Micro Economics In Real Life...

1.Law of Diminishing Marginal Utility: -

Law of diminishing marginal utility states that, the utility/satisfaction derives from a product starts decreasing when it is consumed repeatedly.

Example: -  Circus artistes/ performers performing in multiples cities/ events. If he is performing in the same place continuously the marginal utility of his performance will decrease as people are getting no fun watching the same show again and again. That’s why it’s better to perform in multiple cities.

2.Opportunity cost: -

Opportunity cost is the cost for next best alternative. Or it can be said that it’s the alternative cost of product.

Example: - The prospective locations for a mall. location ‘A’ offers 1000 net benefits units, location ‘B’ 800 net benefits units & location ‘C’ offers 850 net benefit units. Here opportunity cost of location ‘A’ is 200 and 150 from location ‘B’ & ‘C’ respectively. So as a person one will go for location ‘A’

3. Production Function: -

Maximum output or quantity(Q) that can be produced for every specified combination of inputs. Or in other words the various combinations of input or factors of production that produce maximum output.

Example: - As the usage of skilled labour combined with technology is increased, the effect in expected to be higher output in service industries. In case of 'Oneplus' a smartphone manufacturing company. It’s using best available technology in the market with highly skilled labour to produce top class smartphones at an affordable price. And its demand is increasing at a huge rate consisting of 62% share of Indian market.

4. People react to incentive: -

Product will only be sold when general people are given some incentive. General people are fond of incentive. People are always looking for incentives and where they get it, they will react or respond.

Example:-Offering unlimited meals has become a major selling for many Andhra restaurants. They know that knowing unlimited food more and more people will come. But people generally don’t get unlimited food as a person can eat a certain quantity. And unlimited food is just a statement to lure people.

5. Supply

Supply can be defined as the willingness and ability of the producers to offer their products in the market for sell at various prices at a particular time period.

Example: - Supply of a live musical performance where the price for tickets varies and the higher priced tickets generally has more supply and lower supply at lower price.