FIVE ECONOMIC CONCEPTS

1.                    1. OPPORTUNITY COST:

                              Opportunity cost means to choose the best alternative from the                      available options, and to sacrifice the other alternative in order to get more                     benefits.

             Ex: 1. As when iam searching for colleges to join in MBA I compare different              colleges and finally selected IBA because I think IBA has more benefits than                 other colleges and I leaved the other colleges.

            2. When we compare i-phone and 1+, 1+ offers more specifications within                        budget, those who consider price they bought 1+ instead of i-phone, because               it has more benefits.

2.     SUBSTITUTE GOODS:

                                  The goods which are replaceable with another   which have similar or comparable characteristics is called has substitute goods.

      EX: 1. Close up is substitute for Colgate max fresh

             2. 1+ is a substitute for i-phone

    3.   CONSUMER SURPLUS:

                                    The price of the product which is less than the price of the customer wants to pay for that product is called has consumer surplus.

              EX: 1. In amazon freedom 1+ is giving 2000 discount and 10% on SBI    debit cards these all benefits are come under the consumer surplus.

                    2. I purchased 2500rs worth clothes in reliance trends and up to that time I don’t know there is a 1000rs voucher. This voucher is a surplus for me.

            4.   ELASTICITY OF DEMAND:

                                            An elasticity is a measure of the sensitivity of one variable to another, it means the percentage change in one variable occurs due to the percentage change in another variable.  

           EX: 1. In a pen’s manufacturing company if he cost of the raw materials increases it will result in increasing the price of the final product, then the quantity demanded increases.

                  2.In rainy season the cost of the onion’s increases so the demand will decrease, it means due to increase in price variable there is a change in another variable.

5. FLEXIBILITY OF INPUTS:

                                         The inputs which can be change in the place of another inputs are called as flexible inputs.

              EX: 1. I can purchase an another phone which have same specifications like i-phone but this phone can’t replace the brand value of i-phone. It means the specifications are flexible, but brand Is not flexible.

                     2. TV shows like KAUN BANAGA KAROREPATHI we can change other inputs but we can’t change the host AMITAB BACHHAN.