FIVE CONCEPTS OF ECONOMICS WITH EXAMPLES

Five concepts of economics

As the usage of skilled labour combined with technology is increased, the effect is expected to be higher output in service industries

CONCEPT- IRTS (Increase In Return To Scale)

EXAMPLE- I am running a bakery shop with 5 workers and 2 machines produces 500 kg of products in first month. In 2^nd month I hire total 10 workers and 2 more machines, production increased from 500 kg to 1200 kg per month. Here output increase more than proportionality with an increase in the inputs.

Three prospective locations for mall

Location A offers 1000 net benefit units

Location B offers 800 net benefit units

Location C offers 850 net benefit units

CONCEPT- Opportunity Cost

The opportunity cost of an item is what you give up to get that item.

EXAMPLE- If I have to purchase insurance and a new mobile. Rs 20000 spent on a mobile could be used to buy an insurance. Here insurance is the opportunity cost which you give up.

To many, Indian It industry success is on account of their ability to offer products at low prices

CONCEPT- LAW OF DEMAND

EXAMPLE- If the price of apple increases from Rs 140 to 220. We are not willing to purchase more quantity hence decrease in demand. And when price decreases we are willing to buy more apples hence price decreases so demand for apple increases.

Offering Unlimited Meals Has Become A Major Selling For Many Andhra Restaurants

CONCEPT- LAW OF DIMINISHING MARGINAL UTILITY

EXAMPLE- Suppose I am hungry so I consume one apple satisfies me. If 2^nd apple I will consume it will satisfy me less than the 1^st apple. If I will eat 3^rd apple the satisfaction will be diminishing (even less) than the 1^st and 2^nd apple.

SUPPLY CURVES FOR LIVE MUSICAL PERFORMANCE

CONCEPT- SUPPLY CONCEPT

EXAMPLE- I went to a shop to purchase rice. I saw there is increase in price of rice but I have no options. So I decided to purchase rice at same price. In supply concept rice in price slightly decrease in quantity demanded