PRINCIPAL 3
1.“RATIONAL PEOPLE THINK AT THE
MARGIN”
ECONOMICS and principal are nothing but the study of
society, individual and how society use their scare resources and how its manages. Economics has certain
assumption and its principle (AN EXPLANATION OF FUNDAMENTAL
REASON), we ae going to discuss about our third principle of ECONOMIC as
mentioned above… RATIONAL PEOPLE THINK AT THE MARGIN. First we have to know
that what rational means what is the rational people means..
*RATIONAL
PEOPLE ;- According to economist rational people called
when people who knows how to achieve their adjective in systematic and
purposefully and in the best way.
According
to this principle Economists normally assumes that people are rational, and
rational people takes a marginal decisions . (MARGINAL REFERS TO EXTRA BENEFIT OR SMALL CHANGES IN COURSE
IF ACTION TO GET AN EXTRAA BENEFIT), good economic
thinking is almost and always a MARGINAL
THINKING.
EXAMPLE :- Have you ever set alarm to
wake up n the morning and when alarms rings you set is it snooze mode for 15
minutes later to get an extra 15 minutes sleep.. getting of that extra sleep is known as
marginal thinking..
2.PRODUCTION POSSIBILITIES
FRONTIER
Production possibilities frontier is the
representation of possibilities of combined of two diffrent resources to
produce good in the given resources and
technologies. Factors like labour capital and technologies. It has an another
name i.e is the transformation frontier..
ASSUMPTIONS ;-
· TECHNOLOGY IS CONSTANT
· EFFICIENTLY USED OF RESOURCES
· CHOICES BETWEEN ONLY TWO GOODS
References
:-
3.LAW OF DEMAND
The
law of demand state that inverse relationship between price and quantity
demanded at the given time of period.
Law
of demand explains that if the price of commodity is decreases than the demand of that
commodity or services will rise and it is also inverse so when the price of the same commodity
is rise then the demand of that commodity will fall down or decreases by
keeping other things remaining constant..
ASSUMPTIONS OF LAW DEMAND
·
There shouldn’t
be the change in the tastes and preferences of consumer
·
The price of
related goods and services must be remain same
·
Income of
consumer must remain same
EXAMPLE;-
Last
month I to buy shoes for me in local market … and where I found that lots of
shoes with different brands were available there, but I wanted to buy a my favorite shoe of favorite brand i.e BATA.. but the cost was out of my budget … by previously
bought that bata shoes was ;- ₹ 800/- now its priced hiked up-to ₹1999 so I bought
another shoes which was within in my range….
(her I experienced the the law of demand
because I choose the best goods according my budget).
4.LAW OF DIMINISHING MARGINAL
UTILITY
Law of diminishing marginal utility states that other thing remaining
constant as the consumption of a commodity is increases the marginal utility
which derives from that good will be decreases by each unit of consumption.
UTILITY:- satisfaction derived from consumption of
good.
Marginal Utility :- its refers to an extra unit of satisfaction
derived from additional unit of commodity consume.
Assumptions
· Taste and preference of the consumer remain
same
· Consumption of that particular commodity must be continuous
· Utility of that commodity measurable
“UTILITY CAN BE MEASURES IN UTILS”
Example:-
Suppose you are a sports man and you are
returned from your exercise and you are extremely tired an thirsty you need to
refill yourself with a energy and nutritional so , you decided to drink you
healthy multivitamin juice.. You start drink that commodity your first
consumption derived you the utility, after one glass you drunk another glass of
same commodity/same juice and then you again you repeated its 5 times after
each consumption of your that commodity decreses the interest on that same
juce/commodity… in every unit of
consumption its derive satisfaction but in extra unit of consumption diminishes
its utility.
5.CONSUMER BEHAVIOR
Consumer Behaviour is the understanding decisions
which is taken by the consumer with the references to their production, acquisitions
and disposal of good , services ,activities and idea in a given time period.
ASSUMPTIONS
·
Consumers wants are unlimited
·
Consumers behave rational
·
Consumers thinks of marginal
·
Consumer maximizing their own profitability
THERE ARE TWO WAYS TO ANALYZE THE CONSUMER
BEHAVIOR
1. Marginal Utility Approaches
2. Indifference Curve Approaches
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