Economics Concepts in real life

    1.    Opportunity cost :

   The cost or value of one alternative you sacrifice due to the chosen of other      alternative.

Example  1 :-  I  and my family decided to go Ooty for the picnic but  when we are on the way there is a point where road divides into two ways, one goes Ooty and other goes Mysore both are almost same distance. Suddenly, we decided to go  Mysore for the picnic. Here, the opportunity cost is Ooty.

Example 2 :-   One day I wants to buy a burger in one restaurant and when I reach there I attract towards the French fries as both are of   same amount so I purchased French fries. Here, the opportunity cost is burger.

2.     Consumer Surplus :

 The gap between the price what consumer willing to pay and what consumer actually pays.

Example 1 :-   Once I want to buy one A4 size copy from the shop in my  locality and I prepared  to pay  Rs. 60 for the copy as it is an MRP but seller ask me to pay only Rs. 50 then I buy copy immediately . Here, consumer surplus is Rs. 10.

Example 2 :-    I am living  in the Bangalore since 5 years and I decided to buy a one new house in one royal place which will  cost  around Rs. 5 crore. I  ready to pay such cost but the broker interested to sale it to me in only of Rs. 4.5 crore . So I buy it , here  the consumer surplus is Rs. 50 lakhs.

 3.   Law of Diminishing marginal utility :

It means reducing in the satisfaction of the consumers derive from the consumption of each additional unit of a good or service.

Example 1:-   When my father reach home after working the whole day he usually very hungry, my mother serve the dinner in which one day she cooked chole bhature. When he ate first bhatura he felt amazing  and happiness and in second he  was almost filled and in third one it was very hard for him to  eat . So, in this every additional bhatura gives  less satisfaction when he consume.

Example 2 :-  I was travelling by  the car and I passed through the tunnel of 2 Km long after coming out from the tunnel I   felt wonderful and satisfied to saw the light and it will decrease when I travelling in the light continuously.

  

4.   Producer Surplus :

Difference between the price producer is willing to sell and in the price he actually sold.

Example 1:-  My uncle is the owner of a stationery shop one day he wants to sell the pen box for Rs. 100  but the MRP is Rs. 120 and  the  customer actually paid Rs.120 for pen box. Here, producer surplus is Rs. 20.

Example 2 :-  I  want to sell my  car for Rs. 5 lakhs but the customer liked  my car so much that he ready to pay Rs. 6 lakhs for the car. Here ,Producer surplus is Rs. 1 lakh.

5.    Veblen goods and Inferior goods :

Veblen goods  are those goods whose demand increases when price increases.

Example :- When the price of diamond increases the demand also increase as it is a status symbol for rich person.

Inferior goods  are those goods whose demand falls when income increases.

Example :-  My sister working in a company so before she go on work she used to eat bread in breakfast everyday but after sometime her income increases and she switch to toast from the bread to eat   in the breakfast. Here, bread demands fall when her income increases.