ECONOMICS IN REAL LIFE

OPPORTUNITY COST:

The value of something that must be given up to acquire something else is called opportunity cost.

Examples:

1.      Now currently my mobile was taken away by the management, in order to get my phone back I need to pay some amount as a fine so here the fine amount is opportunity cost.

2.      Tomorrow is Sunday and I want to go to a movie but I am having mid exams so I need to study, here I am not going to movie to get good marks in exams here the movie is opportunity cost.

CONSUMER SURPLUS:

 Difference between the price at which consumer is willing to pay and the price at which consumer actually pays is called consumer surplus.

Examples:

1.when I am came to Bengaluru for joining in the college we started from Yesvantapur   railway station where I approached a taxi and asked him how much he is expecting from to take me to IBA he said he want Rs.1500 from me where I thought 1000 rupees is reasonable to pay so , I started bargaining from 700 rupees and we talked so much about the price and finally we both agreed at 900 rupees here I wanted to pay 1000 but I am actually paying 900 so the difference 100 is called consumer surplus.

2. I have a habit of seeing my favourite hero movie at the first day first show only so I generally go to the theatre before 3-4 hrs of starting the show at that time generally the counter will be with house full board and there will be a plan b also where we can find tickets from who have excess with them so, at that point the person having the excess ticket offered me the ticket for 1000 rupees but I am interested pay 1000 rupees because it is my favourite hero movie but I did bargaining and took the ticket from him for 800 rupees here the difference 200 rupees is consumer surplus

LAW OF DIMENISHING MARGINAL UTILITY:

The more of a good we consume a product in a small interval of times the satisfaction or utility derived from that produce decreases from the consumption of additional one unit

Examples:

1.      Previously I like potato items but after joining here in MBA college eating potato everyday 2 times lost my interest in potatoes it can be example of law of diminishing marginal utility.

2.      I personally don’t like to use same kind of pens all the time If I use the same kind of pen thrice I lost the interest in it and tends to buy a new kind of pen

 THE CONCEPT OF UTILITY:

The satisfaction derived from consumption of goods or services

Examples:

1. Watching a movie gives me utility and satisfaction
2. Using cabs for travelling from one place to another

CARDINAL UTILITY:

Measuring the utility in terms of numericals is called Cardinal utility.

Examples:

1.Review the amount of satisfaction obtained from services given by sales people in pantaloons

2.The amount of energy obtained from drinking a energy drink.