Management Education

Last time, we have discussed about the concept of demand. Today we will show that there is an inverse relationship between demand and quantity demanded. There are the following reasons due to fall in the demand curve (refer below figure):

1. Law of diminishing marginal utility: it means that if we go on consuming more and more units of a commodity the utility derived from each additional unit goes on diminishing. So for every additional unit the consumer is willing to spend only at less price.

2. Income effect: It means the effect on the quantity demanded when the real income of the consumer changes due to change in the price of the commodity. For example the consumer has rs. 50 and each apple cost 10 Rs. And if he buys 5 apples then he will have to pay Rs. 50. But if the price of apples falls from Rs. 10 to Rs. 8 then he will have to spend Rs. 40. This means his real income will increase and he will be able to buy anything else with the saved Rs. 10.

Continue reading “Why does demand curve slopes downward?”

Last time we discussed the 8 factors affecting demand. Let us today discuss the Concept and types of Demand schedule. 

Demand schedule is the tabular presentation showing the relation between quantity demanded and price of the commodity.

It is of two types:

• Individual demand schedule
• Market demand schedule
• Let us discuss them:

Continue reading “Concept and 2 types of Demand schedule”

Last time I have discussed about the concept and nature of utility. Today I will discuss about the Types OF UTILITY APPROACH.

Utility approach is basically of 2 following types: Continue reading “TYPES OF UTILITY APPROACH”

CONCEPT OF UTILITY

Dear friends let us first discuss the concept or meaning of utility.

Utility may be defined as the want satisfying power of a good. A commodity is demanded because of the want satisfying power of a commodity as long as good satisfy human want they set to possess. Continue reading “Concept and nature of utility”

Today we will discuss the concept of opportunity cost with the help of examples.

The concept of opportunity cost was developed by Austrian school of economics. Later on it was popularized by American economist Devenport. Continue reading “Concept of Opportunity cost”

Last time we have discussed the types of economics. Today we will discuss the difference between positive economics and normative economics. Let us discuss it:

POSITIVE ECONOMICS:  

It deals with the economic issues of past, present and future and tells about what was, what is, what would be. Positive economics is basically based on the facts and figures which can be verifiable.

For example India is the second largest populated country; it is a positive statement nobody can deny it as it is based on the facts and figures.

NORMATIVE ECONOMICS:

It deals with the opinions of economists related to the economic issues and tells about what ought to be. Normative economics is basically based on the opinions which can’t be verifiable. For example there should be the development industries in underdeveloped countries to make them developing countries. So this statement is just an opinion and it is just a judgment.

I hope you have understood the difference between positive economics and normative economics.

The term economics is very common and Economics can be broadly classified into two parts:

MICRO ECONOMICS: in microeconomics we study “I” which means individual. It means in micro economics we study everything from the point of view of individual. The word micro itself means small. In micro economics we study individual firm, individual producer, individual consumer etc. Continue reading “Types of Economics”

Economics is the study of human activities which they perform with their limited resources to satisfy their unlimited wants. Continue reading “Concept of Economics and Economic Problem”