5 Concepts of ECONOMICS

The Law of Demand
It states that other things remaining the same, the higher the price of a good, the smaller is the quantity demanded.
Examples-
1) If Price of Dominos pizza has increased then people will think buy consuming it.
2)You’re fond of Cadbury Silk and you have it daily. But now the price has increased then surely you will move to other substitutes like Nestle.

The Law of Supply
It states that other things remaining the same, the higher the Price of a good, the greater is the quantity supplied.
Examples-
1) Reliance fresh is willing to sell 100kg of mangoes at a price of Rs 190 per kg. At a higher price, farmers will invest more capital and land to mangoes and the supply increases.
2) Television shows Horlicks ads which attract more customers and results in increase in supply.

Law of the Diminishing Marginal Utility
It states that a consumer consumes more and more units of a specific commodity, the utility from the successive units goes diminishing.
Examples-
1) In domino's pizza, I ordered a large pizza having 6 slices. The first slice provide the maximum amount of marginal utility. But as I consume more slices, my marginal utility decreases.
2) Barbeque Nation is a buffet style restaurant. It provides only veg and non veg buffets from starter to desert. It knows that each additional plate or dish provides less utility.

The Price Elasticity of Demand
It equals to the percentage change in the quantity demanded divided by the percentage change in price.
Examples-
1) Reliance treads provide offers to the customer that's why other retail stores also started providing offers and sales to attract more customers. Now people have many choices of what kind of clothing and how much to spend.
2) The elasticity of demand for meat is low, but the elasticity of demand for beef, lamb and chicken is high because price meat is high in compared to price of beef, lamb and chicken.

The Price Elasticity of Supply
It equals to the percentage change in quantity supplied divided by percentage change in price.
Examples-
1) Last month the price of Onion was high, so the farmers could not increased supply because it depends on the cultivation.
2) If Honda Toyota is operating at 80% capacity, then it can easily increase supply and produce more cars in response to changes in price.