APPLICATION OF ECONOMICS

1. OPPORTUNITY COST: The cost of something is what you give up to get it.

Example:

•       On my 19^th birthday in want to purchase new footwear for which I went to a shop where I liked one pair but the shopkeeper told me that its of Rs.1100. which was out of my budget. So after few hours I visit another shop where I got the same footwear in Rs.700 only.

So, Rs.1100 was my opportunity cost and Rs.700 was my best choice.

•       this incident is about last year. As a profession my mother is a CHILD COUNSELLOR, so she thought of opening her own school so that she can easily manage her students. Then after few days she got a call latter from a school for a child counsellor post for which they were paying her Rs.30000 . So she accepted the call and joined the school.

So, here opening her own school was opportunity cost and accepting the call latter was best choice.

2. PRICE ELASTICITY OF DEMAND: It the is difference between percentage change in quantity demand and percentage change in price.

Example:

•       Inelastic Demand: Elasticity is less than 1.

Last to last year my elder bother wanted an iPhone although he know that its cost little bit expensive but still he demanded for that and he got iPhone 6. And few days back again he bought iPhone X.

So by this incident I want to explain that as the price increases and there are slightly changes in the demand that it  decreases . But the demands remains the same.

•        Elastic demand: Elasticity is greater than 1.

Few months back me and my mom went to buy gold jewellery, but that the price of gold was very high so she refuses to buy but when the festive season starts the rate of gold automatically falls down. So then she said lets go and buy the jewellery.

So, this states that if the price increases the demand automatically decreases and vice versa.

3. LAW OF DIMINISHING MARGINAL UTILITY: Consumption increases the marginal utility derived from each additional unit declines. 

Example:

• ·      I brought a dress which i wore in a function for the first time from which I derived 10 units of utility. After that when I wore it for second time I derived 8 units of utility and as the definition is suggesting it goes on decreasing with use.
• ·      Last year I went for guitar classes. On the first class I derived 100 units of utility and on the second it went to 80 units and so on its got decreases.

4. LAW OF DEMAND: “conditional on all else being equal” As the price of goods increases the demand of goods decrease and vice versa.

          Example:

• ·      As all of we used to go salons in day to day life. Like once we are used to of it we only visit that salon but if suddenly the prices of services got increases the demand of that salon also decreases.
• ·      Cosmetics are the best example for the law of demand, as I used a product of lakme which is of Rs.250 and suddenly the price increases. Then I stoped using it and shifted to another product or brand.

5. PEOPLE FACE TRADE OFF: To get something you want, you have to give up something else you want. Resources are getting scare but our wants are unlimited and have alternative users

Example:

• ·      One day I went outside for shopping and I was having onlu 400rs. And then I was hungry so I spent almost 300rs. on food so I want the food for that I want to give up on my shopping.
• ·       Tomorrow I want to go to meet my friend who is coming from my home town but I have taken participated in the YMCC event in which they told us to finish the work by tomorrow. Because of which I have to five up on meeting with my friend.