Concepts of Economics with real Life Examples

The Law of Diminishing Marginal Utility:

• When you consume more and more units of the same product the amount of satisfaction that will derive from the every addition unit consumed will be decreasing.
• Other things must remain constant in this Law of Diminishing Marginal Utility.
• This LAw will not be applicable in case of rare collections.
• When you are hungry you would like to eat more of sweets as the more no of sweets you consume the utility or the satisfaction that will derive from each and every additional sweet consumed will be decreasing.

Supply:

• Producers willingness and ability to offer the goods in the market for sale at various prices id supply.
• Price and supply are directly related When price increases supply increases and when price decreases supply decreases.
• Supply curve will slope upwards from left to right, Which is a positive slope. 
• When the price of the Milk in the market increases then the producers of the Milk will be willing to sell the product in the market at various in the market that leads to increase in the supply of the Milk in the market.

Production Function (Suppliers):

• Maximum output Q that a firm can produce for every specified combination of input is called Production Function.
• Q = F( K , L ) Where, K = Capital, L = Labour.
• In long run, all factors of production can be changed Ex: capital, Labour.
• In short run, only Labour can be changed.
• If the Farmer wants to increase the output to the maximum then if the farmer increased the labours and the machinery in the field then the combination of both can give the farmer a maximum of output to the farmer.

Price Mechanism in Good Market:

• In a good market when the demand of the product increases the demand for the good is a shortage in supply that leads to the increase in the price of the good, when the price of the increases the demand will be decreasing and simultaneously the supply will be increasing, this will continue until the demand equals to supply.
• During Ganesh Chaturthi the demand for the idols will be increasing as there will a shortage in supply the price will increase when the price increases the demand will be decreasing and simultaneously the supply will be increasing, this will continue until the demand equals to supply.

Elasticity:

• An elasticity is a measure of change in one variable to other variables in response to a percentage change in another variable.
• Which can be replaced is called Elastic.
• If good is elastic, reduce the price of the good to increase the revenue.
• When You went shopping to buy a dress the increase in the price of one good or the low price of another dress will make you choose another dress which will increase the demand of that goods.