UTILITY AS PER ECONOMICS:

It is the power of a commodity to satisfy the wants of human beings.

Ex: when we eat a chocolate it satisfies our want and provide us sweetness. So here a chocolate has a power  to satisfy  the want of a human

Further utility can vary from person to person. Considering the above said example, there are some person who likes sweet.so the person who likes sweet may derive a good amount of utility from chocolate. But a person who doesn’t like sweet  may not have any utility of the chocolate.

Ex: There are some person who likes non veg food and most preferably the order for chicken when they went outside for food . so the person who is a non vegetarian may derive utility form that food  on the other hand person who don’t prefer non veg may not have any utility on that food.

There are some person who equate quality as usefulness but practically it is not true. There are somethings which are usefulness but don’t have any utility , conversely there are also products  which are utility but not useful to human mankind and to the society.

Ex: alcohol, cigarette,

But how over for a drunker and smoker there is utility for cigarette and alcohol though they can derive utility from that product.

                       MARKET EQUILIBRIUM AND MARKET CLEARING PRICE:

Market equilibrium is defined as a price at which both of the parties producer and consumer are agreed to exchange when both producer and consumer interact with each other in the market.  Which results them to behave differently. It’s the phycology of a consumer that he wants more things and products at lower prices but here producer look forward to supply more things at higher prices.

Ex:  you are a costumer. You went to the vegetable market and wanted to but tomato. That’s why you bargain with the shopkeeper to give you at low price but he denied by saying I will only sold it with this amount of price. Here in this scenario the price by the producer must be higher than the asked price by the costumer.

Market clearing price:

This is the price at which both the consumer and producer are agreed to exchange is called market clearing price. This is the point at which producer are agreed to supply the exact amount of quantity what costumer demands as per his requirement .

Ex: you are a costumer and you went a shop to buy a mobile phone . so the shopkeeper showed you a particular mobile of Samsung brand . when you asked him about the price  he told that it costs Rs 10000. But you want to pay 10000 for the mobile and you started bargaining . you asked him to sold the mobile on Rs 9500. At last the shopkeeper agrees with you and sold it on 9500. So here 9500 was the market clearing price.

                                        PRICING DECISSIONS

Price is one of the most important factor as per economy though it generates revenue for every individual and to any particular organization. Price also can be stated as the value paid be someone to buy or to get a product in the market.it is one of the key element that can be quickly change to react market changes.so that the decision about pricing plays a vital role in the context of overall business objectives.

There are two kind of decision can be made on pricing.

1.     Consumer surplus

2.     Producer surplus

Consumer surplus:

It is  an economic measure of consumer benefit .consumer surplus can be measured by  analysing the difference between what consumers are willing to pay for a particular product relative to its market price.

   Consumer surplus = willingess to pay for a product- actual price

Ex:  I  want to buy a new redmi mobile of Rs 20000.  I am so eager to get that phone that I  could not wait for the online sale. So i went to the mobile shop and I am ready to pay 22000 to get it immediately.so here the consumer benefit is Rs 2000.

Producer surplus:

it is measured as the difference between producers are willing and able to supply a good and service and the price they actually receive after supplying.

Ex: there is a toy and the shopkeeper want to sell it for Rs 200.but fortunately he is able to sell the toy for Rs 300. So here the producer surplus is Rs 100.

                                      OPPURTUNITY COST

Opportunity cost is defined as something you give up to get something with extra benefits. In other words it is to choose the best form the available option and to give up something for the extra benefit.

Ex: I went to Reliance trends to buy a jeans pant. The sales person showed me pants of many different brands and also explored their features like stretchable, ankle fit ,long lasting etc. but I choose levies brand though it was having some valuable benefits  and I leave other brands.

Ex: After  completion of my graduation I was searching for  best pgdm college. For which I  have visited so many colleges and at final I choose iba to pursue my pgdm though I got some extra benefits here and leave other colleges in order to get the extra benefits.

                                                  ELASTICITY

Elasticity in economics is defined as measure of a variable’s sensitivity to change in another variable. In simple words  it is the process to identify how the two variables are inter dependent with each other.

ELASTICITY OF DEMAND:

It is defined as quantity of demand of a product or service to a change in its price .

Ex:  the cost of the textile products is directly dependent upon the cost of cottons. Is there is a hike In price of cotton the price of the textile products will also hike which also effects the demand of the product.