Diminishing marginal utility
when product or service consumed the satisfaction from that will be start decreasing and at certain point it will becomes 0. that utility decreasing is called diminishing marginal utility.
Example 1:-i went to shop to have chocolates i started eating for the first chocolate i had lot of satisfaction and for 2nd chocolate satisfaction has decreased and at the 6th chocolate i cant eat which i have received maximum satisfaction from the five chocolates.
Example 2:-i have bought a bike on the first day i am thinking about only the bike,after one month thinking about has decreased and at last i stopped thinking about bike. from this example we can know the satisfaction is high on first month and the satisfaction has started decreasing.
Consumer surplus and producer surplus
consumer surplus means difference between what consumer willing to pay but actually pays.
example:-once i went to bags store to buy luggage bag i want to only rs 500 but i bought the bag for rs 400 the balance is my surplus.
producer surplus means the difference between what producer wants to sell but actually sold.
example:-i want to sell my mobile at that time i want to sell it for rs 6000 but if i say to customer rate is rs 6000 they will start to bargain so that i said it the rate is rs 7000 the customer said ok for that the rs 1000 is production surplus.
Budget line
combinations of goods which consumer can afford at given market prices within income levels.
Example1:-i have 1000 rupees i went to buy shoes for a mall the price of shoes is 800 and i bought slippers within my budget.
Example2:-a person went to reserve train ticket which he can afford only 2000 but the price is only 1600 so with 400 hundred he ordered for food in train.
indifference curve
an indifference curve means combinations of two goods that will provides equal satisfaction.
example1:-i went to fruit juice shop to have grape juice which i can satisfy only when i have them two glasses but the equal satisfaction can get with one glass of apple juice.
Example2:-went to mall have shoes but with the same amount i can get five shirts so i prefer to have shirts.
opportunity cost
opportunity cost means missing out for choosing one alternative over another.
Example1:-once i went to buy a mobile which available namely letv and one plus so i misses out one plus to buy letv.
Example2:-i want to buy home theaters mi and samsung and miss out mi and buy samsung.
consumer surplus means difference between what consumer willing to pay but actually pays.
example:-once i went to bags store to buy luggage bag i want to only rs 500 but i bought the bag for rs 400 the balance is my surplus.
producer surplus means the difference between what producer wants to sell but actually sold.
example:-i want to sell my mobile at that time i want to sell it for rs 6000 but if i say to customer rate is rs 6000 they will start to bargain so that i said it the rate is rs 7000 the customer said ok for that the rs 1000 is production surplus.
Budget line
combinations of goods which consumer can afford at given market prices within income levels.
Example1:-i have 1000 rupees i went to buy shoes for a mall the price of shoes is 800 and i bought slippers within my budget.
Example2:-a person went to reserve train ticket which he can afford only 2000 but the price is only 1600 so with 400 hundred he ordered for food in train.
indifference curve
an indifference curve means combinations of two goods that will provides equal satisfaction.
example1:-i went to fruit juice shop to have grape juice which i can satisfy only when i have them two glasses but the equal satisfaction can get with one glass of apple juice.
Example2:-went to mall have shoes but with the same amount i can get five shirts so i prefer to have shirts.
opportunity cost
opportunity cost means missing out for choosing one alternative over another.
Example1:-once i went to buy a mobile which available namely letv and one plus so i misses out one plus to buy letv.
Example2:-i want to buy home theaters mi and samsung and miss out mi and buy samsung.
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