ECONOMIC CONCEPTS

LAW OF DEMAND:

 Law of demand state that there is an inverse relationship between price and quantity demanded of a commodity. With the increase in price of a commodity there is a decrease in quantity demanded of that commodity.

For example: There is a festival season – too much guest, feast and cooking at home. So now people will run toward milk and Paneer shop to buy more of them. So as demand increases with supply unchanged. The price of milk and paneer increases.

LAW OF DIMINISHING MARGINAL UTILITY

As we consume more and more amount of goods the utility derived from the extra amount of each consumption keep on decreasing this is called law of diminishing marginal utility.
Lets assume you are hungry. You see bananas in your kitchen and you rush to eat them.1st banana. 2nd banana. 3rd, 4th the more you are eating the heavier it feels. Think of the satisfaction you got from the first banana. When eating the second banana you are still hungry, but less than you were when you started eating your first banana. And so the satisfaction you got from first banana was more than the second banana. Same shall be the case with the later bananas. Thus law of diminishing marginal utility.
EQUI-MARGINAL PRINCIPLE
The Law of Equi-Marginal Utility is an extension to the law of diminishing marginal utility. The principle of equi-marginal utility explains the behavior of a consumer in distributing his limited income among various goods and services.This law states that how a consumer allocates his money income between various goods so as to obtain maximum satisfaction.

_{PEOPLE RESPOND TO INCENTIVE}

It is said that people get driven or attracted by certain return or benefit, called as incentives. It can be a type of discount or any free gifts.
EXAMPLE: Almost all cellular companies offer unlimited plan for their customers. Thus on payment of some small amount they get the service without any limitation or restriction. Thus customer respond to this types of offer
LAW OF SUPPLY
Law of supply state that there is a positive relationship between price and the quantity supplied of a community with the increase in price of a commodity there is increase in quantity supplied of that commodity.
For example... From the seller perspective we can see that every saturday when we don't get dinner at mess than large number of crowd went to outside restaurant for having their dinner Thus they have to increase their supply and for the same reason at the same time they also increase the price.