Situation-1
To analysts, Indian industry will be able to take advantage
through offering products at low prices
Concept:
Law of Demand:
When the price of the product increases the demand of the
product decreases vice versa.
Justification:
Indian industry will be able to take advantages through
offering products in low prices as the price of the product decreases the
demand of the product increases.
Situation-2
Many star hotels routinely offer unlimited buffet meals
Concept:
People responds to incentives:
Incentives=price: quantity
Justification:
Star hotels gives incentives to buyers to have a unlimited
food which is incentive to the buyer. Example-barbeque nation
Situation-3
As the usage of skilled labour along with technology
increased the output is expected to be high.
Concept:
Increased return to scale
The situation is related to this concept because when the
input is increased the output also with increased according to increase return
to scale. The inputs are skilled labour and the technology when these two are
increased the output is also increased.
Situation-4
Diminishing Marginal Utility:
Utility means the amount of satisfaction that one will get
from the consumption of a product. Marginal Utility states that each addition
of a unit of good added the satisfaction you receive from consuming the good
decreases.
Example: By eating
first piece of pizza the utility is at highest which satisfies a person. Eating
second piece of pizza will be less than the satisfaction gained form the first pizza.
If third piece of pizza is eaten the satisfaction will be even less.
Situation-5
The artist or performers performing at different cities or
events
Concept: Law of
demand
This situation is related to law of demand because the artist
is performing in different cities because of the increasing demand for their
performances. As one among the determinants of law of demand is the
satisfaction of the customers, this performance satisfies them and thus it
increases the demand.
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