RESPECT TO THE PRICES BY CONSUMERS

Rational people thinks at margin:

Rational decision maker always take action if it Exceeds the marginal cost.

Example:

When I was in intermediate I had 40,000 rs to purchase the second hand bike when I went to shop I saw a bike which costs 36,000 rs and I found some repairs which incurs 6,000 rs. So I dint purchase the bike because I am rational thinkers who thinks about only profit.

Law of Diminishing Marginal Utility:

As the consumption increases the satisfaction of the consumer decreases

Example:

I have seen a park I visited at first time then satisfaction of joy is high ,as I regularly visited I joy of visiting the park decreases

Factors of Supply:

As the price of the things increases the supply of the things also increases ,when the price of the good is constant then the supply curve shifts left are right

Example:

In a circket stadium the seat of the stadium is constant so the supply of the people may flow are not flow ,the supply curve moves left are right

Inelastic Demand :

It is the situation where the people buys the same quality whether the prices increases or decreases

Example:

We have  seen the situation that alcohol prices in few situation increases drastically but people drink alcohol even if the prices increases

Price mechanism:

It explains that there will be changes in supply, demand and prices of the product according to the seasons

Example:

At the time of summer season the demand for the mangoes increases and the price also increases and the supply of the product also increases then the price decreases and the demand and supply will be equal