Law of demand

Law of demand

Demand of any goods and services always show a preference or choice among the options available in the market. A consumer always buys that combination where his satisfaction is higher.

combination of good & services

                                                                                                 In other words, we can say that demand always show a “strong order from consumer side”. We know that when there is “increase in the income, we increase our buying behaviour. Sorely demand decrease of there is a price hike of that particular goods and services”.

Law of Demand

  Assumption for law of demand –

ü  There is no change in the consumer interest

ü  Combination of goods and services always show a consumer preference

ü  Consumer have a strong order for that combination

ü  Consumer choose one combination where other thing remain same

ü  Always prefer to buy more thing then few

ü  Consumer behaviour is given and consistent

ü  Always show a preference in different combination where ‘good x’ is preferred then ‘goods y’ and ‘goods y’ is preferred then ‘goods z’ then naturally ‘good x’ is preferred ‘then z’

ü  Always show a positive correlation between income and goods if income increase then a consumer increase its buy behaviour

   

Income Demand

Change in Income Demand

This theory defines by marshal. Demand is the quantity of any product which a consumer has ability to buy on different price. For demand, it is must that consumer have an interest in that product & also have buying ability or money.

When, we accumulate all the demand of any products in an economy that is total demand of product in economy. When we discuss about demand theory, we assume that all thing remain same in the economy.

Income demand –

In income demand, we analysis the behaviour of income, when other thing remain same in economy, income demand represent the different -2 co-relation of goods and services with income. When there is an increase in the income, a consumer increases their buying behaviour so that they are able to buy more goods & services. So we can say that there is a direct co-relationship between income and demand.

Income Demand

When there is a increase in income from I to NI so then quantity will be shift from Q to Q1 and co-relation shift from A to B.

Decrease in Demand

Decrease in Demand

This theory defines by marshal. Demand is the quantity of any product which a consumer has ability to buy on different price. For demand, it is must that consumer have an interest in that product & also have buying ability or money.

When, we accumulate all the demand of any products in an economy that is total demand of product in economy. When we discuss about demand theory, we assume that all thing remain same in the economy.

Decrease in Demand

When we discuss about demand & it analysis, we assume that other thing will be remain same. In other things, we include like income, interest in particular thing & price of other things. If there is a change in any one of the factor like income, if income decrease then our buying power decrease on same price list and know we are able to buy less products on the previous high price. We call it “shift of demand curve or decrease in demand”.

Decrease in Demand

These show that on same price we increase our demand from Z to Y and quantity also from Q to Q1.

Increase in Demand

Increase in Demand

This theory defines by marshal. Demand is the quantity of any product which a consumer has ability to buy on different price. For demand, it is must that consumer have an interest in that product & also have buying ability or money.

When, we accumulate all the demand of any product I economy that is total demand of product in economy. When we discuss about demand theory, we assume that all thing remain same in the economy.

Increase in Demand

When we discuss about demand & it analysis, we assume that other thing will be remain same. In other things, we include like income, interest in particular thing & price of other things. If there is a change in any one of the factor like income then our buying power increase on same price list and know we are able to buy more products on the previous high price. We call it “shift of demand curve or increase in demand”.

Increase in Demand

These show that on same price we increase our demand from Y to Z and quantity also from Q to Q1.

What you know about Demand meaning of demand demand ka mtlb

What you know about “Demand”

This theory defines by marshal. Demand is the quantity of any product which a consumer has ability to buy on different price. For demand, it is must that consumer have a interest in that product & also have buying ability or money.

When, we accumulate all the demand of any product I economy that is total demand of product in economy. When we discuss about demand theory, we assume that all thing remain same in the economy.

Demand analysis – demand is the equal to the quantity which a consumer wants to but on different price when other thing remains same in the economy. Demand theory or curve show the buying behaviour of consumer on different price. If any things have a high price, few people show interest to buy on that price. But if same product have a less price or cheaper then lot of people show their interest to buy that product.

For example – if any things have a high price like 5 rupee then we buy 10 units,

4 rupee we buy 20 units,

3 rupee we buy 30 units,

2 rupee we buy 45 units,

1 rupee we buy 65 units

Demand with different price

These things show that on high price, we have low demand and on cheaper or low price, we have more or lot of demand.   


Increase in Demand 

Decrease in Demand

Income Demand

                                   

What you know about utility utility kya he

What you know about utility

Utility – a new classical theory which discuss about our satisfactions which we receive from every single units of consumption. In it, we count our satisfaction from consumption by taking some things in a series. In starting, we get more satisfaction but every new consumption of same units, it decreases our satisfaction level with every new consumption with step by step. In it, we assume that we are able to count our satisfaction in a unit and we call it “util”.

knowledge about Utility

Some assumption for theory –

ü  We are able to count our satisfaction level with every single unit of same consumptions

ü  Money is the main parameter for this

ü  Marginal utility of money remain unchanged or same

ü  We know the quality or availability of  different product

ü  We know the price of different product

ü   There is no alternative available

        

Total utility – when consumption the same thing in a series, he get utility from that but our utility of consumption is decreasing with every new consumption of the same unit. If we add all the utility of same things then we get the “total utility”. For example –

1^st banana give us a utility of 10 units,

2^nd banana give 7.5 units,

3^rd banana give 5 units,

4^th banana give 2.5 units and if we add all these utilities of banana then we get the total utility of banana which we receive.

Marginal utility – when we start the consumption of any goods and services, 1^st units give us a high level of satisfaction, 2^nd give us a less satisfaction then 1^st, 3^rd give us a less satisfaction then 2^nd. So every new units of consumption have less utility then it’s previous. Other way, we can say that marginal utility is decreasing with every new unit. For example –

1^st units have 10 & 2^nd units have 7.5 so total marginal utility is (10+7.5=17.5).

2^nd units 7.5 & 3^rd units have 5 so total marginal utility is (7.5+5=12.5).

3^rd units have 5 & 4^th have 2.5 so total marginal utility is (5+2.5=7.5). 



Demand - meaning & knowledge

What you about Price Mechanism Price mechanism kya he

What you about Price Mechanism

Price mechanism is a totally free financial system in which all its components or elements are free to take any financial decision like firm, consumers and other production factors. There are lots of authorities in the market. Individual & collective decision should be taken according to the market. These free mechanism help to develop a policy where all the price & trade fixed by their individual behaviour.

meaning of price mechanism

The role of price mechanism in economic

ü  What to produce and what quantity – this is the first step for price mechanism to determine – what to produce and what is the quantity of a particular things, we know that our available resources are rare so an optimum utilization will be there, when we know – what to produce and in what quantity then we draw a “production possibility curve” for economy. It also includes the quantity of capital & consumers goods and services. If we increase the supply of any product, we get fewer amounts due to their demand. For having less supply of any product, we receive a good price. So demand and supply fix a fare price mechanism for every-thing.

ü   How to produce – there are lot of production methods in economy. Every producer pay interest, salary, rent or interest as expenditure and also profit for his own. if we add all these things then we get the total cost of the production. In economy, if labor is available on a low cost then we use this method in productions. But if we have capital goods on a cheaper cost then we prefer this method. What types of method we adopt, it totally depends on the cost of the method.

ü  Income distribution – this is also a important part of price mechanism. In a free economy, income and goods distribution are inter-related. One side – household provides their services & receives wages, rent, income or interest and after that they buy goods and services. On the other hand, a firm produces goods & services by the help of house-hold or production factor. Consumers or house-hold by these goods & services and pay to firm for these things. So money will be moving from one hand to another and also making an equal distribution.

ü  Free mechanism help to establish a standard for work by using all rare resources.

ü  Price mechanism also motivate for economy growth. Price mechanism also motivate for improvement, innovations and R&D etc.  

Macro Economics and its Limitations macro economics ki badha

Macro Economics and its Limitations

Macro Economics is the study of collective data of our economics. In macro economics, we analysis data as a whole like – total employment, national income, GDP, total consumption, total demand and supply etc. macro economic analysis economics as a units, also analysis the inter relationship of different sub-units in a economics.

In macro economics, we not discuss on a single units but treats whole economic as a single units. It draws a big picture of the economics and also draw inter relationship of different sub-units. It covers all the issue or problems of an economy and also tries to find out a correlation with others.    

knowledge about macro economics

Limitations of a Macro Economics –

ü  Behaviour issue – macro economics is analysis economics as a whole but this thing is not applicable for all the times. Some things is good for an individual market but not for all the market. For example – some-one is drawing amount from bank then there is no issue but if all persons are doing the same activity then it is a big issue for bank.

ü  Macro-economic, we assume the entire individual group as a same units or sub-units. For example like total income or average income of a particular group or units.

ü  In macro economics, some time aggregate variables are not important like if there is a increase in national income so it is not possible that there is a increase in all personal income.

ü  Create conflicts – if we form any policy on the behalf of macro-economic but that is not suitable for micro economics or individual units.  

What do you mean by Macro Economics

What do you mean by Macro Economics?

Macro Economics is the study of collective data of our economics. In macro economics, we analysis data as a whole like – total employment, national income, GDP, total consumption, total demand and supply etc. macro economic analysis economics as a units, also analysis the inter relationship of different sub-units in a economics.

In macro economics, we not discuss on a single units but treats whole economic as a single units. It draws a big picture of the economics and also draw inter relationship of different sub-units. It covers all the issue or problems of an economy and also tries to find out a correlation with others. 

A study about Macro Economics

Importance of Macro Economics

Ø  In macro economics, we understand the macro variables so it help us to understand the economic in a broad way like total employment, total income, GDP, total demand & supply and so on.

Ø  Micro economic work as a whole. These things help us to form the policy for different sub-units or area like total income in different sector, monetary policy, business cycles and so on.

Ø  Micro economic help us to understand the individual behaviour also, if we add all individual demand it become total demand of an economic and this help us to form a policies for whole.

Micro Economics – Importance and Limitation

Micro Economics – Importance and Limitation

Micro – a word which is firstly used by Ragner Frisch. In micro economics, we include the economic activity at micro level or unit level or individual level. Micro economic cover all its financials activities at lower levels. It also analysis them & find out some meaning-full outcomes. In other words, we can say that it is a study about “special firm, special family, individual incomes, prices or special goods and services”.

Micro Economics

ü Micro economics help us to understand the micro level basic activity of an economic. It provide a base for economic because there is no authority to regulate the economy. What to produce, how to produce, for whom to produce or how to distribute, these basic questions solved by the consumer and firm at their own level.

ü Many economic policies formed by different – 2 tools which is provided by the micro economics. Government provide lots of facilities like post, train, water etc. The cost is fixed at break even points for these services.

ü  Micro is the basic economics. So it helps us to allotment or relocation of different resources. All our resources are rare and we must utilize them fully.

ü  It helps us to understand the current consumer market and also help to understand the demand and supply factor.

ü  Micro level is working on ground level so we are able to understand the taxation issue also and their effect.

ü  It also help us to understand the international trade like defecates, demands and supply of foreign currency.

ü  With micro economic, we make & use such a model which helps us for real economic phenomena.

Limitations –

ü  It assume that economic have a full employment

ü  It adopt a laissez faire policy

ü  It not provide any support for whole economic picture

What you know about micro economics

What you know about micro economics

Micro – a word which is firstly used by Ragner Frisch. In micro economics, we include the economic activity at micro level or unit level or individual level. Micro economic cover all its financials activities at lower levels. It also analysis them & find out some meaning-full outcomes. In other words, we can say that it is a study about “special firm, special family, individual incomes, prices or special goods and services”.

What you know about micro economics

It is a wide area in which we analysis the use of resources for special goods and services. Also discuss about the distribution system and efficiency in this process. In other words, it totally study the inter relationship between a consumer and firm for goods and services. It is a consumer market; also price will be influence by other available goods and services. Consumers have all production factors or resources and they receive income, interest or rent against these services.

Another parts is firm, it produce all the consumer goods and services. They use different – 2 resources in production and pay for these as a rent, salary, income etc. Profit also adds in the total- cost of production. In this way, a firm earns profit in market. In the end, we can say that every one inter related with each other at micro level. At the same time, one party is earning & other party is paying the amount.  

Scientific theory – use and limitation

Scientific theory – use and limitation

In economic, there are lots of issues or problems. Every theory will be developed for some critical issue or problems and try to bring some outcomes from them. May be, these outcomes are for single or multiple use. These theories predict the future events or solutions for any problems. But every theory has some use and also has some limitations.

Scientific theory – use and limitation

Use of theories –

ü  These theories provides economic tools to short out the particular problems or multiple problems

ü  These theories are able to explain every economic factor or issue or phenomena. Always choose the relevant factor for this.

ü  These theories provide us a base on which predicts the relevant economic events. It also helps to find out the economic issue or problems in current time frame.

ü  These theories also help us to judge the economic performance and also find out the faulty factor.

ü  These theories also help us to understand the economy and its relations with different – 2 factor or issue or problems. It also helps us to form future policies and coordination between different policies.

Limitation of theories –

ü  Economy do not have accurate data to make a better theory or policy

ü  Nobody or any theory will not be able to predict to future event or issue accurately

ü   Human being live in society so that all its behaviour is not rational

ü  Every theory will be developed on the basic of assumptions but these assumptions is not real

ü  These theories did not applicable in all situations. Every theory will be formed for different issue or problems because situations will not be remain same for whole times. 

what you know about a scientific theory

Scientific theory of economic

Scientific theory of economic

Economic, we define it in two ways - one is scientific and another is an art. They have their own opinions for this to define. In economic, there are lots of issues or problems. These theories give us some steps to tackle these problems and find some outcomes from them. A scientific theory has tested again - 2 for a better outcomes by a expert observation. 

Selections of problems – this is the first steps of any theory. In it, we define any issue or problem very clear. There are any types of issue or problems like unemployment, poverty, inflation's or any problems which have a limited area like any policy related with industry or particular sectors.

Data collections – in it, we collect all the information related with a particular problem. Some time, it’s become very easy but some time it’s become very tough. Accumulated data is very clear so that it become easy to make an out-come from them.

Classification of data – after accumulation, we divide them into different parts according to their use and different – 2 situations. We also divide them by their similarity and times gap. We also differentiates or classification them according to their demand.  

Make or Formation the Hypothesis – in this step, we form the hypothesis according to the outcomes of the collected data. It is totally depend on the examiner previous formation or experience.

Examine the hypothesis – in this step, we examine the formation of hypothesis and see that it cover all over expectation or not. It’s defines the mention problem or not. If any hypothesis is ready to give meaning full outcomes for future, it is pass the test.

Finally, we verify the hypothesis for final use in future.

Main issue or central problem of an economic

Main issue or central problem of an economic

Every economy have lot of issue or problem like what to produce, how to produce, for whom to produce, unemployment, capital goods, consumer goods and so on. Every economic have a limited or rare resources to use. So every economy wants to optimum utilization of available rare resources. Also when there is a multiple use of a single resource.

central problem of an economic

Main issue or central problem of an economy

What to produce and how much – every human being have a different demand for goods and services. Overall in economic have a multiple demand so it is the responsibility of the economic to analysis these different products demand and produce that much quantity which is sufficient or equal to demand.

How to produce – every economic have a multiple demand for different product and there are lot of combination and method for production. So every economic choose one method for production which is cost effective and produce more goods and services to meet the demand.

For whom to produce – in our society, there are lot of difference in our income level. Some-one is earning more than a lot but other one is earning below 10K. So it creates a difference in their buying behaviour for goods and services. Another is consumer goods and capital goods or durable goods. So economic have to decide those things. Governments also play an important role by tax collection, social security and try to cover the gap between high to low level income.

Efficiency in utilizing the resources – it is the responsibility of the society or economic to find out that there are full utilization of resources or less then the capacity. There are rare resources in every economic so that is our duty to use them full. Say no to misuse or wrong distribution.

Is the economy growing – this is the final step of the process that a economy is growing or not. If we are growing so what is the rate and if we are not growing so what is the reason for this. What is the ratio in production of consumer goods and capital goods? Find out the new innovation for economy and their use

What you mean by Economics

What you mean by Economics

A basic question which everybody want to ask that what do you mean by economics. A economics cover a wide range of activity like – what to produce, how to produce and for which we produce.

In economics, some-one call it a science or other one is an art and also they have their own assumption for this. As much as, we understand it, its area becomes wide. On other words, we call it a social science also because it always try for development and satiability and also maintain them by using rare resources because in economics, there is a demand & supply but we have a limited stock for rare resources so to achieve the target, we must have an optimum utilization of resources.

What you mean by Economics

In any economics, we have three different parts - household, firm and government. In the starting of economics, we have village types of economics where we exchange our goods and services with each others at village level. So there is no need for market. Then after, we start an economic in which one side for household and another is firm. A household have land, labor, and capital and so on. They give their services and earn. On other hand, we have firm which produce the goods and services. Both parties make a settlement or trade for goods and services against some amount. After that government involve in it and provide their services and also collect tax from both the party and make such a platform where all these things take places.    

An Economics – Growth and development

An economics – Growth and development

In current time frame, every-body is talking about economics and its growth. In economics, we include every sell and purchase of goods and services against a fix prices because every goods and services have a prices or manufacturing costs. So, if we accumulate all these buying and selling, it becomes an economic of any country. People also exchange their goods and services with each others at village level in previous time.

An Economics – Growth and development

Economics growth – It is a process, in which we bring changes or upgrade the life of poor and uneducated people in a long run and also have short term goal with micro level. These things related with employment, increment in income and also bring changes in their living standard.

This is a long process, in which an economic has a continuous improvement in their GDP (Gross Domestic Product). There is also has a difference in GDP and GNP in which we take lots of steps to improve the quality of life.

Mostly, we find a close connection of growth with personal income. Some time, we also include consumer index. In short, we can say that there are lots of factors which we include in economics growth like jobs, income, livings standard and so on.