(1)Law of demand: There exists an inverse relationship between the price of a commodity and the quantity buyers are willing to purchase in a defined time period, ceteris paribus (all other factors remain constant)
Example: Increase in demand during sales season. All the big brands like Pantaloons, Shoppers Stop, forever 21 offer Season End sales from July – August to clear their stock, this is done basis the Law of Demand. As the price for the apparels, footwear decreases the demand for the same increases among the customers, and vice versa – When there are new arrivals with costly prices the demand for the same decreases.
(2)Utility: Satisfaction people derive from their consumption activity is known as utility. In Economics Utility is expressed in utils. Utility can be either cardinal or ordinal utility.
Example : All of us uses Uber or Ola as a means of public transportation in our day to day lives. The satisfaction that we get here is known as utility. After, every ride we are asked to give a rating for the respective ride (1 – 5 Stars) – the rating that we give is known as cardinal utility. After giving the ratings for Ola or Uber, there is a ranking done in order to understand which company offers the best cab service – The ranking done is known as ordinal utility.
(3)Diminishing Marginal Utility: Additional satisfaction derived from every extra unit of consumption is known as Marginal Utility. According to the Law of the Diminishing Marginal Utility, every additional unit we consume, the marginal utility (satisfaction) we get diminishes.
Example: Most of Restaurants offer unlimited food offers based on the Law of Diminishing Marginal Utility. One of the leading restaurant Barbeque Nation offers unlimited veg/non veg meals - which includes unlimited barbeque snacks, main course, deserts and drinks. This offer is designed based on the fact that as the consumers consumes additional food, the additional utility derived from the same goes on decreasing. Hence restaurants are able to make profits from such offers.
(4)Trade off and cost Benefit analysis: Trade-offs are faced in the simple behaviour that we exercise day to day lives. Trade-offs are experienced, when there are different – alternates available to a customer. Trade-off is also expressed as an opportunity cost of most preferred possible alternative, as the trade-offs are resolved basis cost benefit analysis – that is obtaining net benefit after subtracting cost from the benefit obtained.
Example: There is a discount that is being offered within three leading apparel stores: Pantaloons, Shoppers stop and Lifestyle. All the three stores offer varied net benefits - Pantaloons: 1000 units, Shoppers stop: 800 units and Lifestyle: 1100 units. Now as a customer after seeing the discounts everywhere, we may experience a confusion of where to go, that is known as Trade off. In order to resolve the trade-off, we do the net benefit analysis to understand the opportunity cost of most preferred possible alternative. Within the example Lifestyle offers highest Net Benefit 1100 units as compared to the other stores, hence we give up 800 + 200 units (combined for Pantaloons and Shoppers stop) in order to gain the additional benefit of the option Lifestyle. Hence, 800 + 200 is the opportunity cost we give up for selecting Lifestyle store.
(5)Upward sloping supply curve: As the price increases the firms produces more. This is known as Law of Supply – As the price increases the quantity supplied also increases.
Example: Winters are all about shawls and sweaters. During winters, the price for sweaters and shawls are high, hence at that time it is more profitable for the firms to produce and supply more of winter apparels. Therefore, the producers increase the production for woollen apparels during winters, when the price for same is high.
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