learning from economics

In my first trimester of economics , the overall topics are related to micro economics and this economics deals with the internal operation of the economics world , all the topics were interesting.
From starting topic to end topic i came to know that how micro economics play role in the economics world for every organisation . One of the great learning is that how i can apply the economics concepts in the entire economy by seeing the benefit . From the entire trimester , the whole concepts was practically explained by prof. prashant kulkarni sir , which helps me lot to related the concepts within the company externally and internally.  

Learnings !!!

When we say about economics what comes to our mind? Micro or Macro Economics or may be its definition that “economics is a branch of knowledge concerned with production, consumption and transfer of wealth.

Economics for me was same only - just a subject to be studied. But it was in trimester one that I actually learned to apply the economics concepts to the real world, “the world around us”. You name it and economics is there – I have had dinner in Barbeque nation multiple times, I have even gone to amusement parks during special offers, but it is now that I have realised that all these works on the basis of our Diminishing Marginal Utility.

During shopping I used to get so much confused while buying clothes/other items, then I used to sit around and resolve the confusion of which one to buy – This also relates to the economic principal of “Trade-offs” and “Net Benefit analysis”.

I often went to watch the circus but never thought about the mobility of inputs concept related to elasticity of Supply behind the movement of circus artists from one city to another. I have even had friends who have participated in talent hunt shows and I often imagined what made them get so attracted towards such shows. Now after completing trimester 1 I know how people respond to incentives and this itself was the reason behind all the young talents getting attracted to talent hunt shows – as the money they generated after becoming super stars was enormous.

Surprised by economics all around??? aren’t you .. So was I but now I know how does the world revolve around economics and how these many years I have overlooked the same.
So don't just sit around..but analayse everything... as you never no ..when and where, which economics concept may surprise you.

 

 

From "scared of Economics" to "Simulation and Price Wars"

Economics was never my forte and I never imagined I either would be, at least until the time Micro-Economics came into my life in the first trimester of PGDM. 

I started the journey of 3 months with panicky feelings like "I know nothing about Economics" and "I'm scared of it." Well, to be honest, I was initially. But slowly when the concepts unfolded, I realized it is not that bad and to my utter surprise, there are so many things we do in our daily lives that can be associated to the Economic concepts.

The Fun Element!

What seemed scary in the beginning actually became fun by the end. We were eventually introduced to Competitive Strategy Games. It is a simulation game where players fought in different markets with competitors trying to sell their products while raging price wars. It simply raised the bars of the course!

Now, I can understand this lingo!

 Source: economicsmemes.com

The single most important learning!

It's true that Economics teaches us a lot of parables on how an economy works, but most importantly it teaches how our life works!  Everything has a cost, in other words, "there ain't no such thing as a free lunch.

And yes, people are rational. I don't mean that people have perfect judgements or can do computer-like calculations of pleasure and pain. What I mean is rationality is less demanding, and still helps us make sense of the world. People can think things through.

In a nutshell, it was an intriguing experience learning something new that could be of great help in everyday life. Thanks to Economics, you start seeing the world from a new perspective! 

ECONOMICS CONCEPT BEHIND THEINDIAN RAILWAY

PRICE ELASTICITY OF DEMAND:

Here the Demand of the railway have less changes as compared to change in price due to lack of substitute and competitor. And it is the most convenient for most of the people.

So here demand is in elastic.

ELASTICITY OF SUPPLY:

 Railway service is constant, Train travels to its designation as per its scheduled time, whatever the demand may be.

So supply is Constant and supply is perfectly inelastic

PRICE DISCRIMINATION:

Indian railway offers various compartment and seats. like AC, Sleeper, General etc. according to price. Here buyers are divided into different groups as per income and willing to pay.

INCOME ELASTICITY:

In some places where Airport is available, there Railway act as a inferior goods

Because as per the increase in income the demand will shifts toward Airlines for long journey.

ECONOMIES OF SCOPE:

Indian railway also provides catering service and online ticket booking facilities with its core service in order to reduce the cost and increasing the revenue with the same resources.

BAWARCHI

ECONOMIC CONCEPTS:
1. LAW OF DIMINISHING MARGINAL UTILITY:
                                                Bawarchi biryani sometimes provides unlimited buffet. Because, as per law of diminishing marginal utility as we consume more the marginal utility will decrease. So they provide unlimited buffet. Because, they know that as the consumers consume more the marginal utility will decrease for them.
2. LAW OF DEMAND:
                                         They generally won't increase their price. Because as per law of demand, if price increases demand decreases and if price decreases demand increases. So if they increase price the demand will decrease.
3. ECONOMIES OF SCOPE:
                                         Economies of scope occurs when products share common inputs and diversification leads to cost savings. Here in Bawarchi biryani same cook prepares different kinds of dishes with same equipment. This leads to cost savings.
4. PEOPLE RESPOND TO INCENTIVES:
                                         Sometimes bawarchi biryani provides discounts and combo offers. Because, people respond to incentives. So if they provide discounts and combo offers like biryani plus coke at a price of biryani then people buy more than before.
5. MONOPOLISTIC COMPETITION:
                                       In monopolistic competition there will be no entry barriers. So, anyone can enter into the market. The number of firms operating monopolistic competition is more in case of restaurants. So anyone can start the business of restaurants.

TATA MOTORS-THE INSIGHT ECONOMICS

TATA MOTORS

TATA MOTORS was founded in the year 1945 as a manufacturer of locomotives but entered the passenger vehicle market in 1988.

TATA MOTORS is the largest automobile manufacturer in India and a member of the TATA GROUP. The company is providing with various products such as passenger cars, trucks, vans, buses, coaches, sports cars, military vehicles etc.

The economic concepts that can be easily identified are: -

Utility-  Fulfilling the needs of the consumer and providing satisfaction according to the class of the income level.  For example- “Zest” is preferred by lower-middle-class level, whereas “Hexa” is preferred by upper-middle-class level. A different variant provides the customer with the ability to select & go for their own preferences.

Monopolistic Competitive Market- It is competing with various other firms such as Mahindra & Mahindra, Maruti, Hyundai, Honda etc. with fewer restriction barriers to the market.

Economies of Scale- This goes well with the mass production concept. As the production quantity increases, the average production cost decreases following the economies of scale.

Price Discrimination- The same product can be sold at various prices relative to the type of customers- like the defence wing has a special price for acquiring the vehicles and logistics for TATA MOTORS.

Trade off- People go for TATA vehicles as they have a wide variety of models suiting the desires and preferences of consumers. Hereby giving up the opportunity cost over Mahindra or Maruti. Similar goes with the TATA’s own product depth where a particularly middle-class society wanted NANO which suited their budget & income giving up on other models.

FIVE ECONCMICS CONCEPTS

                                APPLE   I PHONE’S

Consumer surplus:- The people are willing to spend 1 lakh’s rupees to buy i phone .The consumer will  get satisfied for the product 

  PRICE DISCRIMINATION :-  There is a  pricing changes  different consumers are charged different prices for the same product service. Apple charges different prices for the same product to differentconsumers  based on different county’s. Apple charges high prices 20 %extra  on phones compare to USA

VEBLEN GOODS :- The i Phones prices increases at any point the demand will be same for i Phone products . Because  it is nish market apple target’s mostely 

MONOPOLISTIC MARKET :- Market structure of apple is monopolycomes to the smartphones , mac books. As there are very few firms thatdominate apple. Because apple is using  their own  “os”  for i phones and mac bookstores 

PEOPLE RESPOND INCENTIVES:- People always respond to incentives Apple offers few deals on certain days              likeThanksgiving, Blackfriday, Boxing day etc., on such days they give discounts on phones in US . The people who wants to buy Iphone they like tto buy on that day. people responding to the incentives given by apple

ECONOMICS BEHIND CLOTHING AND TEXTILE INDUSTRY

1.LAW OF DIMINISHING MARGINAL UTILITY:

As our marginal utility decreases with increase in consumption of same type of clothes. So they leverage on this and produce new designs.

2. Economies of Scope:

The average cost per unit can be reduced by producing more type of products from same type of machines and inputs. This is mostly used by textile industry.

3. Economies of Agglomeration:

Textile factories are often located near to each other because of the reasons like low transport costs and large supply of labor.

4. Increasing Return to Scale:

If we have skilled labour and technology then if we increase these inputs then the output will be more in proportion. So they use skilled labour and technology.

5. People respond to incentives:

Generally people buy things more when there are more offers so they will give more offers to customers.

google relates to economics concepts

Google relates to economics concept

    

Monopoly: -google comes under monopoly market, as it is unique in nature in the market. No competitors to google as it unique compare to others.

Economies of scope: -google is providing different services like Gmail, hangouts, drive, play store, etc. instead of providing one service, it results in decrease of average cost of production.

     As economies of scope says that producing different products on their own with cost effective.

People respond to incentives: -people respond for incentives google comes under this concept because, in recent times google launched Tez, which formerly called as google pay, in this they are providing incentives by giving scratch cards which may help you to win up to rs 1000.

Applying Economics in ITC

ITC or Indian Tobacco Company was started in 1910 as “Imperial Tobacco Company”.

The basic operation was in cigarettes manufacturing, which later diversified its presence in FMCG sector like food, oil, cosmetics etc.

1.    Oligopoly market competition-

                                                       ITC cigarette manufacturing occupies the oligopoly market as it is the first market big leader in cigarette manufacturing since 1910 followed by few companies like-Godfrey Philips, AJE India Pvt Ltd. The nature of product is unique & due to many licensing & Govt. bans & promotion of anti-smoking initiatives. It has been tough for the other’s in this segment, thus restrictive market.

2.    Elasticity of Demand-

ITC understands the elasticity & inelasticity of demand & came up with its presence in FMCG & cosmetic goods.

It bought many variants in different domain from season to season, keeping in mind the geographical contexts to keep product demand in inelastic zone.

3.    Cross price elasticity of Demand-

CPED plays an important role for both substitute & complimentary. ITC variants like- SUNFEAST noodles were perfect substitute of Nestle’s Maggi.

Similar goes with the fluctuation in demand & events like when Maggi went down, the supply increased to accommodate the need of the noodles.

4.    Spending behaviour & budget constraint-

ITC in cigarettes division understood the economies condition of the country & introduced cigarettes smaller in length like-60-65 mm to make it affordable & help people migrate from bidis to cigarette. They are able to capture 19% of tobacco users in the country.

   

5.    Economies of Scale-

Mass production of goods in cigarettes as well as FMCG sectors, making goods such as ready to eat food products, chocolates, cosmetics have reduced the average production & handling cost with increase in output.

MYNTRA E-COMMERCE SITE WITH ECONOMIC CONCEPT

DEMAND:-

The demand of a Myntra products will increases when there is an offer. The consumer purchasing will increase when there is a special offers and discount therefore the demand of a products will increase.

CONSUMER SURPLUS:-

It is difference between consumer willing to pay and actual price the difference is consumer surplus.

Example: - In Myntra the price of the shirt of some brand was Rs.2000 and Myntra offer coupons after the offer the price will be Rs.1300 the difference amount will be 700 that is consumer surplus.

PEOPLE RESPOND TO INCENTIVES:-

On some days the Myntra will announce some extra offers, like festival offers, big billion days, cash back on e-commerce etc. so during these days the consumer will think rationally and the purchase bulk of clothes and the will respond to incentives.

PRODUCER SURPLUS:-

The price of the product when seller has buy the product and he selling the product at higher price after he gets at profit is known as producer surplus.

Ex: - The concept of myntra products in pants the actual he buys at Rs.1800 and he sells at Rs.2000 and he gets Rs.200 surplus.

TASTE AND PREFERENCES:-

In Myntra site the consumer is having different taste and preferences. Like on Diwali, the men’s more buys the kurta and pyjama for their festival and they might not use shirts and pants.

Economic concepts applied to restaurants

People respond to incentives

An incentive something that which induces a person to act, in the prospect of reward or punishment. restaurants provide discounts to customers so that it attracts them. customers respond to incentives.

Economies of scope

Economies of phenomena where single input is used to provide various output and production leads to cost savings. Restaurants uses the same utensils and cooks as a single input and provide various output.

Monopolistic competition

In monopolistic competition, there will be number of firms and anyone can enter into that market. The product could be differentiated from one another. In case of restaurants there are no entry barriers.

Law of diminishing marginal utility

many star hotels provide unlimited buffet like in barbeque nation, this comes under a concept of law of diminishing marginal utility. In barbeque nation they provide buffet at a price of 900 which is unlimited food. May be person who ordered can consume food which costs 500. As the consumption increases, consumer utility reaches to a level. So that they cannot eat more than that.

Price description by self-selection

consumers are self-selecting themselves. They got to restaurants which provide online payment so that they can get cashback through third party apps.

Economic Concepts in ZARA

So how many of you like to shop in ZARA? I personally love their apparel. Yes they are pricey, but they are indeed a class apart. Ever wondered, what are the economic concepts that might be going inside the company, fetching them unmatched success even in Indian market.

Source: India TV

Following are 5 such concepts:

1. People respond to incentives - ZARA puts on several discounts and sales on its apparels to induce more and more customers to buy their products. This has in fact helped ZARA acquire a good customer base in India.

2. Law of Diminishing Marginal Utility - The law states that the marginal utility of a product declines as a consumer keeps obtaining more and more of the product. ZARA understands this aptly and comes up with new clothing trends almost every season!

3. Law of Marginal Rate of Substitution - The marginal rate of substitution is the rate at which a consumer is willing to give up some amount of one good in exchange for another good while achieving the same level of utility. Keeping different assortment of designs at different prices actually allows consumers to switch between similar price range products yet enjoy elegant designs.

4. Price Elasticity of Demand - ZARA products can be considered as Veblen goods (premium product), as the demand of the apparel stays high even when the price increases. 

5. Price Discrimination - Although ZARA puts high price tags on its apparels, people still buys them. First degree discrimination is applied where company charges maximum possible price for each unit consumed. 

Economic Principals underlying Kannur Cafe

Kannur Café in Madival Street

Madival street is a famous street in Bangalore where there are several Kerala food joints, “Kannur Café” is one of them.

Five Economic principals associated with the same are: -

1)Economies of scope – Large Scale/Different outputs produced. 

The restaurant offers various options in their menu. The food items produced have common inputs and the diversification leads to cost savings. By this their Average cost is reduced as the Fixed Cost gets distributed by larger and larger amount of output. Hence it costs lesser for the restaurant to produce all the output than what it would have costed for the different restaurants to produce these food items separately. Therefore the restaurant benefits by the reduction in the Average costs through Economies of scope.

2)Economies of agglomeration -  This refers to the reduction in the cost that firms obtain by locating themselves in proximity to each other. Madival Street is famous for the food joints, hence Kannur café easily benefits by being located close to other food joints that are located there – It is easy for them to gather the information about their competitors, hence they can adopt the best practices of their competitor restaurants.

3)Diminishing Marginal Utility – Kannur Café offers Kerala Meals at Rs 100/150 – This offer provides for unlimited rice and side dishes. The restaurant offers such meals on the basis of Diminishing Marginal Utility. As the Marginal Utility of the consumer (for the food) decrease with the consumption of every additional unit – the Resturant benefits and earn profits, on the other hand the consumers remain happy with the meal offers that the restaurant serves.

4)People Respond to incentives – To attract large number of customers the restaurant provides various offers like meals with unlimited repeats, discount during lunch hours, Onam Sadhya with limited rates as compared to the rates of the competitor restaurants there.

5)People face trade off – With the distinctive menu card offered by the Kannur café customers face trade-off for which item to purchase as they get tempted towards all the items displayed within the menu. Therefore, the customers like me end up doing cost benefit analysis and go with the option that provides the maximum net benefit. 

Hence through these economic principals, Kannur Cafe benefits and adds on to its advantage.

 

Economic Concepts in ITC Ltd.

                                        ITC LTD

ITC Ltd. is one of the fast moving companies which deals in consumer goods. We can also show how simple concept of economics applies in ITC Ltd. which deals in different types of product such as Fiama Devils, Aashirvaad, Sun feast, Vivel, Engage, Classmate etc.

ECONOMIES OF SCOPE :-

ITC Ltd. deals in various field of household or consumer product that leads to cost saving because product shares common input and diversification of product such as Fiama Devils, Aashirvaad, Sunfeast, Vivel, Engage, Classmate  etc. Here we can easily say that economies of scope applies in this company.

PEOPLE FACE TRADE-OFF :-

There are many examples of product under ITC Ltd. between which people can  face trade-off such as Aashirvaad, Sunfeast, Vivel, Engage, Classmate , Paper Boat, Colour Crew  etc. Here we can say that people have to give up .

PEOPLE RESPOND TO INCENTIVES :-

ITC Ltd. offers that buys products of  Rs.500 and Rs.200 product free and many a time discount is also offered by them of some of the product such as up-to 50% off on Vivel, Flat 30% off on Pond's cream and people start buying product more rapidly. Here, we can say people respond to incentives applies in this company.

TASTE AND PREFERENCES :-

Demand of products under ITC Ltd. is depend upon taste and preferences of people . All consumers have different taste and preference  according to their up bringing , religion and believes. Lets take Marwadis , they are mostly pure vegetarian so they might not use Vivel because it contains egg into it.

SUBSTITUTE GOODS :-

Price of substitute good also influence the demand of  products under ITC Ltd.. For example, if price of Santoor is more than Vivel ,  than demand of  Vivel is more and vise-versa.
So, we can say that ITC Ltd is one of the good example to explain concepts of economics.

McDonalds related economic concepts

McDonalds

1.)Demand:
the quantity of demand of chicken burger increases when the price of the chicken burger decreases then the demand of  the McDonalds increases.

2.)Ordinal utility:
it determines that by consumption of product or services derives the satisfaction of the consumer. it can be calculated by taking feedback  from the consumers.

3.)Peoples response about incentives:
McDonals will attract the customers by giving big discounts,cashback offers,coupons and flight &movie tickets.

4.)Opportunity cost:
when we make comparison with other restaurants McDonalds is providing similar products but with high price but with different types than any other restaurants so here comes the opportunity cost.

5.)Consumer surplus:

the differentiation between the consumer price which he or she willing to pay in their mind,able to pay for that product and consumer really pays for that product to the seller.

THE RELATIONSHIP BETWEEN PIZZA HUT AND ECONOMICS

LAW OF DEMAND-
                When the price of product is less in pizza hut then the demand of pizza in pizza hut will be high and vice versa.

OPPORTUNITY COST-
                When a consumer go to pizza hut to eat pizza, consumer have so many options, like chicken tikka pizza, panner tikka pizza. When consumer buy chicken tikka pizza, the cost of panner pizza will be opportunity cost.

INCENTIVE
          Pizza hut gives so many discount and buy one get one free , which help to pizza but for selling more pizza.

MARGINAL UTILITY-
           The quality is the key factor of pizza hut. As the other companies like Domino ,but still people remain stick to pizza hut because it brings satisfaction to them after consuming the pizza.

CONSUM SURPLUS-
        Difference between the price consumer is willing to pay and consumer actually pays.
    My willing to pay in pizza hut-600
If I will pay through paytm then-300 off
  Consum surplus -300
         

Economics @alibaba

Economics of scope:

The cost savings associated with the offerings through sales of different products by a single stream through the same small channels.

Alibaba has two sales channels namely Taobao  and Tmall. The advantage of scope comes into picture as there are cost savings to them as they are bringing the common inputs but the diversification leads to the cost savings to the organisation.

By the same channel, they are supplying it with the two sources which in turn saves the cost.

Economies of scale:

There the cost savings because, it has the large platform for selling in bulk, there are certain advantages of economies, so that it can reduce the prices that it is offering.

As the research said that Taobao and Tmall topped by $163 million which is more than the amazon and ebay.

The largest the area of network the more valuable the product becomes to each other.

Respond to incentives:

With the economies of scale and scope, the company is able to offer certain incentives by saying that if there is a minimum order of purchase, then there will be a discount. As this trends as incentives which is making the people to buy the products.

Monopoly: 

In china, the monopoly competition of alibaba as it takes up 80% of the online shopping revenue of the country's total population in 2010.

Pricing model:

Alibaba's pricing model impiles to set a low price in order to increase sales and market share. They also bring into llay with the discount to increase more sales as well as to increase their relationship with their customers.

FACTS ABOUT THE ECONOMICS PRESENT IN SHOPPING MALLS

ECONOMIES OF AGGLOMERATION :-

Although the stores in the mall may not be related but locating close together gives them the opportunity to use the same infrastructure. By doing this interaction with the customer is easy and it also helps in cost reduction.

PRODUCT DIFFERENTIATION:-

It is the process of distinguishing a product or service from others, to make it more attractive and alluring to a particular target market.

So, Shopping malls too have a product differentiation like various categories of retail, functional design differentiate malls. For example Apple,Samsung,Vivo etc showrooms are present in the mall.

Customers check and compare the products which they have purchased from different malls.

PEOPLE RESPOND TO INCENTIVES:-

Shops which provide price discounts,gifts,coupons and rebates offered by mall retailers attract many customers and there is more traffic and rush on that shop. Hence, incentives comes to play here.

PRICE SENSITIVITY:-

Mall provides discount offers on the product thus customer provide signal that they are price sensitive by buying the products which offers discount. Because price plays an important role as it affects the sales of a product.

IMPORTANCE OF TASTE AND PREFERENCES:-

This concept measure the feeling or aroma about particular store. Customers are very particular about feeling or touch or smell for those products which they are purchasing from shopping malls to get customer satisfaction, its all because consumers are not identical each and every individual have different taste and preferences.

 

Economic concepts related to flipkart

Economics concepts used in flipkart

Economies of scale- As flipkart is producing higher quantity of products so that it can absorb the average cost faster which result in lower cost. This will maximize the profit of the company as the difference between the cost and revenue increases.

Economies of scope- Using internet as the only platform they are reducing their fixed cost as they are using only internet to sell their product so, in short they are using one input to produce variety of outputs.  

Price discrimination by self-selection- Flipkart obeys the practice of progressive procession as it is complex, data-driven method. The goal of progressive pricing is to adjust prices according to the response to the demand in the market for maximizing the profits. In flipkart, we see that the same product will be sold by multiple sellers and the price is different based on the seller which you select while placing an order.

Product differentiation- As flipkart and Amazon are the leaders in this sector. They form a strong brand in the eyes of the consumers. The power of the brands creates barriers for other companies to enter into the market.  

People respond to incentives- They sell goods at low price nearly less than MRP, where in the offline market we need to buy at MRP. So, automatically people respond to the incentives of discounts which is like a reward for the consumers.

Oneplus's Economics Strategy To Lead The Market

INTRODUCTION:-

                                            ONEPLUS ONE has earned the title as the new king of mid-range Smartphone. The phone is cheap, but without comparing quality. it’s relatively   low priced with a high specification ratio.

OPPORTUNITY COST :-

                                  At the same price range other smartphone company providing only 4 GB ram with snapdragon 640,but at the same time Oneplus is providing 6 GB ram with snapdragon 845.So the customers are choosing Oneplus and give up other smartphone which are at the same price.

UTILITY:-

                                         The total satisfaction consumed by Oneplus is high. Because after consuming Oneplus's 1st product the customer are fully satisfied,so they are upgrading their smartphone with Oneplus's new phone.Recently within 10 mins of launching of Oneplus 6, 100 million customer bought  Oneplus 6 in all over the world.

INDIFFERENCE CURVE:-

        Now some companies provides same level of service like Oneplus. They are providing 6 GB ram with 845 snapdragon processor at the same price.So the total amount of utility consumed by Oneplus is equal to the other product's utility.Its called Indifference curve.

PERFECT COMPETITION MARKET:- 

                                               Perfect competition is theoretical market structure,where all firms sell an identical product.So Oneplus entered in the perfect competition market,where it compete with the existing market owner like APPLE &SAMSUNG.

PEOPLE RESPONDS INCENTIVE:-

                                                               Oneplus is giving extra 2000 on exchange of old smart phones.and also giving free insurance on mobile for 1 year and free jio voucher.So they are using the principle that people responds incentive.

Big Basket: The Concepts Underneath.

"Big Basket"

Economies of scale:- Big Basket has acquired Delyver in 2015. They also partnered with SnapBizz to manage their inventory for local markets so that their production cost comes down.

Economies of scope:- The company provides an array of products and to store it, the company uses the same inventory.

Product differentiation:- The term online grocery store itself creates a sense of differentiation. There are about 6 million users who prefer to buy fresh groceries and want them to be delivered at their doorstep.

People respond to incentives:- They  offer Flat 20% OFF for first time users using Mastercard (Credit/Debit cards) on all products. The offer is valid on Home & Kitchen Essentials, Food Supplements including Fruits, Vegetables, Groceries, Staples and more.

Price discrimination by self selection:- The company does price discrimination by self selection to attract regular customers. It provides certain offers to those who use their service frequently.

Economic concepts related to McDonald's

Economic concepts related to Mc Donald's

1. Law of demand- demand for fast food items like burgers are always high among customers. When demand of the particular burger increases, McDonald's reduces the price.

2. Economies of scope- when McDonald's increases the production capacity of burgers, the average cost of production increases. Hence it makes a reduction in prices of items.

3. Law of diminishing marginal utilities- mc Donald's offers meals of 700, 500 etc which is a combo of burgers, fries, cold drinks. Since they know that utilities will diminish over time, they offer combo meals.

4.Price discrimination- McDonald's offers different price slabs for different types of customers. There are pocket friendly packs of 100- 150 as well as high price meals ranging around 500-600.

5. Incentives for the customers- McDonald's offers special offers like free softies, french fries and ice creams for customers in order to increase demand. These incentives offered to customers are determinants of demand of products offered by McDonald's.

Economics Principles on Airlines Industry

Economics Principles on Airlines Industry

Oligopoly Market: - Airlines industry comes under Oligopoly market as there is less number of seller or service provider who controls the market. High entry barriers cost prevents other to get into this types of market.

Economies of Scale: - In Airlines industries, fixed cost is very high, to reduce the cost, airlines companies try to get maximum passengers on every flight so that they can maximize the profit.

Customers taste and preferences: - Generally air tickets are available in two class, economic class, and business class. Economics class tickets are for the people who want to spend less and business class is especially for the elite group of people who prefer comfort, so people booked their tickets accordingly to their taste and preference.

Law of Demand: – Demand for the air tickets depends on the availability of other modes of transport and increases in the festival time due to high demand. Increase in demand for tickets results in price hike of air tickets.

People response to incentive: - Nowadays a huge number of people prefer to travel in the air than the railway, and other modes of transportation. As airlines offer a huge discount on their tickets and that enables the customers to get air tickets, at a cheaper price than the railway. So people prefer air tickets over the railway.

Economics in outsourcing companies

The following are the basic concepts applicable for Outsourcing companies

1)    Mobility of Inputs: Since most of outsourcing companies perform the operations either based on the data provided or the type of product (in case of manufacture), the mobility of inputs is possible.

2)    Producer Surplus: Difference between the price the service provider (outsourcing company) is willing to provide the service & the price for which it is actually provided is known as producer’s surplus.

3)    Perfect Competition: As many firms are in this sector, providing homogeneous (i.e., indifferent) services & freedom of entry is unrestricted the market in which these outsourcing companies are operating can be classified under perfect competition.

4)    Internal Economies of scale: By locating their companies in a certain location, they share the customers, manpower, Innovations, Information, etc., for example in the area where companies are hugely located & are looking forward to save their time and resources.

5)    Trade-offs: Due to limited resources of the companies, sometimes they face situations where they get multiple contracts for the same period & they can’t perform the task for both the customers. Hence in such situations the outsourcing company has to do trade-off between the two or more offers available to them.

Bata's Five Concepts of Economics

BATA

1) People respond to incentives: -

          In festival they offer discounts and many other offers to attract customers.

2) People face trade off: -

          There are many footwear brand available in market and many people come to purchase from Bata due to the discounts, and then they tread off other brands.

3) Opportunity Cost: -

          We select among two companies Bata and SreeLeathers but Bata has more cost and Comfortable so we leave ShreeLeather and select Bata, here ShreeLeathers is the Opportunity Cost.

4) Low of Supply: -

          In festival seasons supply is more so that the price is also high during those time.

5) Monopolistic Market: -

          There are many footwear brands but Bata have some unique features so customer choose Bata.

Economics concept in D-Mart

1- Law of demand - when the price of the product is less in D-Mart then the demand of the product will be high in demand and vice versa.

2- Opportunity cost - when a consumer go to D-Mart to buy a chocolate consumer have two options for chocolate one is KitKat and another is perk when a consumer buy KitKat the cost of perk will be opportunity cost for the consumer.

3- Incentives - D Mart offer lot of discount and buy one get one free offer which help D-mart to increase their sale.

4-Economics of scope - In D-Mart there are variety of product which share common Input and diversification lead to cost saving

INDIAN RAILWAYS

Indian Railways is the state-owned railway company of India. Indian Railways had, until very recently, a monopoly on the country’s rail transport. It is one of the largest and busiest rail networks in the world, transporting just over six billion passengers and almost 750 million tonnes of freight annually. IR is the world’s largest commercial or utility employer, with more than 1.6 million employees.

MONOPOLY

Indian Railway is Monopoly in nature. A monopoly is a market in which a single seller sells a product which has no substitute.

UTILITY

Indian Railway fulfills the travelers need. A consumer buys or demands a particular commodity and services he derives some benefit from it. He feels that his given want is satisfied by the availing the service. Utility is the basis of consumer demand. A consumer thinks about his demand for a commodity on the basis of utility derived from the commodity.

ECONOMICS OF SCOPE

Economics of scope occur when products share common inputs and diversification leads to cost savings. Apart from the travelling services they also provide food services as they have separate pantry section in trains.

ECONOMIC CONCEPTS RELATED TO KFC

KFC

UTILITY -:
KFC is related to utility. It has the ability to satisfy the wants of the consumer .

LAW OF DEMAND -:
KFC is related  to law  of demand and income goods and substitution effect . and KFC food now a days are  getting decline in local market  and substitutionability also increased .

SUPPLY OF DEMAND -:
 
KFC is also related to SUPPLY of DEMAND  . The SUPPLY Of KFC is higher than the demand in the market .

PRICE ELASTICITY DEMAND  -:

As we know the price elasticity of DEMAND is a unit free quantity of demanded  to change in its price and also price decreases the total revenue .

MARGINAL UTILITY -:

MARGINAL UTILITY  is the satisfaction  a consumer gains for consuming extra unit of goods and services.  With each extra units of food item consumed in KFC the marginal utility derived by the consumer increases .
 

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.

CONCEPT OF ECONOMY USED IN TITAN COMPANY

TITAN WATCHES

*Titan industry was established in 1994 as a joint venture between TATA group and Tamil Nadu Industrial Development Corporation.

*The five economic concept used by company as follow:-

1.   PERFECT COMPETITION

        The company brought Indian watch market  offering quartz technology with international level styling and quality , while he segmented the youth ,women and men. For youth its launched the FASTRACK, for women its launched RAGA series of watches and for men segment its launched SONATA… acquired   the 60% of watch marketing 1984 for competitors like imported brand TOMMY HILFIGURE and SWISS WATCH.

2.LAW OF DEMAND

       After acquiring the Indian watch market with the domestic sales of 6 million a year where the DEMAND where the demand is the high for the Titan Watches because 190 million watch owing Indian, between them 120 million people are from urban ,90 million from rural, women owns more than men, so titan lesser its price from others  brands like TOMMY HILFIGURE with its pricing starting range was ₹6000 but TITAN WATCHES set his range ₹600 for youth and all the segment. They also provided the international quality SWISS WATCH named XYLS which was affordable than the other international Swiss watches starting the range was around ₹20000.

3.LAW OF SUPPLY:

        From the producer point of view as the slight increase in price and supply in the RAGA and FASTTRACK watches after branding and using the brand ambassador like very famous celebrity of Indian Cricketer M.S DHONI the supply increases in the youth segment and men.

4.ECONOMIC OF SCOPE ;

        Here economic of scale applied because the TITAN COMPANY started the giving service in EYE CARE and started producing the TITAN SPECS i.e TITAN+ EYE CARE  and lenses , and also enters in jewelry market the famous products is TANISHQ , MIA , ZOYA, GOLDPLUS ,FQ TEEN DIAMONDS.

5.ECONOMIC OF SCALE :

     

          Titan watches started producing the TABLE CLOCKS and big decorative watches after acquiring the wrist watch market and also increases the market share of 25% from 2003.

FIVE ECONOMICS CONCEPTS USED BY XIAOMI

UTILITY -
👉 The satisfaction people derived from consumption activities.
👉 Xiaomi mobiles are known for its great specifications with lower price which leads to consumers satisfaction. Here the utility consumers get by using Xiaomi products is very high. That's why Xiaomi has become the most selling mobile mobile brands in Indian market for the last three quarters.

PRODUCTION FUNCTION -
👉 Maximum output Q that a firm can produce for every specified combinations of inputs.
👉 Xiaomi which is a Chinese company initially faced a lot of problems to fulfill the demand of its products in customers because it has no manufacturing plant in India. But now it has nearly six manufacturing bases in india where a lot of skilled labour work to produce Xiaomi products. So right now it can meet the demands of the consumers in india.

PRODUCT DIFFERENTIATION -
👉 Every model of Xiaomi has a three variants like 2gb ram with 32 GB internal storage, 3gb ram with 64 GB internal storage and 4 GB ram with 128 GB internal storage. So product differentiation help customer in choosing for buying purpose which helps Xiaomi in Selling its products.

RELATIONSHIP BETWEEN SUPPLY AND DEMAND -
👉 Xiaomi always uses flash sell method in online store. Where limited number of mobile units sell occurred for a limited time period. In this situation the demand is high but supply is limited so it sells all its products comfortably.

ECONOMICS OF SCALE -
👉 Economics of scale means percentage of change in average cost of production following 1% change in output.
👉 Xiaomi eliminates having to manage surplus raw materials and drastically reduced shipping costs. Secondly it also use inventory holding technique which helped in keeping costs down by lowering inventory holding price. And lastly it gives less emphasis on advertising. So its advertisement cost is very low. In this way Xiaomi lowers its manufacturing cost which leads to increase in productions.

Economics in Financial institutions

In this article, let’s peep into the Banking Sector & see few economic concepts which can be applied to the banks.

1)      Economies of Scale: The more the number of customers who avail the services, the average costs of service are spread across all the customers. Here the change in number of customers results in change in the average costs of service. This is known as Economies of scale.

2)      Economies of Scope: Banks provide insurance policies, mortgaging, locker services along with its main operations in the same premises. Thus getting benefited by the same location.

3)      Monopolistic competition: The nature of services provided by various banks are heterogeneous (i.e., different from each other). As each of the bank has different schemes & services for the customers though the basic services of bank remain same. The freedom of entry in this sector is unrestricted. Therefore, we can classify this to be a monopolistic competition.

4)      Law of demand: In general, we can see this in banks that with the increase in interest rates of loans, the demand for borrowings from banks decreases & vice versa in case of decrease in interest rates.

5)      Opportunity cost: Customers being rational people check their opportunity cost before depositing the money in fixed deposits with other alternatives like stock market/mutual funds, etc., & take decisions using the concept of Opportunity cost.