afford to buy.