5 Economics concepts in Redmi company

1. People respond to incentives :

An incentive is a reward or punishment that induces people to act.

In today scenario, people respond to incentives by comparing benefits and cost.

Example - In MI mobile company, mi provides handsets with back cover and screen guards which other company not provide, this incentive attracts the customer and influence them to purchase mi phones and mi also provide latest features handsets in very less price.

2. Law of Supply :

According to the law of supply, the price and quantity is directly proportional to each other which means if price increases quantity supply also increases and vice – versa.

Example - In today’s market, whenever mi company introduced new handsets in the market, the price of the other products goes down and supply of the product so start decreasing.

3.Market based price discrimination:

In market based price discrimination, monopolist charge different price in different market for the same product.

Example -  MI company handsets phones like MI Note 5 pro sell in India at Rs.14,999 and sell in China at Rs.17,200 and similarly in different prices in other countries. This shows the market based price discrimination.

4.Economies of Scale :

Economics of scale means the percentage change in average cost of production following a 1 percent increase in output.

It occurs when increased output leads to lower unit costs.

Example - When MI company purchase spare parts in bulk from the other company the  change in average cost of production following the percentage change in its finished product output also.

5.Perfect competition market :

The Perfect Competition is a market where lots of buyers and sellers are engaged in the buying and selling of the same kind of product at a single price in the market.

Example:  In current Indian market, MI is selling his handsets nearly at Rs.15000 by providing all important features . So, in the competition other companies like Samsung, Vivo, OPPO also introduced there mobile phones in the same price as MI company and providing all features which MI comes up.