CONCEPT OF ECONOMICS

LAW OF DIMINISHING RETURNS -:

If one factor of production is substituted other factor of production , The marginal product of  one factors declines as the marginal product increases .

 EXAMPLES -

1- After eating the first Ice cream my satishfaction was the high level . And as i consumed more Ice cream my Satishfaction level goes down .

2- After drinking first cup of coffee my satishfaction was the highest level . But after drinking second cup of coffee it decreased .

LAW OF SUPPLY -:

It states that when the price of goods or services increases in the market the quantity of the product also increases , other things remaining constant .

EXAMPLES -

1- When the price of apple increases , the supplies is willing to supply apple in the market to increase his profit .

2- when the price of orange decreases , the supplier willing to supply less quantity .

LAW OF DEMAND -:

It states that increase in the price of a goods and services the quantity demanded decreases and Vice versa  and remaining constant .

EXAMPLES-

1- When the price of TV decreases Quantity demanded increases .

2- When the price of Refrigerator increased Quantity demanded decreases .

CONSUMER SURPLUS -:

It states that it is a price that the consumer willing to pay and the one he actually pays .

EXAMPLES-:

1- while choosing a college of PG , I was willing to pay 12 lacs. But actually paid only 8 lacs.

2- similarly , When i went for shopping  I decided to purchase a dress that comes with rupees 2000 .

but i found the cost 4000 because i was so attract and decided to purchase that .

PRODUCER SURPLUS -:

It states that the difference between price of the producer willing to sell and the price at which he actually sells .

EXAMPLES-

1- when i went to the shop the producer was willing to sell a bag at rupees 1000 . but he actually sells that 1500 . 500 is the producer surplus .

2-  The seller was willing to sell a pair of shoes at rupees 2000 . but he actually sells that 3000 . 1000 is the producer surplus .