Microeconomics

1. Introduction about micro: Hello students. First of all, I would like to welcome to all of you into the course of microeconomics. And I would like to introduce myself. My name is Nancy money, and I have done my PhD economics from one of the finest university in Islamabad, Pakistan. I am in the field of teaching from last 14 years. Currently, I am working as a permanent fix team member at zero-based, which is one of the finest university in Islamabad, Pakistan. In the field of teaching. I have done as a lecturer at multiple universities and different colleges level. And I also experienced of the research a feature with one of the leading NGO in Pakistan, which is planned Pakistan. So let's discuss about the course. Course outline microeconomics. First of all, we will discuss that what is the difference between micro and macroeconomics? That what are the topics which are being discussed in microeconomics and what are the topics which are being discussed in macroeconomics. Then we will discuss about what our economic models, what are economic loss, and how to make economic models. What are the different types of variable, exogenous variable and endogenous variable. We will take an example from our daily life and we will make some economic model and try to understand that what kind of relationship exists between the variables. Then we will discuss about demand and supply analysis. What is mean by demand and desire locked him and love supply. And what are the factors that shift the demand and supply? And then we will also discuss about market equilibrium. And after that, we will discuss about consumer behavior. We will discuss about utility in the topic of consumer behavior. And then we will discuss about indifference curve and different methods to measure utility. Then we will discuss about consumer equilibrium in this topic. And moving forward, we discuss about cost and revenue analysis. The most hot topic in economics, because every term is objective to maximize its profit and to minimize its cost. So we will see that how a firm can maximize his profit and minimize is costed. Then we discussed about market structures and whatever market. And in market structure we will discuss about perfect competition. And then we will discuss about monopoly in our Microeconomics course. 2. Difference between economic laws and other sciences laws: Hello everyone, welcome to our today lecture. In our today lecture, we are going to discuss that what is meant by law and how economic laws are different from other sciences. Laws, basically law means the simplest definition for the law is when we are doing an experiment. After every time we are getting the same result, then it will become law. It is the simplest definition that when we are repeating an experiment and we are getting the same result, that it will become law. Similarly, there are certain laws which we are going to study in microeconomics or in economics. First of all, we have to clear about what is meant by law and how economic laws are different from other sciences. Laws like the laws of physics or chemistry or other sciences, laws, basically economic laws are conditional. Economic laws are conditional, and other sciences laws are not conditional. It is the major difference between economic laws and the other sciences, Laws. What is meant by conditional conditional mean that before stating any law in economics, we have to make certain types of assumption that are so called paribus. Without making any assumption, without implementing certain conditions, we cannot state any law in economics before, uh, stating a theory of any economic loss. We have to take certain type of assumption. We have to say that keeping all other thing constant, we simply say that conditional mean keeping all other thing constant, all other things constant. In economics, we have to take certain things constant. Then we can state any law in economics. But in other science laws, they are not conditional. Like the love gravity. Basically what is meant by love gravity. Every object when we drop from a fall down Earth will attract every object. Then definitely it goes down. If we're doing this experiment number of times, then we will get the same result. Whenever we drop the pen, it will fall down to the Earth. So this will become law. And there is no assumption, or there are no conditions attached to it. But in case of economic like, the famous law of economics is law, demand, which we study in microeconomics, Law, demand states that when price goes higher, demand will fall. Before stating this law, we have to, uh, make certain kind of assumptions then will become true. Otherwise this law will not hold. This is the major difference between economic laws and other silas that economic laws are conditional and other laws are not conditional. 3. What is economics: Hello, Welcome to our first lecture. Our first lecture is about introduction to economics. In this lecture, we will discuss that, what is economics, what is microeconomics? What is the difference between microeconomics and macroeconomics? Then we will discuss that what is law? What is the difference between economic loss, social laws? And then we will discuss that. What is the difference between demand and there? So let's start our first lecture. Starting from there. What is economics? Basically, there are different definition written in different books about economics. But one of the most general definition for economics is that it is the study of human behavior. That we studied that how our household or individual changes behavior according to the market scenario, quite example. Well then we are going to the market. First of all, when we want to buy. I think the first question which arises in our mind that we asked the price of that good, which we are willing to buy. After knowing the price where you decide that how much we are going to. But cheers of that good. If price goes higher, we will demand or we will buy less of that good. So this is our behavior, which we changes according to the price. So that is economics. Economics is the study of human behavior. Similarly, there are different definitions about economics. Like Adam Smith said that who is the father of economics will say that economics is the study of economics. We started that how to produce wealth, how to consume wealth, how to exchange well, and how to transfer well. Basically this definition is totally discussed by Adam Smith. And similarly, there are other economist who gave different definitions or cardio into deer on view. But the most common definition of economics is that it is the study of human behavior in this subject of social sciences, economics, we study that what is human behavior according to the market scenarios. We can say that how an individual maximize it has utility with limited amount of budget. The next is that what is microeconomics as our course is based on microeconomics. So there are two major branches of economics. One is called microeconomics, and the other one is called macroeconomics. Micro mean when we are steady on where we are studying on small-scale level are when we are discussing about and individually. So that means we are discussing about microeconomics and macroeconomics. Macroeconomics mean when we are studying about on large scale level like country income contain Ghana's GDP. It may be GMP, it may be NNP. We will discuss about these GDP, GNP, and NP in our later lectures. But in this last, at this particular time, we are interested to know that what is microeconomics and macroeconomics? Microeconomics mean when we are studying on smile scale level, our way when we are discussing about an individual or one household income. That means that we are discussing about microeconomics. And macroeconomics mean when we are studying on Alaska level. For example, when we are discussing about the country income, which is GDP, this is the major difference between microeconomics and macro economics. Our next topic is dead. What is law? Basically? When we repeat an experiment number of times and every time we are obtaining the same result. So dad, experiment become law. There are certain difference between economic loss and other sciences. Laws. In economics. Our laws, our conditional, but other sciences, law, it's not conditional. For example, here I have written other sentences. Love is Islam, which is gravity. Gravity law states that when any individual hold I think, in his hand and when he dropped that thing. So bye. A force of attraction, Debye force of gravity attracts everything to itself. So whenever any person drop good from his hand. So every time we will get the same result that art will attract their good to itself. So everything will fall down when we drop it from a particular point. So when we, when we repeat this experiment number of time and we were getting the same at same result. So dad will become now that is called gravity lab. They attract everything too itself that become gravity law. There is no condition in that law. Whenever every individual perform this experiment, we will getting the same. And there are no conditions in this lab. But in economics, before making any law, we have to assume, we have to assume certain kind of condition. So we have to follow certain kind of assumptions without giving any assumptions we cannot predict over, can add, make any theory or law and economics. Because as the beginning of the lecture, I said that economics is the study of human behavior. That in economics we study that what is the human behavior? Human behavior is vary from person to person. Like here in economic loss, I put the example of laugh demand. So what is law of demand? Law of demand states that there is a negative relationship between price and demand. Wherever price goes higher than demand for that product will be low, and vice versa, when price goes lower than demand for that product will goes higher. This is the law of demand, but, but we have to make certain kind of assumption. And we simply call it as ceteris paribus. Ceteris paribus mean that other thing remaining constant, Legionella price increases, demand decreases. So what is mean by ceteris paribus and what is mean by other thing that many constant. It means that there is no change in income. There is no change in fashion. There is no change in. So if all other things remaining constant, and when price increases, then there will be a decrease in demand. So this is the difference between economic loss and other sciences. Last, economic laws are conditional, but other sentencing laws are not conditioner. So in economics, whenever we want to present any law or any acuity, we have to make certain assumptions. Without making any assumption, we cannot detect any theory in economics. I hope that you are clear about what are the difference between economic laws and social sciences lungs. So let's move to our next topic, which is the basic definition for demand and desire. Most of the people think that necessity is his or her demands, but they are run. We cannot say that necessity is our demand. To see anything you are demand. You must have to fulfill these two condition. What are these two condition? First one is willingness and the second one is purchasing power or ability or the money. What is mean by a willingness that you are willing to buy any product? And what is mean by purchasing power. You have the money, you have the price of that product. When you are going to the market. And you see, for example, marker there and you want to buy that market. So you want to buy that market, that is your willingness and the price of that monitor is $1. And if you don't have $1 in your pocket, you cannot say that that is your demand until or unless you have the purchasing power, you have the ability, or you have the price of that thing. So to say anything you are demand, you must have to fulfill these two condition. What is willingness? And the other one is purchasing power. If you want to buy a market that is only or five rupees and you don't have $1 in your pocket, then you cannot say that that particular market is huge demand because you are not fulfilling this second condition. So if you are only willing to buy a thing, that is your desire. So this is the difference between demand and desire. To see any product, your demand, you must have to fulfill these two criteria. One is willingness, and the second one is purchasing power. If anyone of any one of these condition is missing, then that is your only desert. If you want to buy a BMW and you have the price of that BMW and your bucket, then you can see that that is your demand. But if you burn, if you want to buy a marker of foreign dollar and you don't have the money, or you don't have the purchasing power, or you don't have the ability to buy that market. That is, there's price is only $1, then you cannot say that that particular Baraka is due tomorrow. So this is the difference between demand and desire. This is on for our first lecture. We will continue from here and we will discuss that what is the difference between demand and quantity demand, demand schedule, demand curve, and we will take some values. We will discuss all these things in our climate lecture. Thank you. Take care. 4. Economic models: Hello, Welcome to our next lecture. In previous lecture, we have discussed what is economics, what is microeconomics? What is the difference between microeconomics and macroeconomics? Then we discussed about that. What is demand, what is desire? And in our today lecture, we are going to discuss about what is economic model. Basically, model is the abstract form of materiality. We may model to make things simplify. We may complex complexity into very simple things. Like kid 88 that add a comment model is a simplified version of reality that allow us to observe and let's turn and make prediction about economic behavior. The purpose of model is to take a complexity adverse situation and return to the essentials. What does it states? It steers that my, they'll make us easier to understand what is happening in the real world. Okay? So when we said that when price increases, demand decreases, that is laughing man. But price is not the only thing which is affecting demand. There are a lot of other variables which are affecting our demand decision. But for simplicity, we take all other variable as caution and we check one-to-one relationship between price and demand. So in any model of economics, did always exist two types of variables. One is called exogenous variable and the other alcohol and arginine is very, but we also called exogenous variable as independent variable and endogenous variable as dependent variable. Exogenous are the independent variables, are those variables which are not depending on any adults. First-gen occur in independent variable. Then they will affect all other variable pricing in D, Marta. Let's say take a example of quantity demanded and price. So here is a model. Quantity. Demand is a function of price. It is a, it is the one of the most simplest model in the economics. In this model we have two variable. One is exogenous and the other one is endogenous. In this model, price is our exogenous variable. And quantity demand is our endogenous variable. And economics. By rule, we write exogenous variable on the right-hand side of the equation. And we write endogenous variable on the left-hand side of the equation. So this is the rule of economics that how we write economic burden, would I dependent variable on the left side of the equation, and we write independent variable on the right side of the equation. So here, QD is showing quantity demand, P is showing price level. Qd is endogenous variable or the dependent variable. P is the exogenous variable or the independent variable. So in this model we have only two variables. One is quantity demand, and the other one is price. We are seeing that there is a relationship between quantity demanded and price. Whenever price increases, we will demand less for that product. But in real world, our demand decision is not depending only on price. There are a lot of other factors which are affecting our demand. For example, our income, taste, weather, condition, fashion. So these are all things are affecting demand as well. But first, simplicity of the model, like in, as I discussed in the previous slide, that five simplicity, we take all the thing as constant. We do not want to discuss the complex situation aftermarket, we make things simpler. So that's why we take all other variable or constant, like we also can write here, fashion, taste, whether they are affecting our demand whenever our income increases, we are more interested or we are more willing to buy more number of codes. But for simplicity of the model, we take that all other things remaining constant. There, a van den price increases, our demand increases. There is a negative relationship between quantity demanded and price. Similarly, when we talk about supply or fannie God, so being a producer, we are looking at price. If price increases, then in order to earn more profit, we will supply more of debt good. So our supply decision is depending on price, first-gen, our current price. Then by looking at price, we decide that how much we are going to supply off dead good into the market. So when we are talking about demand, we are discussing the household. And when we are talking about supply, we are discussing the supplier side or the producer side of the economy. So I hope that in this lecture, you will definitely learn that what is the difference between exogenous variable and endogenous variable? And what is economic model? So in our next lecture, we will discuss that. What is quantity demand? Why does demand schedule demand curve and what are the assumption and what the law of demand. So if you have any question you can ask me, best of luck, Take care. 5. Differenece beween demand and desire: Hello, welcome to our today lecture. In our today lecture, we are going to discuss what is the difference between demand and desire. Most of the time, people are thinking that demand and desire, both are the same thing. But there is a major difference between demand and desire. Basically, demand means when you are willing to buy a product and you have the power to buy that product, you are willing, you have the power to buy that product. Then it is called your demand. In order to say anything you demand, you must have to fulfill these two conditions. The first one is willingness and the second one is purchasing power ability, or the money or the price of that commodity. Desire mean only willingness. You are willing to buy a product, but you have the price of that product, then this will your desire. For example, if you want to buy bread. Okay, the price of that bread is 20 rupees. If you don't have 20 rupees in your pocket, then this bread will be called your desire. On the other hand, if you want to buy BMW car, and for example, the price of that BMW car is 500 million, okay, 500 million is the price of that car and you have 500 million in your pocket, then this will be your demand. So if you have if you are willing to buy a product and you have the purchasing power to buy that thing, then this thing will be Calvert Demand. On the other hand, if you are only willing to buy a product but you have not the purchasing power, then this act will be called as your desire. 6. Law of demand: Hello and welcome to our today lecture. In our today lecture we are going to discuss one of the basic first laugh, the economics that is law of demand. So let's start with the definition of the lab tomorrow. But he's loved tomatoes. I love tomatoes stayed that holding everything else constant. When the price of a product falls, the quantity demand will increases. And when the price of product rises, the quantity demanded decreases. In simplify, we can say that there is a negative relationship between and quantity demand. Whenever price of any product increases, its demand will decreases and vice versa. We can say that when price decreases, demand increases. So there is inverse relationship between quantity, demand and price level. And we can write this relationship in a mathematical equation like this, Q dy equals to a minus bP. We, QD is true in quantity demand is the intercept, b is the slope, and P is the price level. Here, p is minus is showing that negative change and there is a negative relationship between quantity demanded and price. So that's why here is a negative sign. It is indicating that when price increases, demand will go down and when price decreases, demand will go up. And it's doing intercept. The average value of demand when price is 0. So as we discussed in earlier classes, that before making any law of economics, you must have to take certain kind of assumption. Without taking assumptions you can predict or you cannot make any law of economics. So what does it mean by holding everything else constant? It means that ceteris paribus. Ceteris paribus mean that other thing remaining constant. And then if there is an increase in price level, decreases. So what is mean by that in a minute costume? As we know that our demand decision is not only depending on the price of that good, our demand is also depending on income. Whether fashion, taste, multiple other things which are affecting our demand. But for the simplicity of the model, we're considering that there is no gene, all other variables which are affecting demand. At the moment, we are only considering the two variables, which is quantity, demand, and other venues place. From these two variables, we can easily identify that which one is dependent and which one is independent, as we discussed in our earlier classes, that in economics model data to variable. One is called dependent variable and the other one is called independent variable. Dependent variable is there, which is not, which we cannot change its self value. And the independent variable is one who changes fast and it will affect other variable. In this case, quantity demand is depending on price level. As we discussed in our earlier classes, that we always write independent variable on the right side of the equation and dependent variable on the left side application. We also call these variable is exogenous and dependent as endogenous variable. So when we are going to market, first of all, we asked the price down the shopkeeper. And after knowing this design, then we will decide, after knowing the price, then we will decide that how much unit of that particular good we are going to buy. So if price is lower, we will buy more. So in this way, we see that our demand decision is depending on price. So price independent variable and demand is dependent variable. So moving on, we will discuss that what is mean by quantity demand? Quantity demand means that the amount of a particular good that a consumer is willing and able to buy at a given price. As we discussed earlier, that file, seeding anything demand, you must have to fulfill two criterias. That demand is equals to willingness plus purchasing power of the ability. You must have to fulfill both of these two criterias in order to say anything your demand. What is demand schedule? When we draw a table of price and quantity, we have different lab prices and we have different. Quantity. And when we plot these prices against these quantities and other half dead particular glove, we'll show that these values are showing us a demand schedule. When we plot these values on a curve, on a graph, that graph will show to market. So the market demand is when we add up all of the demand of the economy. And we can see that when we add the demand of all the individual which are present in the economy, then we can say that the sum of the demand of all the individual is car market demand. So next topic is what is mean by extension and contraction of demand? Extension of demands mean that when the price decreases and demand increases, it is called extension of tomorrow and there is movement along the curve. There are two particular cases or Anika. One is cost shifting and the other one is contraction, story, extension and contraction. And we can say that shifting, movement along data. So by means of extension or contraction, then there'll be, be more thicker. And when we see a rise and fall, then they will be shifting of that car. Extension mean when price decreases, demand increases, that is called extension of demand. And what is mean by contraction of demand when price increases demand deposit that is called contraction of demand. The next is rise and fall off. Demand arise mean when there is no change in price and demand increases. It is called rise after one, or when price increases and demand is fixed, it is also called price of tomorrow and it will be shifting. In our earlier lecture, we discussed that there is a negative relationship between price and demand. So we say, also said that there are some other variables which are being kept constant or ceteris paribus. So if any change occur in those variable, which we have kept constant like income or taste, whether our fashion when any change occurring dead variable are those variables they really know affect our demand decision. So in that case, there will be rise and fall of demand if demand, if price changes but no chin on demand if price changes and no chin and among them, there will be two cases. One is called Dicer to remind the other one is falling tomorrow when there is no change in price and demand increases. So that is called Reiser tomorrow. And when there's no change in price and demand decreases, then that is called fall off tomorrow. So no, let's make a graph of the law of demand or the demand curve. Here we have different values. As you can see, that price is decreasing from 700 to six hundred, six hundred to 400, then 300. And the trend in prices decreasing. So according to love, demand when price decreases, demand in Greece. So you can see that in this table are in this demand schedule when price is decreasing, demand is increasing. So we know simply plot these values on a graph and we will make the demand. On our y-axis, we have taken the price level and our x-axis, we have taken the quantity. After that, we simply write the values of quantity demanded, which are 3456734567. And similarly on y-axis we have written the various off price is three hundred, four hundred and six and then seven. And after plotting all these values, we just draw a point with the combination of each price against it, E, value when the price is 100. Quantities three, here, 703, we plot a simple dot here when price is 600, quantitative minus four. So 604 would plot a simple point here and so on. After plotting all these values here, we just join these points and we have a demand curve, which is a negative slope. Why it is negative slope? Because there is a negative relationship between price and quantity demanded. So there is a negative relationship between quantity demand and that demand curve is negatively sloped. Here is one of the most important thing that way we are cutting it as a demand that. So keep in mind that in economics, we always named because of the President of the dependent variable. In this model, we have two variables. One is price and the other one is demand. Prices independent variable, and the demand is dependent variable. So that's why we are calling it as demand. So keeping in mind that in economics we always name the curve after the dependent variable. In this model, demand is dependent variable, so that's why we call it as demand god. So next, moving on. We will discuss that what is mean by moving? What is mean by shifting of the curve? By movement mean that when there is a chain in those variables, which are mentioned on the axes, like here. On this axis we have mentioned price, and on this axis we have mentioned the quantity demanded. So whenever change occur in those variable price or quantity of wine, it, they will bring movement along the curve. What is mean by a movement? By a mean of moment? We say that we are moving from point this to this, from this point to this point. And do this one. We cannot make any separate graph. We have only when demand curve and we are changing our position from point a to B, B to C, C to D and D to E and so on. So that is called movement. And when movement occur, movement occur when data changes those variables which are mentioned on the axis. And what is mean by shifting? Shifting mean that when there is change in those variables which are not mentioned on the excess, alike in this, we have only two variables, price and quantity to one. So if any change occur in those variables which are not mentioned on the axis, like income, session taste better population and so on. If any change occur in those variable, they will shift our demand curve. And we have made, we have to make a new demand curve here. It is depending that whether the gene in those variable is increasing our demand or decreasing over tomorrow. If any change in those variable will increase their demand than our demand curve will shift outward. And if any change in those variable will decrease, demand and demand curve will shift. And why it is depending on the situation. So the point is that what is mean by movement and shifting? By movement mean we are, we are having only one demand that we are changing our position from point a to B, B to C. And shifting means that we have a new demand curve. Shifts occur when there is a change in those variables, which are not mentioned on the other fixes. So that's it for today lecture. And the next lecture we will make some graph fat and the shifting of thicker and the movement of the graph. 7. Shifting of demand: Dear students, welcome to our today lecture. And nobody sent lectures. We have discussed that what is the difference between movement and shifting? Inevitably lecture we will discuss them graphically that how can we drop the shifting and movement of the demand curve? So basically, what is mean by movement and what is mean by shifting? When there is change in those variables which are written on the axis of any graph, them, they will bring movement in debt car. And when there is change in those variables which are not mentioned on the exit which are outside of the model, then they will bring shifting in the Anika fight example, when we are discussing about the demand curve, there are only two variables. One is price and the other one is demand. Prices independent variable. And the demand is dependent variable. So any change in price will brings movement along the curve. While, when there is no change in price and demand increases or decreases, then there will be shifting off the demand curve. So any factor which is outside of the model or any change in dose variable which are being kept constant in love demand. According to ceteris paribus, a lot of assumptions. If any change occurring, those variables which are being kept constant, then they will shift our demand curve, any curve, okay? So movement is when there is change in those variable, which are mentioned on the X's. And when there is change in dual variable which are not mentioned on the exit, then there will be shifting of that curve. So let's discuss what are the effectors which brings shifting. Indeed, demand curve. There are basically five factors. There may be more than five vector, but here we are discussing only five vectors. Five important variables are five important factors. Which brings shifting in the demander. First one is income. Second one is price of the related goods. Third one is taste for Chinese population. And the fifth one is expected future prices. Now let's discuss each of them one by one. As you can see in this graph, there is only one price. And there are two quantities. There is no change in price, but demand increases from 15 to 25. Dice is same, but demand increases from 15 to 25. So this is called increase, our rising demand. And when this is the case, then there will be shifting of the demand curve when there is no change in price, but demand increases. Why demand is increasing? Demand is increasing because maybe your income increases, maybe fashion increases, or we may, maybe there is a change in fashion. Maybe there is a change in taste, or maybe population increases, or maybe the price of related goods increases. So there may be certain reasons, but all those reasons are outside of the model, which are being not written on either of the x's. So when your income increases, you are willing to buy more goods. You are not considering the price. Seeing this price, you know, buying this amount of quantity when there is no change in price and demand increases, demand curve will shift outward. Similarly, when there is no change in price and demand decreases from 50 to 40, for example, then the demand curve will shift inward. As you can see that in this case, there is also no change in price, but demand decreases. So movement occur when both of these variable genius price changes and quantity also tinnitus, then they will moment. But if there is change in only one of these variables, either price changes or either quantity changes. One of them is being kept constant, then there will be shifting. When there is change in both of the variable, then there will be movement along the curve. We have a single demand curve and we are moving from point here to here, and we are moving from only one demand curve. So our next discussion is about extension. And contraction aftermath. Extinction occurs when price decreases and demand and it is called extension of demand. As you can see in this table, that price decreases from ten to five and demand increases from 30 to 45 according to law of demand, when price decreases, demand increases based decreases, demand increases. What is mean by contraction of demand? Contraction of demand means when price increases and demand decreases, it is called contexts enough contraction of demand. Price increases from ten to 15 and demand decreases from 30 to 25. That is called extension and contraction of demand. But there are two other cases which are called Rise and Fall of demand. Most of the times students think that extension and contraction and rise and fall up demand for that same, but this is not the case. Extension and contraction occur when there is change in price and quantity. Well, both then both changes price and quantity demand both changes. Then there is extension and contraction. When only price changes are only quantity demand changes, then there is a rise and fall. So now let's discuss about rise and fall up tomorrow. So here, as you can see that according to definition of price, if demand, then there is no change in price. And demand increases. It is called Rise up tomorrow. As you can see in the table. Price is ten, but demand increases from 15 to 25. So this is the case for shifting up demand curve. We can see that price is same, but there is change in quantity demand changes. So there are other factor which are discussed earlier, like income tastes fresh and population, they are changing. Our Timur. Fall of demand mean when there is no change in price and demand deposit that is called follow-up tomorrow. As you can see in the table, that prices 1010, but demand decreases from 50 to 40. So when there is no change in price and demand increases, that is called price up demand. When there is no change in price and demand decreases, that is called fall off tomorrow. Similarly, as we have written here, base is constant, but demand increases. Price is constant but demand decreases. That is called file and that is called rise up demand. So now let's discuss all of these cases in a single graph. We will discuss no extension, contraction, rise and fall. Or we can say movement and shifting the demand curve in a single graph. So you can see that we have to demand curve. One is the case for shifting off the demand curve. And on the other hand, we have a single demand curve and we have two points on a single demand curve. That is the case of movement of the demander. So now let's first discuss about the movement of demand. As we discussed earlier, that movement occur when both variables changes, which are written on y and x-axis. As you can see in the table, that price and quantity demand both are changing. So this will be the case of movement of the demand curve. As you can see, their price decreases from 700 to 600 and demand increases from 3 million to 4 million, as we have written quantity million. So when price decreases, quantity demanded increases, price decreases to 600 and demand increases to 4 million. So we'll move from point a to point B. We are on a single demand curve. So when we are moving from single demand curve and we're changing our position, that is called movement along the curve when we are moving from point a to B. And we can see, we can also write multiple points here. When price decreases 600 to 500, quantity demanded increases to five. And we have another point here, which is called point c. So when we are on a single demand curve and we are changing our position on a single demand curve that is called movement along the curve. And that is because of when there is change in both variables. Let us discuss about the shifting case. As you can see that there is no change in price, but demand increases from 3 million to 5 million. As you can see, that price is 700 and demand is three. Unsimilar price of 700. Now, demand increases from three to 4 million. So one variable is fixed, but other is chaining. So well, this is the case of our curve will shift. And now we are discussing about demand curve. So in this case, our demand increase, demand curve will shift outward as our demand is increasing. So main summary or main crunch of today's discussion is that movement occur when both of these variable changes, which are mentioned on the axis and shifting occur when there is change in those variables which are not mentioned on the axes, which are outside of the model, which are being kept constant in assumptions. So any change in those variable, we'll shift our demand curve. When there is change in both of these variable, then there will be movement along the curve. So now we will discuss in detail all those vector which are shifting our demand curve. We will discuss them one by one. The first factor which is shifted our demand curve, that is income. In assumption, we kept this variable as constant, but when there is change in income, but income increases, we will buy more goods. So our demand increases. So that increase in demand is because of income. So our demand curve will be shifted. And data two types of pooled variance called normal good and the other one is called inferior goods. Normal goods are those goods. When your income increases, the demand increases, and when your income decreases, the demand decreases. There is a positive relationship of those good with income. Or income increases demand and cases for that good and have an income decreases, demand decrease the fact that course, normal good, our vary from person to person. It might be possible that a thing which is normal for me, it may be inferior for you and good, which is Inferior. Inferior for you. That might be possible that dad good is normal for me. But the definition will remain same. That any good whose demand increases with increase in demand, that is called normal good. When income decreases, demand for that good decreases. For example, we can take the example of chicken n matter. As we know that Martin is expensive than chicken. So whenever income increases, we will demand more of mutton and we will buy less chicken. So in that case, chicken is our inferior and mutton is our normal good. As we increase the demand of mutton when we went over in some increases. In case of an inferior good. When our income increases by less of that good, that is called inferior good. As in previous example, I told that when our income increases, we will buy more time. So Martin is about normal good and we buy less chicken. Or chicken is our inferior good. But it may be vary from person to person according to his choice, a normal goods and inferior goods changes. The next variable which shifted, which bring to change whenever demand, that is called price of related goods. There are two types of related goods. One is called substitute and the other one is called compliments. Substitutes are those goods or services that can be used for the same or a similar purpose. When we have, don't worry, we'll buy coffee. So coffee and substitute coffee and tea or both or substitute of each other. Gas and petrol. And I did I'm complement goods and services that are used together like left shoe and the right to the car and the driver, they are complement. So when up price up delineated good increases, our demand will also be affected. So our demand curve will be shifted. And the third variable which shifted our demand, that is called taste. You know, when people are addicted to any kind of taste, they will not bother their price. If price goes high and they will still buy that code. So when people are addicted to any taste, so Bryce will not matter to them. They are still buying that amount of gold. So in this case, demand curve will also be shifted. Default variable which shifted our prices, which are shifted our demand curve that is called population. When there is more number of people, then there will be more demand for goods. So in this way, when population increases, demand also increases. So this is the four-factor with powerful variable, which is demand curve. And the last vector which shifts the demand curve, that is called expected future price. You know, being a rational consumer, when we know that incoming month, the price of any product goes higher, then no, We will buy more amount of dead code. So in this way, our demand increases because our perception is that are, we are assuming that in future price is price when it goes to know, Let's take more amount of dead code. So this will increase the demand. So in this variable demand curve will shift it as there is no change in prices at the moment, price will change it in future. We are buying more of that good because we are thinking that in future price increases. So our disc disease again will increase the demand. But there is no change in price, add crunch time period. So this will increase our demander. These phi vectors which shift our demand curve. And the last thing which we cover in this demand topic, that is change in demand and change in quantity demand. A change in demand refers to a shift in the demand that because a change occurred in demand due to those variables which are being kept constant. Those variables which are other than the price. Change in quantity, demand means change in demand due to changes in price. So if there is change in price and demand is ascertaining, that is called change in quantity demand. And when it is no change in price, but demand changing, that is called Tin in demand because no demand changes due to certain other factors. That is alpha, our today lecture. In ever coming lecture, we will start the other side of the economy, which is called supply side. 8. Rise and fall of demand: Hello everyone, Welcome to our today lecture. In our today lecture, we are going to discuss what is the difference between rise and fall of demand. Basically, in case of a rise of demand, there is no change in price and demand increases, then it is called rise of demand. There will be shifting of demand curve. In case of fall off demand, there is no change in price and demand. It is called fall off demand. Basically, the question arises when there is no change in price. So why demand is increasing or decreasing? Basically, demand is increasing or decreasing due to those factors that are being held constant, as we have discussed in our earlier lectures in law of demand. Before stating any law, we have to make certain kind of assumption. We have to take certain things as constant. So if there is any change in those variables which are being kept constant, then there will be a rise or fall off demand. For example, in case of rise of demand, there is no change in price. Price is constant and demand is increasing, then it is called rise of demand. In case of fall off demand, there is no change in price. Price is constant and demand is decreasing. That is called fall off demand. And in this case, there will be a shifting of the demand car. So for example, we have two prices. In the second column, we have demand. The price is, for example, let's say ten. And the demand is 20. And then demand goes to 30. So there is no change in price, but demand increases 20-30 So in this case there will be shifting of the demand carp and we have two demand curve. First one demand curve is D one. And the second demand carve will be D two. At price ten we have demand of 30. Again at price ten we have demand of 30. The price is same but the demand increases from 22 30. In this case, they will be shifting of the demand curve. When there is no change in price and demand is increasing, then the demand car will shift outward. Similarly, in case of fall of demand, let's say we have two again. The price is ten and the demand decreases from 32, 20. As you can see that, there is no change in price, but demand is decreasing. While demand is decreasing, demand is decreasing because of those factors which are being kept constant. Again, price is ten, demand is 20.30 In this case, our first demand curve is on 30, which is D one. And the second demand curve is on D two. At price ten. The first demand is 30, then there is no change in price. Then demand decreases. 30-20 The demand car will shift inward. In case of fall of demand, demand car will shift inward. In case of rise of demand, demand car will shift outward. In case of rise and fall, there will be shifting of the demand curve and we have at least two demand curve in case of shifting, while in case of movement we have only one demand curve. We are changing our position from 0.8 to the 0.2 C. But in case of rise and fall, we have separate demand curves. And in case of rise and fall, there will be shifting of the demand curve. Demand curve is shifting because of those factors which are being kept constant. When those factors are changes, then there will be shifting of the curve. 9. Difference between movement and shifting: Hello everyone. Welcome to our today lecture. In our today lecture, we are going to discuss a very interesting topic that is the difference between shifting and movement. Basically, movement occur when there is change in those variables which are inside the model or the variables which are mentioned on the axis. Any change in those variables which are mentioned on the axis or those variables which are inside the model variable. Then there will be movement along the curve and any change in those variables which are not mentioned on the axis, then there will be shifting Alma car. There is the major difference between movement and the shifting of the car. In case of movement we have only one curve, but in case of shifting we have more than one curve. Like in case of demand carve for example. Here I am making the demand curve. On y is we have price, and on x, x we have quantitative demand. Here is demand curve that is negative flow. In this curve, there are only two variables which are being mentioned on the x. One is price and the other one is quantity Demand. Any change in price and demand will bring movement along the curve. As you know that there are infinite number of payers of price and demand on this demand curve. When we are moving from this point to this point to this point to this, all these points are, there is a movement along the curve because on all these point, price is changing and demand is also changing. All these points are representing movement along the curve. In case of shifting, we have more than one demand curve. On Y x we have quantity price level, and on X x we have quantity demand here. This is the D one. This is two D12d2. In case of shifting, there is no change in price level. Price is constant and quantity demand is increasing from 122. When we have more than one demands, then there will be shifting off the curve. Shift occur or this change occur due to those factors which are not being mentioned on the axis. Like here, we have mentioned income, weather, fashion, or taste, or any other variable other than the price. If there is change in those variable other than the price, then there will be shifting of the demand as income, fashion, taste of whether none of these variable is being mentioned on the Xs. Any change in those variable which are not being mentioned on the Xs, they will bring shifting in the curve. Any change in those variables which are being mentioned on the Xs. Any change in these variable will bring movement along the calf. We can understand it in another way. If we have a demand equation like this, QD is equals to a minus baby. In this simplest model, we have only two variable, one is demand and the other one is price level. These are called inside model variable. Any change in inside model variable will bring movement along the curve. And any change in those variable which are outside the model, any change in those variable will bring shift in that demand. Here, income, fashion, taste, whether or not mentioned in this equation. If there is any change in income, whether fashion or taste, then there will be a shifting in the curve. Any change in price and demand. Then there will be movement along the curve. When income increases. Now people have more money, so the demand will also increases. Income is not mentioned on this s demand will shift from D one to D two. Similarly, when population increases, increase in population will increase the demand for goods. Again, the population is not mentioned either on the x Y X or X X. Increase in population will increase the demand. Again, the demand will shift from D122 and there is no change in price level. When price increases demand there is change in both Ople which are mentioned on the Xs, so there will be movement along the. So when there is no change in price and demand is increasing or decreasing. So there is no change in price, but there are some other factors who are affecting our demand. So then there will be shifting in the cars. 10. Variable that shift demand curve: Hello everyone, Welcome to our today lecture. In our previous lecture, we have discussed what is the difference between movement and shifting of the demand car. In movement lecture, we have discussed that movement is occur due to only price other than price. All factor will shift demand or any car. In our today lecture, we are going to discuss what are the major factors that are going to affect or that are going to shift our demand car. Basically, there are many which are going to affect our demand. But the most five important factors are variable. Which shift the demand. Car wars, income. First of all, income. The second one is price of related good. Third one is taste. Fourth one is population. And the fifth one is expected future prices. Any change in these variable will shift our demand as the major demand function is Q, D is equals to a minus B. So this is the simplest model of an economics. In this model, you can see that there is only one independent variable present here. Because according to the law of demand, before stating any law, we have to take certain kind of assumption or Citrus paribus, keeping all other things constant when we are keeping all other thing constant. When price increases, demand decreases. That is called movement Al. If income there is income, there is change. Price of related good, there is che, taste, the genine population or demographic. Or there is expected future prices. Any change occur in these variables will shift our demand curve. For example, we have here demand curve. On a Y, x we are taking price, and on X, x we are taking quantity demand. And this is our simple demand curve. We can write it as an. Let's assume that income of the people increases, so when the income of people increases, so now people have more money so they can buy more products. So when income increases and there is no change in price level due to increase in income, people will demand more number of goods, demand increases. So this increase in income will lead to increase in demand. According to this scenario, there will be shift in the demand car. Our demand car will shift from D one to D two. And we can call it as there will be a outward shift in that demand car when income increases. Similarly, when population increases, when population increases, technically there will be more demand for goods due to increase in population. Demand increases again, demand car will shift from D one to D two. And similarly for expected future prices. So now, when people are assuming that in near future, the prices of the goods are going to increase, they will buy more number of goods today. So in order to save their income due to inflation, they will buy more number of goods today. So when expected future prices, PF, mean future prices. When expected future prices are going to increase, then people will demand, or people will buy more number of goods today in order to save their amount of money. When expected, future prices are going to increase, It will increase the demand. In this way, our demand curve will shift from D one to D two. As there is no change in price of that good today, there will be shifting of the curve. These are the most important factor which are going to shift the demand curve. 11. Difference between extension and contraction of demand: Hello everyone. Welcome to our today lecture. In our today lecture, we are going to discuss what is the difference between extension and contraction of demand. Basically, extension mean when price decreases and demand increases. It is called extension of demand. Contraction mean when price increases and demand decreases. It is called contraction of demand. Basically, in case of extension of demand, we can simply write it as price decreases, demand increases. It is called extension of demand. In case of contraction of demand, price is increasing. Demand is decreasing. It is called contraction of demand. So in case of extension and contraction, there will be movement along the curve as the demand is changing due to change in price level. When there is any change in demand due to change in price level, then there will be movement along the curve. Or we can represent it in a table and graphically as well. So here I'm going to make a table for price and demand. Like for example, price is ten, then it goes to 20, then it goes to 15.20 at price ten, there are 30 people who are willing to this product. When price increases, 10-15 there are now 25 people who are willing to buy the product. And when price goes 15-20 there are only ten people who are willing to buy this product. So we can draw this table here graphically. On Y, X we are going to level, and on X x we are going to take quantity demand level. So the first price level is ten, the second price level is 15, and the third price level is 20. Then 101-52-0530 When the price is ten, the point demand is 30. When the price level is 15, the point is 25. When price is 20, the point demand is ten. When we join the graph, the points we will be having the demand if we, let's assume that A is the initial point level. When the price is 15, that quantity demand is 25. When price goes 15-20 we are moving from point A to point. As you can see, the price increases 15-20 the demand decreases. 15-25 to ten. The movement from A to B is called contraction. The movement from A to B is called contraction. When the price goes down 15-10 the demand increases 25-30 If we assume this point, we are moving from point A to the price is going 15-10 and the demand is increasing 25-30 The movement from point A to C is called extension of demand. So in case of contraction and instruction, we will be having only one demand calf, and it is called movement along the calf. 12. Difference between market demand and aggregate demand: Hello everyone, welcome to our today lecture. In our today lecture, we are going to discuss what is the difference between market demand and aggregate demand. Most of the time, students are thinking that market demand and aggregate demand both are the same thing, but this is not the same. Basically, market demand refers to the demand of all household of a single good that they are willing and able to buy a product at different prices. It is microeconomics phenomena. On the other hand, aggregate demand. Aggregate demand is to the sum of our goods. Okay, so here you can see the difference that market demand is the demand or some of the demand of household of a single good. And aggregate demand is the sum of all goods that households are able and willing to buy at different prices. So basically, what is the major difference between market demand and aggregate demand? Market demand shows the sum of demands of single commodity, of a single good that household are willing to buy at different prices. On the other hand, aggregate demand shows the sum of all goods like ABCDEFG, all the goods which are consumers are willing to buy at different prices. On the other hand, market demand shows the sum of only single commodity like a good. So this is the major difference between market demand and aggregate demand. And aggregate demand is also macroeconomics phenomena. Okay? Market demand is microeconomics phenomena. On the other hand, aggregate demand is macroeconomics phenomena. 13. Difference between market demand and individual demand: Hello everyone, Welcome to our today lecture. In our today lecture, we are going to discuss that what is the difference between market demand and individual demand. First of all, we will be discussing about individual demand. Basically, individual demand refers to the quantity of goods that an individual is willing and able to buy a product at different price level. On the other hand, market demand. Market demand refers to the quantity of good. All individuals are willing and able to buy a product at different price level. So basically, individual demand mean the demand of a single individual or a single household of any product. And market demand is the demand of all household. They are willing and able to buy the similar product at a different prices, at various prices. When we add up the demand of all household of a single commodity, that is called market demand. And when we are discussing the demand of only one household, that is called individual demand carve, This is the difference between individual demand. In case of individual demand, we are discussing about a single household or an individual. While in case of market demand car, we are discussing about all individual. They are willing to buy that product at different price levels. 14. Elasticity of demand: Hello everyone. Welcome to our today lecture. In our today lecture, we are going to discuss about the elasticity of demand. Basically, the simplest definition for the elasticity of demand is that it shows the degree of responsiveness in demand due to change in price, income or price of related goods. Basically, there are different types of elasticity. Demand shows a response due to change in income, due to change in price, due to change in price related good. Basically, when there is changing price increases, demand decreases might be possible. Price and demand, both are changing by the same percentage. It might be possible that price is increasing more percentage, but demand is showing lesage. Similarly, when income increases, demand also increases. When price of related goods PR, we can write it as price of related good changes, then demand for goods also changes. There are different types of elasticity of demand. In our today lecture, we are only discussing about what is meant by elasticity of demand. Basically, elasticity of demand shows the degree of responsiveness in demand due to change in price or income, or price of related good. There are some other types of elasticity of demand, for example, cross elasticity of demand. In our next lecture, we will discuss about each of them in details. 15. Greater than 1 elastic demand: Hello everyone, welcome to our today lecture. In our today lecture, we are going to discuss about elasticity demand greater than one or greater than unitary elastic demand. Basically greater than elasticity of demand occur when there is less change in price and more change in demand, then elastive demand will be greater than one. For example, there is change in a percentage change in price, 10% and percentage change in quantity demand is 20. There is less change in price. Price is changing by 10% and as a result, demand is changing by 20% There is less change in price and more change in demand. When we write it in our formula, which is elastic shaped, demand is equals to percentage change in quantity demand due to percentage change in price, 2010. The answer will be two, which is greater than one? When there is less change in price and more change in demand than in this case, elasticity, demand will be always greater than one. In case of greater than one elasticity, the demand curve will be always flatter. Quantity demand, this is our initial price, which is P one. And this is our new price, which is P two. There is less change in price. There is more change in quantity demand. In this case, our demand will be flatter. Okay? So keep in mind that in case of greater than one elastic demand, our demand car will always be flatter. 16. Unit elastic demand: Hello everyone. Welcome to our today lecture. In our today lecture, we are going to discuss what is meant by unitary elastic demand. Unit elastic demand. Basically, unitary elastic demand, or unit elastic demand, mean when price and demand both are changing by same percentage and demand both are changing by same percentage. It is called unit elastic demand. In case of unit elastic demand, elasticity of price is always equals to one. Okay? Why? Because the same change in price and same change in demand. For example, let's say that the formula for elalatity of demand is percentage change in quantity demand due to percentage change in price. Here, the delta sign is showing percentage as we have mentioned in our previous lecture. For example, let's say the price is changes by 20% Change in price is 20% and change in quantity, demand is also 20% When we put these values in elasticity formula, elasticity of price is equals to 20/20 and it will give us one. In case of elastic, a unit elastic demand, elasticity of price is always one. So again, I'm explaining that why this is negative sign. The negative sign shows that there is a negative relationship between price and demand. When price increases, demand decreases. So there is a negative relationship between, negative relationship between price and demand. So that's why elasticity, demand is always in negative value. 17. Perfect elastic demand: Hello everyone. Welcome to our today lecture. In our today lecture, we are going to discuss what is meant by perfectly elastic demand. Basically, perfectly elastic demand occurs when there is no change in price. Demand goes on changing, then it is called perfectly elastic demand. In case of perfectly elastic demand, the elastic demand is equals to infinite. There is no change in price. Demand goes on changing. In case of perfectly elastic demand curve, the demand curve will be totally horizontal. Okay? This is quantity demand. This is only one quantity, demand is changing 1-2 then it goes to three. There is no change in price, but demand goes on changing. In case of perfectly elastic demand, the demand curve will be horizontal, and elasticity of demand will be infinite. 18. Perfectly inelastic demand: Hello everyone. Welcome to our today lecture. In our today lecture, we are going to discuss what is meant by perfect inelastic demand. In our previous lecture, we have discussed about inelastic demand. Today we are going to discuss what is meant by a perfect inelastic demand. Basically, perfect inelastic demand occur or exist when change in price have no effect on change in demand, then it is called perfectly inelastic demand. In case of perfect inelastic demand, elasticity of demand is equals to zero. And in case of perfectly inelastic demand, the demand curve will be vertical here on y, x is we are taking on x, x is we are taking quantity demand. Let's say this is a one, then price changes from two, then price changes 2-3 But the quantity remain is at 11. With 12, with 13, with one, the demand will be vertical. In case of perfect inelastic demand, elasts, demand is zero and the demand will be vertical. And we can also write in a table firm, here is price and quantity. Price changes 10-15 then it goes to 20, but the quantity remain as 40. Price is changing, but there is no change in quantity. Price is increasing, but quantity is constant. In this case, our demand curve will be vertical. We can take the example of salt. If the price of salt goes higher or goes lower, we're not willing to buy this product more or less. This is the example for perfect inelastic demand. In case of perfect inelastic demand, price is changing, but there is no change in demand. 19. Less elastic demand: Hello everyone, Welcome to our today lecture. In our today lecture, we are going to discuss about less elastic demand, or elasticity of demand less than one. Basically, less elastic demand or elastic demand less than one occur when there is more change in price, but demand shows or less change in demand, then in this case, elasticity of demand will be less than one. When elasticity demand is less than one, in that case, demand curve will be steeper in case of less elastic demand. So the formula for elasticity of demand is equals to percentage change in quantity demand due to percentage change in price. Negative sign shows that there is a negative relationship between quantity demand and price. For example, let's say the change, percentage change in price is let's say 20% Percentage change in quantity demand is 10% When we put these values in formula, Ela demand is equals to percentage change in quantity. Demand is ten. Percentage change in price is 20. The answer will be less than one, and it would be 0.5 Ela demand is 10.5 is less then one. In case of elasticity of demand less than one, the demand curve will be steeper. On y x, we are taking price on X x, we are taking quantitative demand. Let's assume P one is our initial price and P two is new price, 12. As you can see, that there is more change in rice, but there is less change in demand. Okay, 12.21 here when we joined these graphs, the demand curve will be steeper. In case of elasticity, demand less than one, the demand curve will be steeper. It means that these goods are those goods, they are less responsive to our price. 20. Income elasticity of demand: Hello everyone, Welcome to our today lecture. In today lecture, we are going to discuss what is meant by income elasticity demand. Basically, income elasticity of demand when there is change in demand, when there is change in demand due to change in income, then it is called income elasticity of demand. Basically, in our previous lecture, we have discussed about price Elativemdse of price elastic demand. Demand changes due to change in price level. But in case of income elasticity of demand, demand is changing due to changing income level. That is called income elasticity of demand. That how much demand is showing response when your income level is changing. That is called income elacity demand. There are different types of income elasticity demand. The first one is positive income elasticity of demand. The positive income elasticity of demand means when demand increases, when your income increases, your demand increases. Here, why is showing income level when your income increases, demand is also increases. That is called positive income elasticity of demand. It usually occur in case of normal goods. When income increases and you are buying the number of goods more that good, normal good. According to you, normal good, inferior good. And give and good we have already discussed in our previous lecture. They are, vary from percent to percent. But when your income increases and you are buying more number of commodity, more number of unit of any good, that good would be normal good according to you. So here is the formula for elasticity of income. Y is equals to percentage change in quantity demand due to percentage change in income. This change is swing percentage, delta is fast change, QD is quantity demand, again this is percentage sine, and delta sine is fast change, and y is swing income. Elasticity of income is equals to percentage in quantity demand. Percentage change in quantity demand, we can write it as percentage change. Percentage change in quantity demand is equals to one minus Q divided by Q in 200. Here one is showing grant quantity, Q is showing the previous quantity, this again Q is showing the previous quantity. And for income level, percentage change in income is equals to y one minus y divided by y in two handed. Again, here, y one is showing your current income level. This y is showing your previous income level. This y is again showing your previous income level. Now we are putting all these values in this formula, where percentage change in quantity demand is equal to one minus one minus Q divided by Q, multiply by 100. And percentage change in income is equals to y one minus y over y in 200. This 100 and this 100 will be cancel out. And one minus Q C minus previous is showing change, change in Q divided by y. One minus y is showing change in income divided by income. We can also write it as change in Q divided by change in y y. When we convert this divide sine into multiply, then it will become change in Q our into y by change in y. We can write both the changes in one divider, sine change in Q, our change in income into y by Q. Here is the final formula for the elasticity of income. The next one is positive income elasticity is divided into further three parts. The first one is income elasticity greater than one. When there is less change in income, but there is more change in demand, for example, your income increases by, let's say, 15% Your income change in income is 15% The demand change in demand is more than 15% Let's say the change in demand is, for example, 20% In this case, elasticity of income would be greater than one. When we put these values in this formula, percentage change in quantity demand is 20, and percentage change in income is 15. When we solve it, our answer would be greater than one. Income elasticity greater than one. In those cases, when there is less change in income and more genuine demand, basically income elasticity greater than one mostly exists in case of luxuric goods. When the people income increases, they will prefer more to buy iphone or this type of goods. In case of income elasticity greater than one, there will be less change in income but more ingent demand. The next one is income elasticity less than one. In case of income elasticity less than one, there will be more change in income but less change in demand. Income elasticity less than one exists mostly in case of necessities like food soup. And it is. So basically when your income increases, you are not willing to spend most of the portion of your income on fast food or like soap in that case. In case of necessities, income elasticity greater, less than one. For example, you change in income. There is change in income of let's say 30% but change in demand is only 15% When we put these values in this formula, change in quantity demand. No, change in quantity demand is 15% Change in income is 30. When we solve this, our answer will be less than one. In this case, elasticity of income would be less than one. And in case of necessities, the last type of the positive income elasticity is unit elastic income. When the demand and income both changes by the same percentage. For example, your income changes by 10% and demand is also changes by 10% In this case, income elasticity would be equals to one. The next type is negative income elasticity. In case of negative income elasticity, demand is decreasing. While your income is increasing, your income increases while swing income level, but the demand for good is decreasing. That is called negative income elasticity. Negative income elasticity exists in mostly cases of inferior goods. For example, when your income increases, you are more willing to buy mutton and the demand for chicken decreases. So in this case, chicken would be your inferior good when your income increases and anything which you are now buying less as previously. So that would be inferior good according to your decision. The last one is zero income elasticity. Basically, zero income elasticity means that when change in income have no effect on demand and demand is constant. In that case, income elasticity would be 00. Income elasticity mean when income have no effect on demand. For example, when your income increases, you are not willing to buy more or less amount of salt. So in this case, dilasticity of income with respect to solve would be zero. So these are the different types and different income elasticities. I hope you understand this lecture. If you have any question regarding this lecture, you can ask the question in the comment section. 21. Law of supply: Hello students. Welcome to our today lecture. Today lecture, we will discuss the supply side of the economy. Basically, when we are discussing supply side, we have to take our self as a producer. When we are discussing demand side of the market, we have to consider ourselves as a consumer. At the moment we are discussing about the supply side of the economy. So now we have to discuss, we have to consider our self as a supplier. We have to consider ourself as a producer of that good. So in this way, you can easily understand the concept of supply. So now, let's start. What is the difference between the supply and stock? Basically, everything which is produced and sent to the Marquee for sale at a specific price that is called supply, which is available in the market. For sale, that is called supply. What is start-start mean that everything which is produced but not send to the market for sale at a certain price, that is called stock. That is being kept in our warehouses. Everything which is made and no price is decided yet, that is called star. We will decide stock price on the basis of those quantities which we have already sent in the market. If our good is selling well, then we increase the price of the remaining product which are being kept in the warehouses. So supply is anything which is available in the market for a sale at a certain price. But stock is a thing which is made but no price is decided yet and it is not available in the market for a same. As in our previous lecture, we have discussed about law of demand. But now we will discuss law of supply. As I told earlier, that before making any law and economics, we have to take certain kinds of assumptions. So similarly in the case of love supply, we have to take certain kinds of assumptions. Or we have to write holding everything else constant or ceteris paribus, or there is no genuine. All other things then increase in the price of product can increase the quantity supply and a decrease in the price of a product, color decrease in the quantity supplied. There is a positive relationship between price and quantity supply. When price increases. As a result, supply also increases. So there is a direct or positive relationship between price and quantity. Supply. Price increases, supply also increases, and when price decreases, supply also decreases. Why this is happening when price is increasing, supply is increasing and when price is decreasing and supply is also decreasing. As at the beginning of today's lecture, I told you that when you are discussing about supply, you have to take yourself as a producer. Being a producer of a laptop. When I came to know that price of our laptop increases, then in order to earn more profit, I will supply more number of laptop in the market. When more laptops sold out, it will increase my revenue and ultimately it will increase my profit. So being a producer, whenever product price increases, we supply more. Why we supply more? Because we, we entered in the market to earn profit. So when price increases, our revenue increases. So in order to capture more revenue, we will increase our supply. What is mean by market supply? Market supply, basically the supply of the firm which are operating in the market. When we add up all the supply of all those firm, that is called market supply. Moving on, let's discuss what is mean by quantity supply, supply schedule and supply curve. Quantity supply means that the amount of goals or the number of goods. Dad firm is willing to sell at a specific price, at a given price. That is called quantity supply. What is mean by supply schedule? Supply schedule mean a table that is showing the relationship between price and different quantities that we'll call supply schedule. When we plot all those values of a table on a graph that is called supply gut. As you can see that we have different prices against different supply that is caused supply schedule. And when we plot all these values on a graph that is called supply curve. At the beginning when the price is 700, we are supplying 7 million tablets in the market. When price goes down from 100 to 600. Or we have decreased our supply from seven to 600. And when price decreases from 600 to 400, we have decreases our supply six to 5 million. And similarly, as the price goes down further, we have decreasing, our supply goes further. When price is 300, we are supplying three Milligan tablets in the market. Price is decreasing, so our revenues decreasing. So we are willing to sell less tablet at this light. And when we join all these points, we have a supply curve. And it is positive slope because there is a positive relationship between price and quantity supply, when price is decreasing, supply is also decreasing. And when prices increasing, supply is also increasing. And why we are calling it as a supply curve, because supply is a dependent variable. Our supply decision is depending on price. We will supply more. If price is going higher, we will supply less if the price goes less. So fast is occur in price. So anything with changes first that is called independent variable. And after that, if variable change that is called dependent variables. So first-gen price, and then our supply changes, that is called dependent variable. So in economics we named every curve after it's dependent variables. So here, supply is dependent variable. So that is why we are calling it as a supply curve. In our previous lecture, we have discussed about change in quantity demand and change in demand. So similarly, there is a difference between change in supply and change in quantity supply chain and supply means that when there is ten into play due to factor other than price, change in quantity supplied mean when there is change in supply due to price. Now let's discuss these and then graph and table farm. As you can see in this table, there is no change in price. Price is constant at ten, but quantity supplied decreases from 25 to 20. So this will shift our supply curve to the left side. Price is ten. Quantity is 25. Price is ten, but quantity supplied decreases from 25 to 20. So in this case, our demand curve will shift to our demand or supply curve will shift to left. As in the case of demand, we discussed that all other variables which are being kept constant when any change in those variables, they will shift our garden. Similarly in the case of supply, when any of these variables constant and other is changing, then there will be shifting of that car. So in this case, price is constant, but quantity supply is changing. So it will shift our curve. In this case, price is same, price is ten, but quantity supply increases from 20 to 25. So this will also shift our supply curve. In this case, our supply curve will shift to right? Why supply curve is shifting to divert? Because supply is increasing. So when supply increases and price, the main costume supply curve will shift to rightward. Price remain constant and supply decreases. Supply curve will shift to the left one. These are the major five factors which shift the supply curve. So now let's discuss each of them one by 1. First vector is price up input. Price of input means the price of raw material which are being used by the output. So if the price of input increases, our cost increases. So we will supply less in the market. We are supplying less than the market, not because of price decreases. Price is same, but our cost of production increases. So we decided that we will supply less in the market. So in this way, our curve will be shifted because our supply decision is affected by other factors, not by price. The next factor is technological changes. If we set a new technology into our firm as compared to the old technology, then we will produce more number of units in a similar working time. This will increase our supply. And in this case, our supply curve will also be shifted. Why supply curve will be shifted because our supply increases, not because of price, but because of technological changes. So anything other than the price will shift our supply curve. And the next variable is price of substitute in production. So any increase in the price of substitute in production decreases the supply of initial boot. So similarly, this supplied decision is not depending on the price of dead code. This apply decision is depending on the price of substitutes which are being used in the production process. So in this case, our supply curve will also shifted. The next variable we shift our supply curve. That is, number of firms in the market. If number of firms in the market than production increases, as a result, supply increases. If there is a decrease in number of firms in the market than production decreases and supply decreases. Similarly, in this case, supply increases or decreases, not depending on price, that is depending on some other factors, like the number of firm. So this will also shift our supply curve. And the last vector which shift our supply curve, that is expected future prices. When a firm realizes that in future price of product is going higher, then they will stop the supply of dead code in order to earn more profit in future when the price goes higher. So similarly, supply decision is not affected by current prices. Price, supply this EGN, have change due to future prices which occur in, after some time period. So any change in supply, not because of price tag, we'll shift our supply curve. What is mean by change in supply and change in quantity, supply chain and supply means when there is change in supply due to factors other than price, that is called Change in supply. And when there is change in supply due to change in price, that is called chain in quantity supplied. So now let's discuss shifting and movement of the quantity supply in a single curve. As you can see that in case of movement price and quantity supplied, both are changing. Price increases from 500 to $600. And quantity supply increases from 5 million to 6 million tablets. So both variables are changing when both cerebellar changing. This will be the case of movement of the car. Price is 500 and the quantity is five. Price increases from five to 600, quantity increases from five to six. We are on a single supply curve. So the moving from point a to B, that is called movement along the curve. Movements occur when both of these variable changes, as you can see in the table, and you also can see in the graph. While shifting occur when one variable is fixed and the other is tuning. As you can see in the table, that price is fixed at 600, but quantity supply is increases from six to 836600. And the quantity supply is six. Price is 600 and quantity supply is IT. And we have a different supply curve. Supply curve shifted from S1 to S2. Supply increases from six to eight, so that increase in supply will shift our supply curve. Why? Because supply, a price is fixed and supply is increasing. So that is the supply-side aftermarket. 22. Difference between supply and stock: Hello everyone. Welcome to our today lecture. In our today lecture, we are going to discuss that what is the difference between supply and stock? Basically, supply is anything which is produced and sent to the market for sale at a specific price is called supply. A stock is that everything which is made but not sent to the market for sale, no price is decided yet, is called stock. For example, if a producer produced total of 100 units. Total production is 100 units out of those 100 units he or she has sent. For example, let's say 60 units to the market for sale. 60 unit far sale at 90. The 60 units are called supply. The remaining 40 units are called stock. Because these 40 units are not available in the market for sale and no price is decided yet. For the 40 units, these 60 units are called supply and these 40 units are called stock. Basically, the producer kept those quantities with the warehouses in their are called stock. And everything which is available in the market at shops for sale and at a certain price are called supply. This is the major difference between supply and stock. Everything which is available in the market for sale. You know, whenever you visit at the shop. First of all you ask from the shopkeeper what is its price. So it's mean that price is already decided for that product. So if any product which is available in the market, available in the shop for sale with a specific price is called supply and stock. Is that commodity or that number of units which are being produced by the producer, but they are not available in the market for sale. You cannot buy that product because they are still remain in the wehouses. Anything which is not available in the market but that is produced is called stock, and anything which is produced and available in the market for sale at a certain price is called supply. 23. Price elasticity of demand: Hello everyone. Welcome to our today lecture. In our today lecture, we are going to discuss that what is meant by price elasticity of demand. Basically, price elasticity of demands mean when there is change in demand of a good due to change in its own price. Then it is called price elasticity of demand. In simple word, we can also say that change, or how much response, is shown by quantity of a when there is a change in price of a. Here, a is representing a good. When price of a changes, then there is how much change in quantity of good. That is called price elasticity of demand. Price elastific demand is represented by PEP stand for elasticity of price and the formula for price elasticity. Demand is percentage change in quantity demand due to percentage change in price. This is the formula for elasticity of price. Simply we can say that elasticity of elasticity is elasticity is equals to percentage change in dependent variable due to percentage change in independent variable. Here, delta sine is change. This sine is for delta and delta change. Dv is our quantity demand dependent variable. Iv is independent variable, which is price. We can furthermore explain this formula. Percentage change in quantity demand. This percentage change in quantity demand, percentage change in quantity demand is equals to one minus Q divided by Q naught in 200. And percentage change in price is equal to one minus P naught divided by P naught multiply by 100. What does mean by one? Basically, one is the current price is old price or the previous price one is equals to current quantity. Q naught is the old previous quantity. Similarly, P one is equals to grant price P naught is equal to old R previous if we have different values. For example, here in the next column we have quantity demand 10.20 when price is ten. Quantity demand let's say is 30. When price goes high, 10-20 the demand will from 32. Let's say for example, 151020 is our P one, which is our crant price. Similarly, this 30 Q, and this is above. Can we have to simply put these values in this formula? And then it will give us elasticity of demand. Keep in mind that elasticity of demand is negative. Elasticity of price is always in negative. Why? Because there is a negative relationship between price and demand. When price increases, demand decreases, they both are moving in opposite direction. There is a negative relationship between quantity, demand. And that's why elasticity of price is always a negative sign. We can further explain this formula and convert it into simplest form. P is equal to elasticity of price, various percentage change in quantity demand and percentage change in quantity demand is equal to one minus Q divided by Q naught in 200. Then P, one minus P naught divided by P naught into 100. This 100 and this hundred will, we can sell out. P is equal to negative sine, negative relationship between demand and price. This one minus Q naught is showing change. We can write it as delta Q on Q. Similarly, this p one minus p num previous value, it will give us change in price and we can also write it as delta upon this is equal to P is equal to change in Q Q divided by change in over. We can further explain it as change in Q over Q. When we convert this divide sine into multiply, then this whole thing will reverse out upon chain in. This will give us the final formula for elasticity of price at the end. We can simply write this formula. If we rearrange them and bring change in one side, change in Q upon change in into upon Q. This is the final formula for the elasticity. 24. Rise and fall of supply: Hello everyone, Welcome to our today lecture. In today lecture, we are going to discuss what is meant by income elasticity demand. Basically, income elasticity of demand when there is change in demand, when there is change in demand due to change in income, then it is called income elasticity of demand. Basically, in our previous lecture, we have discussed about price Elativemdse of price elastic demand. Demand changes due to change in price level. But in case of income elasticity of demand, demand is changing due to changing income level. That is called income elasticity of demand. That how much demand is showing response when your income level is changing. That is called income elacity demand. There are different types of income elasticity demand. The first one is positive income elasticity of demand. The positive income elasticity of demand means when demand increases, when your income increases, your demand increases. Here, why is showing income level when your income increases, demand is also increases. That is called positive income elasticity of demand. It usually occur in case of normal goods. When income increases and you are buying the number of goods more that good, normal good. According to you, normal good, inferior good. And give and good we have already discussed in our previous lecture. They are, vary from percent to percent. But when your income increases and you are buying more number of commodity, more number of unit of any good, that good would be normal good according to you. So here is the formula for elasticity of income. Y is equals to percentage change in quantity demand due to percentage change in income. This change is swing percentage, delta is fast change, QD is quantity demand, again this is percentage sine, and delta sine is fast change, and y is swing income. Elasticity of income is equals to percentage in quantity demand. Percentage change in quantity demand, we can write it as percentage change. Percentage change in quantity demand is equals to one minus Q divided by Q in 200. Here one is showing grant quantity, Q is showing the previous quantity, this again Q is showing the previous quantity. And for income level, percentage change in income is equals to y one minus y divided by y in two handed. Again, here, y one is showing your current income level. This y is showing your previous income level. This y is again showing your previous income level. Now we are putting all these values in this formula, where percentage change in quantity demand is equal to one minus one minus Q divided by Q, multiply by 100. And percentage change in income is equals to y one minus y over y in 200. This 100 and this 100 will be cancel out. And one minus Q C minus previous is showing change, change in Q divided by y. One minus y is showing change in income divided by income. We can also write it as change in Q divided by change in y y. When we convert this divide sine into multiply, then it will become change in Q our into y by change in y. We can write both the changes in one divider, sine change in Q, our change in income into y by Q. Here is the final formula for the elasticity of income. The next one is positive income elasticity is divided into further three parts. The first one is income elasticity greater than one. When there is less change in income, but there is more change in demand, for example, your income increases by, let's say, 15% Your income change in income is 15% The demand change in demand is more than 15% Let's say the change in demand is, for example, 20% In this case, elasticity of income would be greater than one. When we put these values in this formula, percentage change in quantity demand is 20, and percentage change in income is 15. When we solve it, our answer would be greater than one. Income elasticity greater than one. In those cases, when there is less change in income and more genuine demand, basically income elasticity greater than one mostly exists in case of luxuric goods. When the people income increases, they will prefer more to buy iphone or this type of goods. In case of income elasticity greater than one, there will be less change in income but more ingent demand. The next one is income elasticity less than one. In case of income elasticity less than one, there will be more change in income but less change in demand. Income elasticity less than one exists mostly in case of necessities like food soup. And it is. So basically when your income increases, you are not willing to spend most of the portion of your income on fast food or like soap in that case. In case of necessities, income elasticity greater, less than one. For example, you change in income. There is change in income of let's say 30% but change in demand is only 15% When we put these values in this formula, change in quantity demand. No, change in quantity demand is 15% Change in income is 30. When we solve this, our answer will be less than one. In this case, elasticity of income would be less than one. And in case of necessities, the last type of the positive income elasticity is unit elastic income. When the demand and income both changes by the same percentage. For example, your income changes by 10% and demand is also changes by 10% In this case, income elasticity would be equals to one. The next type is negative income elasticity. In case of negative income elasticity, demand is decreasing. While your income is increasing, your income increases while swing income level, but the demand for good is decreasing. That is called negative income elasticity. Negative income elasticity exists in mostly cases of inferior goods. For example, when your income increases, you are more willing to buy mutton and the demand for chicken decreases. So in this case, chicken would be your inferior good when your income increases and anything which you are now buying less as previously. So that would be inferior good according to your decision. The last one is zero income elasticity. Basically, zero income elasticity means that when change in income have no effect on demand and demand is constant. In that case, income elasticity would be 00. Income elasticity mean when income have no effect on demand. For example, when your income increases, you are not willing to buy more or less amount of salt. So in this case, dilasticity of income with respect to solve would be zero. So these are the different types and different income elasticities. I hope you understand this lecture. If you have any question regarding this lecture, you can ask the question in the comment section. 25. Movement and shifting of supply curve: Hello everyone, welcome to our today lecture. In our today lecture, we are going to discuss that what is the difference between movement and shifting in supply car. Basically, movement mean when there is change in supply due to change in price, then there will be movement along the supply. When there is change in supply due to factor other than the price, then there will be shifting in supply car. Simply we can say that in case of movement, price may be increasing or may be decreasing and supply may be increasing or decreasing. Price and supply both are changing. But in case of shifting, there is no change in price. But supply may be increasing or may be decreasing when there is a change in supply due to factor other than the price that it calls shifting. When there is change in supply due to price level, then there will be movement along the car. In case of movement, we have only one supply. In case of shifting, we have more than one supply curve. So let's draw a graph A This, first of all, we will draw the car for movement. In case of movement, as we mentioned that price may be increasing or maybe decreasing when price is increasing. For example, prices increasing 10-1520 And supply is increasing from 40, 50, 60. When we draw the graph of this table, price is 1,015.20 4,050.60 At price ten, there are 40 number of units available in the market for sale at price 15. There are 50 number of units available in the market for sale at price 20. There are 60 number of units available in the market for sale. When we join these points, we have our supply car. Let's assume that this is our initial point, or point, or middle point. Now when price is increasing 15-20 supply is increasing 50-60 The movement from this point to this point is called extension. And when price is decreasing 15-10 supply is decreasing 50-40 Again, we are having only one supplier. We have a single supplier. We are just changing our position from point A to B and then from point A to C when we have only one single graph and we are changing our position from point A to B. And then A two or two A, then A two C. This is called movement Ada, because price and supply both are changing. In case of movement, price and supply, both are changing. This change may be in terms of increasing and may in decreasing. In case of shifting, there is no change in price level, but maybe supply is increasing or decreasing. Now let's take the example for shifting. Now when price is ten, supply increases 40-50 When we draw a graph, this supply rice is constant at ten. And supply increases from 42 50. When price is ten and quantity supply increases from 42 50, we have two supply curve, this is one, this is two. At price ten, there are forteen number of units available in the market sale. Then at price ten, there are 15 number of units available in the market for sale. In case of shifting, we have more than one supply curve. There is no change in price, but supply increases 40-50 When price increases, there is no change in price and supply increases. So there will be shifting in the supply and supply will shift from S1s, 12s2 in right direction. This is called shifting in supply. No, this increase in supply may be because of invention of new technology. The firm have new technology introducing new new technology, so they are producing more number of units, or maybe there are more producers entering the market. When there are more number of producing in the market, this will increase the supply according to the market, supply increases and keeping price at constant atropa ten. This is the major difference between movement and shifting in the supply curve. Movement is because of change in price level. In case of movement, price and supply both are changing. But in case of shift, change in supply occur due to factor other than the price. There is no change in price level. But supply may be increases or decreases when there is no change in price and supply is increasing or decreasing. That is called shifting of the supply curve. 26. Extension and contraction of supply: Hello everyone. Welcome to our today lecture. In our today lecture, we are going to discuss that what is the difference between extension and contraction of supply. Basically, extension means when price increases, supply also increases. It is called extension of supply. When price decreases, supply also decreases. It is called contraction of supply. Basically, there are two more concepts which we are going to discuss in our next lecture. That is called rise and fall of supply. Rise and fall and extension and contraction of supply. They both are different concepts. Basically, extension, we can simply write it as extension. When price increases, supply increases, price and supply both are changing. That is called extension of supply. On the other hand, contraction is totally opposite to the extension. Contraction means when price decreases, supply also decreases. That is called contraction of supply. We can explain it with the help of our graph. Before that, we have to make a table so that you can understand it easily. We have price and quantity supply in both of these. Price is 15 and then price goes to 20. The quantity supply 40, 50, and then it goes to 70. Price is increasing, supply is also increasing. Now we simply put these values on a graph, price and quantity supply. The first price is ten, then 15, then it goes to 2040, 50 70 at price ten. There are 40 number of units available in the market for sale, price 15. There are 15 number of units available in the sale at price 20. There are 70 number of units available in the sale. This is our supplier. We have to explain that extension and contraction. Let's assume that this is our initial price, that is 15. This is at here point A. For example, let's say now the price decreases 15-10 Now the price decreases 15-10 And when price decreases 15-10 quantity supply decreases 50-40 We can draw here point B, the movement from point A to B. Okay? Movement from point A to B is called contraction. Why we are calling it as contraction? Because price is decreasing and supply is also decreasing. Price goes down 15-10 and quantity supply goes down 50-40 So that is called contraction in supply. Now when price increases 15-20 quantity supply increases 50-70 Let's assume that we are giving to this point. Now when we are moving from point A to the price is going to 15 to 20 and quantity supply is going 50-70 Price is increasing, supply is also increasing. The movement from point A to C is called extension. Question arises why we are called calling is that extension? Because price is increasing and supply is also increasing. That is called extension in supply. One thing worth that we have only one supply curve. We are changing our position from A to B, then A two or to A. That to when we are changing our position on a single supply curve. That is called movement alarm. Only one single curve and we are changing our position from different points to different point. That is called movement a curve when we have different supply curve. That is called shifting of the supply curve. 27. Variables that shfit the supply curve: Hello everyone, Welcome to our today lecture. Today lecture, we are going to discuss what are the factors that shift the supply curve. Basically, in our previous lecture, we have discussed about movement shifting, extension, contraction, rise and fall of supply. In our today lecture, we are going to discuss what are the factors that shift the supply curve? Basically, there are five major factors that shift. The first one is price of input that are being used in the production of that good. Second one is the technological changes. Third one is the price of substitute goods in the production process. Fourth one is the number of firms in the market. And fifth one is the expected future prices. If any change occur in these five things, they will shift our supplier. First of all, let's discuss about prices of inputs. So when prices of inputs increases, when prices of input, price of input increases. So, no firm will supply less in the market, so supply decreases. Similarly, when there is technological changes, when the firm have new or modern technology in additive production for the goods, When there is improvement in technology or technology increases, there will be more supply in the market. Similarly, when price of subsite goods decreases, there will be more supply in the market when there are more number of firms in the market. In earlier sites there are only 40, let's say firm operating in the market, 100 firms in the market. So when the number of firms are increasing in the market, the number of supply will increase in the market. And when the expected future prices are going to increase, when the expected future prices, expected future prices increases. So now the firm will supply less today in the market, because they will hold the supplier by their warehouses and they will supply more in future when the price increases. Similarly, when the producers are assuming that expected future prices are going down, they will supply more today. As they know that in future when price decreases, their profit decreases. In order to avoid that loss, they will supply more today. All the scenarios, all of these scenarios will shift our supply. All of these variable are outside of the model and they are not directly related with the price of that good. In case of any change occur in these all five variables, they will shift our supplier. So let's assume that it is our initial supplier S one. When price of input increases, for example, when price of input increases, firm will supply less in the market. This decrease in supply, not because of uh, the price of this product itself, but the price of imports. In this scenario, firm will supply less supply car will shift to left word from 12122. This is called shifting of the supply. Similarly, let's say about the number of firms in the market. Here. Is that supply. It is our initial supply curve. Let's assume there are 40 firm in the market there. This amount of production in the market. Now when firms number increases from 4,200 the supply increases. When supply increases, supply curve shift to right, this increase in supply, not because of price level other than the price level. When there is change in, any change in those factors other than the price, they will shift our supply. In this way, supply can shift from left to right when supply increases because of those factor which other than the supply will shift to right word. When supply decreases due to factor other than the price, then supply will shift left word. 28. Market equilibrium: Hello Students. Today lecture, we are going to discuss what is meant by market equilibrium. We will discuss them to radically as well as graphically. First we will discuss them theoretically and then we will make graph off the market equilibrium. And we take certain cases and we see that what will be the effect of those cases on market equilibrium? So first of all, let's discuss what is mean by market equilibrium. Market equilibrium mean a situation where quantity demanded equals quantity supplied. And the price is decided by the market equilibrium. The market forces, or by the invisible hand, price, is decided by quantity, demand and quantity supply equilibrium. So demand and supply are the market forces are the invisible hand, which are going to decide the price. Everybody's mean by competitive market equilibrium. Market equilibrium with many buyers and many sellers. That is called competitive market equilibrium. As we have made in our previous lecture. And we are now able to understand supply and demand curve. So this positive slope is supply curve and a negative slope base demand curve. The point where supply and demand are intersecting. That point is called market equilibrium because at this point, quantity, demand and quantity supplied both are equal and at this point, price will be equilibrium price maybe. That is called bias Katie equilibrium. And the price is decided by market forces which are quantity, demand and quantity supplied. At this point, there is no surplus and no shortage. It might be possible that in Markey did maybe suppliers and maybe shortage. So now let's discuss what is mean by surplus n shortage. So now let's discuss what is mean by a surplus. And shortage or surplus mean a situation where quantity supplied is greater than the quantity demand. And charted mean. A situation where supply is less than the demand or demand is greater than the supply. So now, let's discuss both of these two cases by graphitic graphically in a market equilibrium. As you can see that on y-axis we have taken price and an x-axis we have taken quantity. Quantity supply curve is positive slope and demand curve is negative slope. The point where demand and supply are intersecting, that will give us the equilibrium quantity and equilibrium price. So now let's say if due to certain reason, price increases from 500 to 600. So when price increases from 500 to 600, at this price, this will be our demand, which is four. And at this price, our supply is six. So supply is greater than demand. Again, look at this when price increases from 500 to 600. So this will be our demand, and this will be our supply. Supply is greater than demand. So the difference between supply and demand, that is called surplus. There is 6 million tablet are supplied in the market, but the demand for those doublet are only 4 million. So the difference between supply and demand is two and the dash 2 million are called surplus. Supply increases and demand decreases. That is according to the law of supply and demand. When price increases from five to 600, being a producer, we will supply more of that good, as we discussed in loves to play that when price increases, supply increases due to increase in price from 500 to 600, we have increased our supply from four to five to six. But being a producer when price increases from being a consumer, when price increases from five to 600. Not that good is expensive for us, so no, we will buy less of that good. So we, we decrease our demand from five to four. So increase in price decreases the demand, and increase in the price increases the supply. So that will create surplus in the market. So now if price decreases from 500 to 300, so when price decreases at this 300 price, this will be our supply, that is three. And this 300 price, our demand is seven. So demand is 7 million and the quantity supply is 3 million. So the demand is greater than the supply. At this price, more people are willing to buy this tablet. But at this price, producers are not willing to supply that amount of good in the market. So the difference between demand and supply, it is called shortage. When price decreases being a consumer, now, we are willing to buy more amount of that good. But when we consider myself as a producer at this price, we're not willing to supply more amount of that good. Why? Because our profit decreases. When price decreases, supply decreases and when price decreases, demand increases and it will create disequilibrium in the market. And there will be two cases. One is called surplus and the other one is called shortage. So now discuss two other cases one-by-one, that if supply increases and there is no change in demand, what will be the effect on market equilibrium? When there is no change in supply and demand increases or decreases, then what will be the effect on market equilibrium? So now let's discuss the first case. When there is no genuine demand curve, we have a single demand curve. And supply increases. When supply increases, supply curve will shift, right? As there is no change in price. So now when supply increases due to other factors, supply curve will shift S1 to S1, S2. This is our equilibrium before changing supply. And at this equilibrium, p1 is the price level and Q1 is the equilibrium quantity. When supply increases from S1 to S2, our disequilibrium, our equilibrium, we shifted from this point to this point. And this point, our new price is P2 and quantity is Q2. This increase in supply have reduces our price from P1 to P2 and quantity increases from Q1 to Q2. Why this is happening that increase in supply decreases the price level. This is because the reason when there is more number of supplier in the market, but less buyer in the money market. This will decrease the price level, a thing which is available on every shop in a bounded quantity. But there are very few buyers in the market. So this will decrease the price level. On the other hand, if due to certain reasons supplied decreases, maybe due to flood, for example, the wheat production decreases. So supply curve is shift left, and as a result, price will increase and quantity decrease it. This might be the case. So now let's discuss what will be the effect on market equilibrium. Then there is no change in supply, but demand increases. Demand increases, maybe due to increase in income, may be due to change in fashion. Maybe due to changing weather, maybe due to change in population, demand increases. So before increase in demand, that is our initial equilibrium level where supply and demand both are equal. At this point. This is the price level which is P1, and this is our quantity which is Q1. Demand increases. So we know that when demand increases, demand curve will shift outward. So when demand increases from D1 to D2, that is our new equilibrium. At this point we are, we can see that this is our price level and the server quantity supplied. So due to increase in demand, price increases and quantity also increases. This is a natural phenomena. When consumers are continuously buying any product, then price of that product increases in the market. Because being a producer, we know that whatever price we charge, people are willing, or people are ready to buy that good, because there is a lot of demand in the market. But supply is very limited. So everyone is willing to buy that product at any cost. Because no, denote that supply is limited. If supplies are some changes that might, will reduce the price as well. But Now we are considering that there is no change in supply, but demand is increasing. So when demand is increases and there is no change in supply. So people know that if we will not pay that price, some other ones or some other consumer will, dad will buy that good. So by considering this scenario, people are willing to buy that good at any kind of price. So due to increase in demand, we know that there is less amount of good available in the market. So being a producer, we will charge higher prices for that code. So now let's discuss two different cases. In previous cases, we discussed that only supply changes are only demand chain is what Noachian considered that if supply and demand both changes, then what will be the effect on market equilibrium? So in the first case, in the left-hand side of the panel, you can see that S1 and D1 is the initial market equilibrium level. As you can see that it is written as initial equilibrium. S1 and d1 is showing initial equilibrium. And P1 is our initial price level, and Q1 is the initial quantity level. In this left panel, supply and demand both increases as we know that when supply increases, supply curve will shift rightward and when demand increases, demand curve will shift outward. But in this case, what heparin, supply increases, but demand increases more than the supply. How, how can we say that? We can say that by seeing that distance between the new supply curve and the old supply curve and the new demand curve and the old demand curve. The distance between supply curve S1 and S2 is minimum as compared to the distance between the D1 and D2. So it means that supply and demand both are increasing, but demand increases more than the supply. So this will increase our price level because still the supplier or not enough to meet that demand. So as a result, price increases. In this case, supply and demand. Again, both increasing. But in this time, supply increases more than the demand. When supply increases, supply curve will shift rightward. As you can see, that supply curve has shifted to right word. When demand increases, demand curve will shift upward or output, as you can see that demand increases from D1 to D2. But in this case, supply has increased more than the demand. So this will decrease our price level from P1 to P2. So when there is more change in demand as compared to supply, this will increase our price level. When there is more change in supply as compared to the changing demand, this will decrease our price level. So this is n for our supply and demand topics. 29. Elasiticity: Hello students, welcome to our today lecture. In our previous lecture, we have discussed that how to determine equilibrium price and equilibrium quantity with the help of a graph. In today's lecture, we are going to discuss that. How can we calculate equilibrium price and equilibrium quantity when we have some mathematical equations? So here we have two equations. First one is Q equals 200 minus 62nd, one is q equals to 28 plus three b. Basically, both equations have only Q. We have to decide for herself that alter them. Which one is quantity demand equation? And which one is it? Quantity supply equation. As you can see that I have mentioned that this equation is quantity demand equation, and this equation is quantity supply equation. The question arises why I have given this as quantity demand equation m and y. I have given this equation as quantity supplied patient. That isn't a simple debt. In this equation. P has negative sign. So as we already discussed in law of demand, that quantity demand is negatively related with price. So that's why we name this equation as quantity demand equation. And we have already discussed in loves to play that price and supply are positively related when price increases, supply increases. So price and supply a positive relationship. So in this equation, p has positive sign. So we write this equation as quantity supply equation and a 100 in this occasion it intercept. And similarly in this occasion 28 is shown as intercept. So as we have quantity demanded quantity supply equation, so equilibrium, we have to put q equals two. Q is for equilibrium condition. After showing QD goes to Q S, we have to simply put on quantity demand equation instead of Qdy. And we have to write quantity supply equation from these two cubed equals two and n minus six v. So we have written S and n equals two, q equals 200 minus six P. And for Q, as we have written, q d q s equals to 28 plus three. So after writing both of these equations, we simply interchange the variables. We have transferred constant to one side of the equal, and we had transferred variable to the other side of the equation. When we transfer this 282 left-hand side of the equation, it will become negative. And when we subtract a 100 minus 28, the remaining will be 72. When we transfer this minus six P to this p, this side will become positive and three plus three plus six P will become nine p. So we have to find price and we have to separate this name from this p. Nine is multiplying with this P. And when we transfer this nine to other side of the equation and a cardiac two mathematical rule. If the number is dividing or multiplying on one side. And when we transfer it to the other side, it's efficient. It will sit position, so it will divide on the other side. So nine is melting away with p. So when we transfer this P to this side, it will divide it by 72. And when we divide sent it to with nine, we have equilibrium price P equals to eight. Now we have to check that whether our answer is correct or wrong. We have to simply put this P into both these equation. Q equals to QS quantity answer must be same. So first step we have QD equals 200 minus six feet. And we are putting a price here instead of P. So these two terms are multiplying. So when we multiply a with six, we have 48. And when we subtract 4800, the remaining answer is 52. So quantity demand is 52. We have to do similar procedure with this quantity supply equation 28 plus three p. And we have put on the value of p, which is 88, is multiplying by three. And when we multiply a with three, it becomes 24. So 28 plus 34 equal to 52. So we came to know that Q dy equals to Q as our price. Our answer is two. And judy equals to QS or so market is in equilibrium. We can similarly show these effecting graph. Here. On y-axis we have taken the price and annex Texas, we had taken the quantity. So this is the positive slope which is slept Laika. And this is the negative slope, which is demand curve. So here the demand and supply are equal. So at this point, equilibrium exists. And against this point, this is the equilibrium price which is eight. And against these equivalent brand, it is our equilibrium quantity. We just fit it to an demand and supply both are equal. At this point. 30. Difference between intercept and slope: Hello everyone. Welcome to our today lecture. In our today lecture, we are going to discuss what is the difference between intercept and slope. Basically, intercept shows the average value of the dependent variable when our other variables are. On the other hand, slope shows that the shape of the curve slope shows that responsiveness, independent variable due to change in independent variable. Basically, in mathematical term, if we write a quantity demand function, quantity demand is equals to a minus B. Here D is the DV, the dependent variable. Price is the independent variable. Here is the intercept. Basically, intercept shows the average value of the dependent variable when all other variables are zero, in this case. In this particular equation, A shows that maximum value of the demand when price is zero. Because in this equation, when we put here D is equals to A minus B, we put a zero. The remaining amount will be A. A shows the average value of the dependent variable when all other variables are zero or when price is zero. On a graph on y x we are taking price, and on x x we are taking quantity demand. As we know that the demand curveys negative slope. So this is our demand curve at this point. This is our intercept A. Because at this point price is zero. Against this point, price is zero and demand is at maximum level. At this point, price is zero and demand is a maximum point, maximum level or maximum point. This is our race slope is negative as this sign shows that there is a negative relationship between price and quantity demand, our slope will be negative. Slope also shows the degree of responsiveness because it is possible that when there is increase in, for example, increased by 5% it may be possible that demand decreases by 2% This is called a slope, that how much response is shown by demand due to change in price? This response may be equal to one, maybe less than one, or maybe greater than one. That is depending upon the responsiveness. So we will discuss this topic in our elasticity of demand, but our today topic discussion was what is the difference between intercept and slope? Intercept shows the average value of the dependent variable when all other variables are zero. Slope shows the shape of the curve, that it is going to be negative or positive, or the degree of responsiveness in the dependent variable due to change in the independent variable. 31. Mathematical approach to find P and Q: Hello students, welcome to our today lecture. In our previous lecture, we have discussed that how to determine equilibrium price and equilibrium quantity with the help of a graph. In our today lecture, we are going to discuss that. How can we calculate equilibrium price and equilibrium quantity when we have some mathematical equations? So here we have two equations. First one is Q equals 200 minus six P. And second one is q equals to 28 plus three b. Basically, both equations have only Q. We have to decide for herself that alter them. Which one is quantity demand equation? And which one is it? Quantity supply equation. As you can see that I have mentioned that this equation is quantity demand equation, and this equation is quantity supply equation. The question arises why I have given this as quantity demand equation m and y. I have given this equation as quantity supply a patient. That isn't a simple there. In this equation. B has negative sign. So as we already discussed in law of demand, that quantity demand is negatively related with price. So that's why we name this equation as quantity demand equation. And we have already discussed in loves to play that price and supply are positively related when price increases, supply increases. So price and supply a positive relationship. So in this equation, p has positive sign. So we write this equation as quantity supply equation and a 100 in this occasion it intercept. And similarly in this occasion 28 is shown as intercept. So as we have quantity demanded quantity supply equation, so equilibrium, we have to put q equals two. Q is for equilibrium condition. After showing QD goes to Q S, we have to simply put on quantity demand equation instead of Qdy. And we have to write quantity supply equation from these two cubed equals two and n minus six v. So we have written as Android equals to q d equals 200 minus six P. And for Q, as we have written, q d q s equals to 28 plus three. So after writing both of these equations, we simply interchange the variables. We have transferred constant to one side of the equal, and we had transferred a variable to the other side of the equation. When we transfer these 282 left-hand side of the equation, it will become negative. And when we subtract a 100 minus 28, the remaining will be similar to when we transfer this minus six P to this p. This side will become positive and three plus three plus six P will become nine p. So we have to find price and we have to separate this name from this p. Nine is multiplying with this P. And when we transfer this nine to other side of the equation and cardiac two mathematical rule. If the number is dividing or multiplying on one side. And when we transfer it to the other side, it's efficient. It will sit position, so it will divide on the other side. So nine is melting away with p. So when we transfer this P to this side, it will divide it by 72. And when we divide sent it to with nine, we have equilibrium price P equals to eight. Now we have to check that whether our answer is correct or wrong. We have to simply put this P into both these equation, Q equals to Q S and quantity answer must be same. So first step we have QD equals 200 minus six feet. And we are putting a price here instead of P. So these two terms are multiplying. So when we multiply a with six, we have 48. And when we subtract 4800, the remaining answer is 52. So quantity demand is 52. We have to do similar procedure with this quantity supply equation 28 plus three p. And we have put on the value of p, which is 88, is multiplying by three. And when we multiply a with three, it becomes 24. So 28 plus 24 equal to 52. So we came to know that Q dy equals to Q as our price. Our answer is two. And judy equals to QS or so market is in equilibrium. We can similarly show these effecting graph. Here. On y-axis we have taken the price and annex Texas, we had taken the quantity. So this is the positive slope which is slept Laika. And this is the negative slope, which is demand curve. So here the demand and supply are equal. So at this point, equilibrium exists. And against this point, this is the equilibrium price which is eight. And against these equivalent brand, it is our equilibrium quantity. We just fit it to an demand and supply both are equal. At this point. 32. Final: Hello students, welcome to our today lecture. In our previous lecture, we have discussed that how to determine equilibrium price and equilibrium quantity with the help of graph. In today's lecture, we are going to discuss that. How can we calculate equilibrium price and equilibrium quantity when we have some mathematical equations? So here we have two equations. First one is Q equals 200 minus six P. And second one is q equals to 28 plus three b. Basically, both equations have only Q. We have to decide yourself that alter them. Which one is quantity demand equation? And which one is a quantity supply equation. As you can see that I have mentioned that this equation is quantity demand equation and this equation is quantity supplied in question. The question arises why I have given this as quantity demand equation m and y. I have given this equation as quantity supplied patient. There isn't a simple debt in this equation. P has negative sign. So as we already discussed in law of demand, that quantity demand is negatively related with price. So that's why we name this equation as quantity demand equation. And we have already discussed in loves to play that price and supply are positively related when price increases, supply increases. Price and supply a positive relationship. So in this equation, p has positive sign. So we write this equation as quantity supply equation and a 100 in this occasion it intercept. And similarly in this occasion 28 is shown as intercept. So as we have quantity demanded quantity supply equation, so equilibrium, we have to put q d equals to q is for equilibrium condition. And after showing QD equals to Q S, we have to simply put on quantity demand equation instead of Qdy. And we have to write quantity supply equation from these two cubed equals two and n minus six v. So we have written as Android equals to q d equals 200 minus six P. And for Q, as we have written, q d q s equals to 28 plus three. So after writing both of these equations, we simply interchange the variables. We have transferred constant to one side of the equal, and we had transferred a variable to the other side of the equation. When we transfer this 282 left-hand side of the equation, it will become negative. And when we subtract a 100 minus 28, the remaining will be 72. When we transferred this minus six P to this p, this I will become positive and three plus three p plus six P will become nine p. So we have to find price and we have to separate this name from this p. Nine is multiplying with this P. And when we transfer this nine to other side of the equation and cardiac two mathematical rule. If number is dividing or multiplying on one side, and when we transfer it to the other side, it's efficient. It will sit position, so it will divide on the other side. So nine is multi-sig Paraguay with p. So when we transfer this P to this side, it will divide it by 72. And when we divide sent it to with nine, we have equilibrium price P equals to eight. Now we have to check that whether our answer is correct or wrong. We have to simply put this P into both these equation. Q equals to QS quantity answer must be same. So first step we have Judy equals 200 minus six feet. And we're putting a price here instead of P. So these two terms are multiplying. So when we multiply it with six, we have 48. And when we subtract 4800, the remaining answer is 52. So quantity demand is 52. We have to do similar procedure with this quantity supply equation, 28 plus three p. And we have put on the value of p, which is 88, is multiplying by three. And when we multiply a with three, it becomes 24. So 28 plus 34 equal to 52. So we came to know that Q dy equals to Q. It's means our price is two. And judy equals to QS or so market is in equilibrium. We can similarly show these effecting graph. Here. On y-axis we have taken the price, and on x-axis we have taken the quantity. So this is the positive slope which is slept Laika. And this is the negative slope, which is demand curve. So here the demand and supply are equal. So at this point, equilibrium exists. And against this point, this is the equilibrium price which is eight. And against these equilibrium point, it is our equilibrium quantity which is fitted to n, demand and supply. Both are equal. At this point. 33. Consumer behaviour: Hi everyone, Welcome to about today lecture. In today's lecture we are going to discuss the theory of consumer behavior. In this lecture, we are going to discuss the different approaches to consumer behavior. We can say that how utility, basically there are two widely used conserve theories to Mayor de utility. One is called cardinal approach and the other one is called ideal approach. Guided L approaches proposed I presented by Alpha, which is also known as the Marshall alien approach. And the second one is ordinal approach, which is proposed are introduced by Hicks NLM. That is also called indifference curve approach. So in today lecture, we are going to discuss each of them one by one. So now let's discuss about the basic concept of utility. Basically, utility is a synonyms with play here, satisfaction and sense of fulfillment of desert. Basically, when we're thirsty and want to drink water, and after drinking water, our thirst or our desire for drinking will be fulfilled. So it means that water has the power to satisfy our warrant. And the second concept which is used for utility is, utility is one satisfying power of a commodity guilty till t is a psychological phenomenon. What is mean by that? Utility is a psychological phenomena. It means that it is related to mental, mental satisfaction. It is related to your mind. So that's why we are calling it as a psychological phenomenon. Now we will discuss that what are the different features of utility? Basically, the first feature of utility is that utility is subjective. What is mean by that utility is subjective. It means that it deals with the mental satisfaction of men. For example, has utility for a drunkard, but not for a person who don't like drinking, it has no utility. So if a person is drinking alcohol, it might be possible that that particular person have utility in drinking alcohol, but alcohol has no utility for that person who is not drinking. Similarly, if a person is used to smoke, a cigarette has a utility for that person who is smoking. But the cigarette has no utility for debt per cent who is not smoking. And the second feature of the utility is that utility is relative. What these mean by utility is relative. It means that utility of a commodity never remains same. So it varies with time, place, and person. For example, heater as utility inventor, but not during summer. So it means that everything has utility according to the time period. And it varies with different situations. Like here I just mentioned the example of heater. Heater are useful in winter season. They're not useful in summer season. Similarly, AC are useful in the summer season, but they're not useful in the winter season. That is the meaning of that. Utility is a relative. Utility varies from time, place, and person to person. And furthermore, feature of utility is that utility is not essentially useful. What does it mean? It means that a commodity having utility not to be used, for example, cigarette is not useful but it satisfies the want of an addict. Those have utility for him. So it means that it is not necessary that everything, whichever utility that might be useful. Like here, I mentioned the example of a smoker who is smoking a cigarette. Cigarette it just satisfying his utility. But it does not mean that that cigarette is useful for him. As you all know that smoking is injurious to health, it has multiple side effect for this smokers. That is mean bye. Utility is not essentially is useful. And one more feature of the utility is dead. Utility is ethically neutral. It means that utility has nothing to do with ethics. Use applicant may not be good from the moral point of view. But as these in toxic can satisfy one of the drunkards, they have utility. So basically these are the major features of the utility. Now we will discuss that. What are the different concepts of the utility? The first concept of the utility is that initial utility, total utility. And at last we will discuss about marginal utility. So now let's start by initial utility. Initially utility mean that utility which we have from the consumption of first unit of a commodity that you do d, which you take from the first glass of parties, from the first byte of pizza, or anything which you are using. The first two units of that commodity. Utility is called initial utility. Total utility. Total utility mean the aggregate or the sum of utility obtained from the consumption of the different units of commodity. As you can see here, that total utility equals to utility from the first unit, utility from the second unit, plus the utility at the third, plus utility at the four and up two, so on. So when you add up the utility of all the number of units that you have consumed. So some of the unit event you have consumed, the sum of that unit consumed utility is called total utility. And there is one other concept of the utility that is called marginal utility. What is mean by marginal utility? Marginal utility mean that the utility which you gain by using or by taking one extra unit of any commodity. But you can see that change in total utility, the resulting from the change in consumption at this formula for marginal utility equals to total utility of all the number of unit consumed plus total utility. Now n minus one, which is minus previous. And did some types of marginal utility. Positive margin utility. What is mean by positive marginal utility? As we have discussed earlier, that marginal utility means that utility which we have by consuming one extra unit. So as long as we are taking another, another and one more, and more and more unit of any commodity. And its utility remains same, same, or we can say that it has positive effect on the total utility. That extra advantage from that particular code is called marginal utility or the positive marginal utility. And 0 marginal utility. When we are continuously using our good deeds of point, where the utility of that particular goods become 0. And negative marginal utility means that when we reach a point where the marginal utility of any particular code becomes 0. And if we still continue to consume that good after that point, then it's utility will becomes negative. We can take the example of writer. Venue are very tasty. So you will like to drink water. The first glass of water, or the first unit, which you have very gives you the maximum utility. And the second unit will give you less satisfaction. And third will give more or less as compared to this second one. And you'd raise a point. When you say that, No, I have maximum number of maximum amount of water. So it means that no, you are utility from water has been fully satisfied. But if you still continue to consume more number of plants have white eyes, then you feel like the conditions of vomiting. So it means that no debt utility will becomes negative. In our today lecture we are, we are just finished here and our next lecture we just start from next point. 34. Cardinal approach to measure utility: Hi everyone. In today's lecture we are going to discuss the first approach to my year utility. As in previous lectures, we have already discussed in detail that what is utility? And we have different, we have discussed different types of utility, different concept of utility. And about today lecture, we are going to discuss that what are the different methods to measure utility? The first method to measure utility is called cardinal approach. This method was introduced by Alfred Marshall and that's why it is also called machete and approach to measure utility. In this approach, we will discuss the law of diminishing marginal utility. The law of diminishing marginal utility states that other thing remaining the same path, ceteris paribus. When you continuously uses a good, it gets less and less satisfaction. It reads to 0 and then becomes negative. As you know, that before making any law, any theory in economics, we have to make certain kind of hubs and shims. Are, we have to take certain things at constant. We sometimes call them ceteris paribus. Without making any assumptions, we cannot predict any law and economics. So other things remaining the same means that there is no gene, any other factors. And when we continuously uses a good, it will give us less and less satisfaction. And then it will become 0. And if we still continue to use that product after that point, then utility will becomes negative. What are the different assumptions of this law? The first assumption is that homogeneous product. What is mean by a homogeneous product? It means that the unit which we used at first time, we have to use a similar unit for the second time and for the third time, and then for the fourth time and so on. It will not change how many units we have consumed. So homogeneous product mean the commodity or the unit which we used at first time, we have to reduce the same number of units for the second, third, and so on. And the second assumption is the suitable quantity. Suitable quantity mean that the number of units which we are using that must be suitable. For example, we have, we have not drink whole the bottle in a single unit or in a single time. We do not have to use very small number of units. Otherwise, our love will not become too. The third assumption is utility is cardinal. Utility is cardinal mean that we may get utility in numbers timeline 1234. The fourth assumption, which is the most important assumption, and that is continuous use of the product. We have to use the product continuously. If we are using a wine glass in a bargaining than the second class in the evening and the fourth class in light. So the gloves which we have used in maddening, it has its own advantage. And the glass which we have used in daytime, it has its own advantage. And the last which we are using evening it says on advantage. So in this way, this will become not true. So far the two occurrence of this law, we have to use that commodity, commodity continuously. We have to use after one by one unit of good. The fifth assumption is that no genuine taste. No genuine taste mean that if we use first glass of simple water, then it must be the same glass of water for the second time, we are not drinking any kind of Coke or Pepsi or some other kind of dream. So there is no change of taste. And elastin I'm seeing is that note you need mental level. It means that there is no change in the. Behavior of the consumer. For example, if a doctor said to anyone that if you drink more water, it will be helpful for you. So in this way, this will, this lab will not hold. You know, sometimes people are facing kidney problems and doctor suggests them that the more the water you intake, it will be more beneficial for you. So in this way, when a person is currently continuously using more number of unit of water, it will give him or her more level of satisfaction or his utility will increases. So they will be no changing 1011. So these are the assumption of this law. As you can see that we have a table here. The table shows that a particular person is taking six glass of water. Against the glass of water. His total utility and marginal utility is given. When the person is not taking any glass. His total utility and marginal utility is 0. When any person is or has taken first-class, it will give him or her age unit of utility. And the second year end when he takes second glass of water is utility will become 14. And when he, when he will take. Third unit of glass is total utility will become 18 and up two, so on. So how can we be marginal utility? As we discussed earlier, that the marginal utility shows that utility which we have by using one extra unit of finding good. As you can see that when a person uses first-class or whatever, his total utility is it. And when he takes second glass of water, his utility will become 14. Eight utility he has already. So what is the change by using second number of units, that is 614 minus eight equals to six. So the second glass give him or her six unit of utility. So when he uses third unit of glass, the total utility will become a t. But here have already 14 utils. So what is the benefit of using third glass? That is for, how can we seeing this? We are saying this because 18 minus 14 equals to four. And similarly goes on. Up to this point. When he uses fifth glass is total isn t is 20 and his marginal utility is 0 because 20 minus 20 equals to 0. So at this point is total utility is at maximum point. And when he still continues to use this code, after this point is utility will becomes negative. So now let's discuss all these inner dove. As you can see that here, on y-axis we have taken total utility. And on x-axis we have mentioned the number of units consumed. So we just have plot all the utility here and number of units here. And we just joined the, all of these points and we have the totals. You take it up. In this graph, we have marginal utility on y-axis and total number of units consumed on x-axis. As you can see in this table, that marginal utility is decreasing from 86420 minus two. So it means that this curve will be negative slope. As you can see that we have here a negative slope, Marginal Utility. At this point. Marginal utility is 0. When marginal utility is 0, at that point, total utility is at maximum point. So what is the relationship between marginal utility and total utility? The first relation is that they both start from the same 0.2 is that when marginal utility is 0, at that point, total utility is always at maximum point. And the third relationship is that when marginal utility becomes negative, then total utility start to decreases. 35. Budget line: Hi everyone. Welcome to our to day lecture. In our to day lecture, we are going to discuss what is budget line. We will see how we can draw budget line. First of all, we will discuss that theoretically, what is made by budget line. Basically, budget line is also called the price line that shows different combination of two goods and options of two commodities like x and y that the consumer can purchase by spending is income at the given prices of the commodities. Basically, every individual have a limited budget and we have to manage his or her expenses according to that budget line. Every month we are having a fixed amount of salary. We have to allocate, allocate our expenses according to that limited amount of money. Basically, we can write a budget line or the budget equation. Mathematically, as I equals to x p of x plus x y, Y here is showing the level of income. X is showing the number of unit of x, x is showing the price of x, y is showing the number of unit of y, Y is showing the price of y. No, let's discuss all the things through a table. Here we have an example of an individual who have the limited budget of $50 The price of rice, PR is showing the price of rice, which is $10 W is the price of wheat, which is supposed to five. Here are the different combinations. This is the budget allocation or the budget line. If that particular consumer is not purchasing any unit of rice, then he can purchase a maximum ten unit. What as the one unit? What price is five? He can purchase ten unit of wheat with his limited budget. When he is not taking any unit of rice, the total budget is equals to 50 A. We have put zero y because he is not buying any unit of gold of rice, ten into zero, which is equals to 0.10 multiply by five equals to 50. When he is buying one unit of rice, the price of one unit of rice is $10 The remaining budget for what is 40? With the amount of $40 he can purchase eight unit of wheat. Because one unit price is 41 unit price of what is five. He can purchase maximum number of unit of what is 810 into 18. Into five equals to 40 plus ten equals to 50. When he is buying two unit of rice, rice price is ten. He allocated his budget of 20 reps in the consumption of rice. The remaining budget is $30 The price of one unit of what is five he can purchase. Maximum number of unit of weight is six because he has a remaining budget of $30 and the price of weight is five. So he can purchase maximum number of unit of weight is six. He has purchased two units of fat, ten into two plus he has purchased six unit of wheat and one unit what price is 56 into 53010 into 2030 plus 20 equals to 50. And similarly goes on at combination. He is buying five unit of rice and one unit price of rice is ten. He is allocating all of his budget on the consumption of rise. And the remaining budget is zero. So he cannot purchase any unit of what we are putting a zero f what, when he is purchasing or spending all of his income on the consumption of rise. Maximum can purchase five unit for rise as the one unit A price is $10.10 into five equals to 50. Now we will draw this in a graph. Here on y x, we have taken number of unit of what? X x. We have taken the number of unit when he is purchasing ten unit of what he is spending all of his income on. What he is not purchasing any unit arise 010. Here is the first combination, when he is purchasing one unit of rice. At that moment he is purchasing a unit of wheat. And similarly goes on all these combination when we draw all these points, after drawing all the point when we joined all these points, we have a budget line here. Budget line can rotate and shift as well. Budget line when there is a change in price of x or change in price of good y. And it will shifted when there is a change in income. 36. Consmer equilibrium: Hello students. Welcome to our to day lecture. In our today lecture, we are going to discuss the consumer equilibrium through indifference curve and budget line approach. As our in previous lecture, we have discussed about the budget line and the indifference curve. Now in today lecture, we will discuss how a consumer is in equilibrium. U, in indifference curve and budget line approach. First of all, let's discuss the basic idea of the consumer equilibrium. A consumer is in equilibrium when the highest indifference curve is tangent to the budget line or the point where the slow path C is equals to the slow path budget line, indifference slow MRS, marginal rate of substitution, the rate at which a consumer is willing to trade off between good far, good or good far. Similarly, the slope of budget line is the price line or the price ratio, that is x y. The point where these both slopes are equal, that point shows the consumer equilibrium through indifference curve and budget line approach. While discussing graphically here, the green line is the budget line. These are the different indifference curves. As in our properties of indifference curve, we have discussed that higher indifference curve give us higher level of satisfaction. But for consumer equilibrium, it is necessary that indifference curve is ten to the budget line. If a consumer can attain this level, then his satisfaction and utility increases. But every household has limited amount of budget. He cannot move away from this budget. Ic three is not attainable for household, this is beyond our budget. We cannot attain this indifference, the bundle of goods which are mentioned on this axis. Similarly, while discussing IC one, this indifference curve is also not showing the consumer equilibrium. Because at this indifference curve, there is under utilization of resources only option remain. That is C two, where indifference curve and budget line both are ten to each other, both are equal, the slopes are equal. C two is showing the consumer equilibrium under indifference carve and budget line approach. One thing more, we have only taken two goods, good y y xs and good x x xs. Because in indifference curve and budget line, we discussed that indifference curve shows the different combination of two goods. Similarly, budget line is also shows the combination of two different goods which a consumer can attain. Consumer is in equilibrium when the highest indifference carve is ten to the budget line. 37. Properties of indifference curve: Hi everyone. In our previous lecture, we have covered the method to measure utility through the ordinal approach, the indifference cover approach. Our today lecture, we are going to discuss what are the properties of indifference curve R. I see, as in our previous lecture, I have mentioned that the first property of indifference is that indifference slope downward to right. The second property of the indifference is that they are convex to the origin. Why indifference curve slope downward? Indifference slope downward because of diminishing MRS, or the decreasing marginal rate of substitution. Moving forward, let's discuss about another property of the indifference curve. Is that higher indifference curve represents a higher level of satisfaction than as compared to the lower indifference curve. As you can see that here we have three indifference curve C1c2 and IC three. On IC one, we are taking this amount of good x one and this amount of good y1c2, we are taking this amount of x two and this amount of two. Similarly, uh, I, C three, we are taking this amount of good x and this amount of good y. As you can see, that on higher indifference curve give us more number of x, one and more number of good. That's why we are saying that higher indifference curve give us higher level of satisfaction ys. On higher indifference curve, we are able to take more number of good x and more number of good y. Higher indifference curve give us more and more level satisfaction as compared to the previous one. The next property of the indifference curve is that two indifference curve cannot intersect each other. Okay. Why? As we discussed in our previous property that higher indifference curve give us higher level of satisfaction if two indifference curves intersect each other. This is the violation of that property as higher and lower giving us the same level of satisfaction. That is not possible. Higher give us more level of satisfaction and the lower give us less satisfaction if two indifference, this is the higher one and this is the lower one. If they are intersecting at this point, it means that higher and lower both are giving us same level of satisfaction. That is not possible. This is the fourth property of the indifference curve, that two indifference curve cannot intersect each other. Why? Because if they intersect, it means that they are giving us same level of satisfaction. That is the violation of the previous property. The next property of the indifference curve is that indifference curve cannot be a stay kind. Okay. There are two extreme cases in which indifference curve may be state line or the L shaped. That is in the case of perfect substitute and in case of perfect complement. But when the goods are normal, the indifference curve can be state line. Why is that? If indifference curve state line, it means that on that point, MRS is constant. You are willing to forgo one unit of X for one unit of y. And similarly goes on, your MRS is not diminishing MRS. It will be constant in state line. That's why indifference curve cannot be state line if indifference curve becomes state line so that in that case, MRS will be constant, which is the violation of its definition. As we discussed in its definition that indifference curves are diminishing, are its slope downward to right, and MRS is decreasing. But in this case, MRS is constant. The next property is that indifference curve cannot be concave to the origin. As we had discussed earlier, that indifference curve connects to the origin. Okay? If indifference curves, uh, concave to the origin, it means that MRS is not decreasing, but it is increasing when MRS is increasing. In that case, that is the only possibility for indifference curve to be concave. It is not possible, as we have discussed in our earlier lecture, that MRS is decreasing if indifference curve in this shape that is concave to the origin. That is only possible when MRS is increasing. That is also against the definition of indifference curve, as we discussed, that MRS is decreasing. But if MRS is increasing, that will make indifference curve concave to the origin, which is also the violation of the definition of the indifference curve. The next property of the indifference curve, that indifference curve are not parallel to either Xs indifference curve cannot be parallel to y x indifference curve cannot be parallel to x x. Why is that? As in our definition, we have discussed that indifference curve. Indifference curve shows the combination of two goods. Okay? And the MRS is decreasing. If indifference carves parallel to y x, it means that we are keeping constant x and we are increasing the number of unit of y, okay? As you can see, that we are consuming the number of unit x, only one unit, and we are increasing the number of unit. That is not possible, as we discussed in our definition, that if you want to increase the number of unit of Y, then you must have to reduce the number of unit x. Increasing the number of unit of y, you cannot keep constant the number of unit of x. That is the violation of the definition. Similarly, indifference curve are not parallel to x x. If you are increasing the number of unit of x and you are keeping the number of unit of y constant. In that case, indifference curve becomes parallel to x x. That is not the property for indifference curve. If you are willing to increase the number of unit of x, then you must have to reduce the number of unit of y. It is not possible that you are going to increase the number of unit of X and you are keeping constant the number of unit of Y You must have to reduce. You must have to forego the number of unit of one God. If you are willing to take more number, unit of the other codes. The last property of the indifference curve is that indifference curve cannot touch either y x or x x. If indifference curve touch this x y x, it means that at this point you are taking zero number of unit of x. That is not possible because in definition, we have discussed that indifference curve shows different combination of two goods. There must be two goods. If indifference to this x, it means that the other good is zero, which is the violation of the definition. If indifference curve this is, it means that you are taking x good. You are not taking any unit of goods. When you IC, touch either y x or x x, it means that you are purchasing only one good. The other good is zero. That is the violation of the definition of the indifference. These are the properties of the indifference. 38. Total cost theory: D students, welcome to our total lecture. In our previous lecture, we have discussed about the concept of fixed cost variable cost and marginal cost. In today lecture, we are going to discuss that what is total cost. Basically, in a production process, we are facing multiple cost. When we add all of these cost, we have total cost. Total cost is usually the sum of fixed cost plus variable cost. Total cost is the sum of all the costs incurred in the production of any good and is donated by TC and total cost equals to fixed cost FC plus variable cost, which is VC the slope of total cost is MC that is madinle cost c 39. Total cost curve: Students welcome to today lecture. Today lecture we're going to discuss that how to make total cost curve. As in our previous lecture, we have discussed all the cost in table Farm. From now on, we will be making every cost curve separately. In our today lecture, we are going to discuss how to make total cost curve. As you can see that here we have the number of output produced 0-14 unit against these quantities or output total cost values here. Now what we are going to do, we are simply going to put on the total cost values on y xs and the number of quantities produced on x x. As you can see that in this slide, I have put on all the number of quantities produced on x x. The number of cost values are on y xs against all these values. When we are producing one unit, we are bearing the total cost of three. Similarly, when we are producing two units, we have cost of 3.80 And similarly for three, we have cost of 4.40 I just simply plot all these values here. After that, we just have to simply join these dots, which are against the number of quantities produced against the total cast at that particular time. After joining all the point, it will give us the total cast. 40. Cost in equation form: Hello students. Welcome to our to day lecture. In our previous lectures, we have discussed about the different types of the cost theoretically. Then we have discussed all of these costs in a table farm. In our today lecture, we are going to discuss how can we write a cost equation farm if all the costs are given us in equation form? How can we separate fixed cost and variable cost from the total cost function? As you can see that Are TC is showing total cost which is equals to 500 plus 40 Q. Now we have to find out fixed cost, variable cost, average variable cost, average fixed cost, and average cost. As according to definition, we know that fixed cost is a cost which is not related with your output. As we can see that this 500 is constant. No variable is multiplied by way this constant. It means that this cast must remain same throughout the production process. If output increases or decreases, that output is not affect this 500. It's mean that this 500 is our fixed cost because this is not changing changing in output. The next we have to find is the variable cost. As you can see in this situation, this 40 is multiplying with Q. It means any change in Q will change this amount. When we put here one, it will become 40. When we put here two, it will become 80. When we are producing three units, we have to put three here and it will make it as 120. This is our variable cost because it is changing with change in output, our variable cost is 40. Now we have to find the average variable cost. As we have discussed in our previous lecture, that average variable cost is the variable cost divided by quantity. As we have variable cost for, we have to divide it by 40 divided by Q and it will give us variable cost. Similarly, average fixed cost is also can be calculated by the formula. Fixed cost divided by quantity have fixed cost 500 and we have to divide it by quantity 500 divided by Q. It will give us average fixed cost. The last is average cost. We can calculate average cost by two formulas. The first one is we have to divide total cost divided by quantity. Our total cost is 500 plus 40 Q divided by quantity. We will divide a whole this amount by Q and it will give us average cost. The second formula for calculation of the average cost is that if we add up average variable cost plus average fixed cost, it will give us average cost. 41. Fixed cost and variable cost: The students welcome to our today lecture. In our today lecture, we are going to discuss the different cost concepts which are being used in economics. As you know that cost and revenue both are one of the important for the profit maximization and output decision. In our today lecture, we will discuss how cost is important and what are the different types of cost. First of all, we are going to discuss what is meant by fixed cost. Basically, the cast that does not changes with change in output. You have to be at this cast. Either you produce something or nothing is denoted by C, which is fixed cost. The basic idea behind the fixed cast is that whether you are producing something or you have to be at this cast. For example, rent, you are going to set up a factory for that purpose. Rent alone from some person, According to mutual agreement, you are bound to pay a specific amount of rent to the owner of that land, where you are willing to build up a factory or a firm, at the end of the month or year, the owner of that firm will come to you and he or she will ask for his rent. He or she has no concern with the output. You cannot say that in this month I have produced nothing and I am not going to pay the rent. You must have to pay the rent, which is already being decided. With your mutual concern, Either you are producing zero unit or either you are producing 1 million number of units. You must have to be at this cost. That is rent that is fixed car, which is nothing to do with output. Similarly, wages of watchman or the gate keepers. Either you are producing something, you must have to pay them the wages. They have nothing to do with your output. The output does depend upon the cost, depend upon the output. That is car fixed cost. The second one is variable cost. The cost which changes with change in output is called variable cost. If your output increases, your cast will also increases and it is denoted by C. For example, electricity bill, labor wages, raw material prices. When you are willing to produce more number of good, then definitely you will use more electricity units. This will increase your bill due to change in output, You cast changes, that is called variable cost. Similarly, when you are willing, willing to produce more number of output, now you have to hire more number of labor and you have to be more amount in terms of wages due to change in output. Your cost also changes in pharma wages. Similarly, when you are willing to produce more number of goods, you need more raw material, you have to pay more father material. Your cost changes change in output. The cost which changes the change in output, that is called variable cost, and the cast which does not changes with change in output. That is called fixed cost. 42. Average fixed cost and average variable cost: Hello students. Welcome to our day class. In our today class, we are going to discuss how to calculate the values for average fixed cost and average variable cost. As our previous lecture, we have already discussed that we can calculate average fixed cost by dividing fixed cost with the number of quantity produced. We can calculate average variable cost by dividing variable cost with the number of quantities produced. Here you can see that we are producing one unit. We are giving the fixed cost, We have to divide three with one, which give us average fixed cost of three. When we are producing two units, we are still being fixed cost of three. We have to divide three with two, which give us average fixed cost of 1.5 Similarly, when we are producing three units, we are giving fixed cost of $3 And we have to divide three with three, which give us one. For this, we have to divide 34, which gives us 0.75 and goes on average. Fixed cost can be obtained by dividing fixed cost divided by the number of quantities produced. Fixed cost remain throughout the production process as it does not changes with genial output. The next is average variable cost. We can calculate average variable cost by dividing variable cost with the number of unit produced. We have to divide variable cost with this number of unit produced, which is one. When we divide 0.3 with one, it gives us 0.3 When we divide 0.8 with two, it gives us 0.40 Here, variable cost is 1.50 and we are producing three units. We have to divide 1.5 with three, and it gives us average variable cost. Here we are producing four number of units and our variable cost is 2.40 We have to divide 2.40 with four. And it gives us average variable cost of 0.60 and similarly goes on. This is the method that how can you calculate the average fixed cost, average variable cost? The next is how to draw the curve for average fixed cost and average variable cost curve. As you can see that on Y X I have taken the cost, on x x I have taken the number of quantities produced. This is the fixed cost when we are producing one unit, our fixed cost is three. When we divide three with one, it gives us average fixed cost of three. When we are producing two unit, our fixed cost is three. We have to divide three with two, it gives us average fixed cost of 1.50 And similarly goes on. We have to simply draw the values of average fixed cost here. After drawing these values, we have to simply join these dots and it gives us average fixed cost. The next is variable cost. Average variable cost is changing with changing in output. That's why when you're producing more number of unit, your cost is increasing. When we are producing one unit, our average variable cost is 0.25 When we are producing two units, our average variable cost is 0.5 and similarly goes on. We have just simply plotted these values from the previous table, and after plotting these values, we just simply join these lines and it gives us average variable cost. Keep one thing in your mind that when you are producing more number of units, it decreases your average fixed cost. And it becomes nearly horizontal to x x. But it cannot touch this x axis because fixed cost can never be zero. The possibility is average fixed cost zero only and only if your fixed cost is zero. 43. Average variable cost and average fixed cost: The students welcome to our new lecture. In our today lecture, we will discuss about the average fixed cost and average variable cost concepts. Average fixed cost is that when we divide fixed cost, total number of quantity produced, then we have average fixed cost is denoted by AFC AFC. Average fixed cost equals to fixed cost divided by number of goods or number of quantity you have produced. We can also write this formula into this form. Fixed cost equals to C divided by quantity, which is Q. Average fixed cost shows that how much fixed cost is being paid to produce one unit of quantity. Basically, average fixed cost give us a single value which represent the overall fixed cost for the production of total number of goods. Now we will discuss about the average variable cost. As we discussed earlier, that variable cost is the cast which changes with change in output. That is variable cost. When we divide that variable cast with number of quantity, it will give us average variable cost. Here you can see that the basic definition of the average variable cost is when we divide variable cost with total number of quantity produced, we have average variable cost and it is denoted by AVC, Average Variable Cost. The formula to calculate average variable cost, variable cost divided by quantity, or we can also write it as simplified form variable cost divided by quantity, the number of unit you have produce. 44. Average cost theoretically: Dear students, welcome to our today lecture. In over today lecture, we will discuss about the concept of average cost. Now let's discuss, first of all that is average cost and how can we calculate basically, average cost is when we divide the total cost, total number of quantity produced. Then we have average cost is denoted by C R. The second formula for the calculation of average cost is that average cost is the sum of average fixed cost, average variable cost. As you can see that both of these formulas are written here. According to these two definitions, average cost equals to total cost divided by number of quantity and it is represented by TC. Quantity is represented by Q. When we divide total cost divided by quantity, then we have average cost. And the second formula, far calculation of the average cost is average fixed cost plus average variable cost. Normally, the average cost curve is U shaped. In our upcoming lectures, I will explain in detail that y average cost curve is U shape. But as we are discussing this concept right now, I will give you the idea about that average cost curve shape. Average cost curve is U shape because of laws of return. The law of return, like increasing returns to scale, decreasing returns to scale, and constant return of scales will have the effect on the average cost curve. Because of these three laws or the variable proportion, average cost curve is shaped. 45. Average cost curve: Hello students. Welcome to our today lecture. In our today lecture, we are going to discuss how to calculate every total cost, average or average cost. After that, we will learn how to make average cost curve. As we have discussed in our early lecture, that average total cost can be calculated by using two different methods. We can calculate average total cost by dividing total cost by a number of quantities produced. We also calculate average total cost when we add average fixed cost plus average variable cost. When a total cost by number of unit produced, it gives us average total cost. As you can see, that when we are producing one unit, our total cost is 3.30 For the calculation of average total cost, we have to divide 3.30 with one, which gives us average total cost of 3.3 $0 When we are producing two, our total cost is 3.80 We have to divide total cost with the number of unit produced, 3.8 0/2 which gives us 1.90 When we are producing three units, our total cost is 4.50 We have to divide 4.50 with three, which give us every total cost of 1.50 When we are producing four units, our total cost is 5.40 We have to divide this total cost of 5.50 with four, which give us average total cost of 1.35 The second method for the calculation of average total cost is that when we add both of these two, average fixed cost and average variable cost three plus 0.3 which give us 3.301 0.50 plus 0.40 which give us 1.901 plus 0.5 which gives us 1.50 And these are the two methods for the calculation of average total cost. Now we will draw the average cost, the average total cost, Ca. As you can see that on Y Xs, we have taken the cost value. On X X, we have taken the number of units that are being produced when we are producing one unit, our average total past this when we're producing two unit, our total past when we're producing three units, our total cost. These are the dot point, which are being taken from the previous table against the average cost and the number of units that are being produced. After that, we have to simply join the curve. Total cost, the average cost. Keep in. Remember that y average cost curve is shaped, average cost curve shape. Because of loss of variable proportion. At this point, our cost is decreasing. At this point it reaches a minimum point and after that it is increasing. Average cost curve is decreasing because of increasing return to scale When you new labor giving you more production as to the previous labor than average cost is decreasing. At the minimum point, your new labor and the previous labor, the marginal product of the labor is constant. So that's why average total cost carve at minimum point are constant. When average cost carve start to increasing, the reason is behind that it is decreasing return to scale. Now you are new labor giving you less production as compared to the previous labor. You can also say that your marginal product of labor is decreasing. That's why average total cost is increasing from after this point. That's why average cost carve shape because of law of variable proportion. 46. Marginal cost: Students welcome to our new lecture. Today lecture, we are going to discuss the concept of marginal cost. In our previous lecture, we have discussed about the fixed cost and variable cost. Today we will discuss about marginal cost. Basically, the marginal cost is the cast which is needed to produce one extra unit. Or we can say that marginal cost is the cast that change in total cost due to change in quantity. All marginal cost me the increase in total cost that arises from an extra unit production. It is denoted by MC. And marginal cost is also the slope of the total cost, which we will discuss in our later lectures. The marginal cost formula is change in total cost divided by change in total quantity. Here, the delta sine is showing change and TC is showing total cost. Similarly, the delta sine is showing change and Q is quantity. The whole formula states the change in total cost due to change in quantity. That is called marginal cost. For example, you are producing ten unit and the production of the production cost of those ten unit is 100. If you produced one extra unit, like your total production will become 11, your total cost will become ten. The change in total cost is ten and change in total quantity is 110/1 equals to that is your marginal cost. Basically, marginal cost shows that how much change in total cost when you are willing to produce one extra unit. The one extra unit cost is called marginal cost. It is the Slow Park total cost as well. 47. Marginal cost in table form: Students, welcome to our to day lecture. In our to day lecture, we are going to discuss how can we make the graph marginal cost curve. Now first of all, let's discuss that. How can we calculate the value of marginal cost curve? Basically, marginal cost curve is the change in total cost due to change in number of quantity or the cost which we have to bear for the production of one extra unit is called marginal cost. As you can see that point, this to this point, we have a change in quantity of one point this to this, there is a change of total cost is 0.30 We have to divide change in total cost, change in quantity. The change in total cost is 0.30 and change in quantity is one. When we divide 0.30 with one, we have 0.30 as a marginal cost. Similarly, when we are moving from this point to this point, the change in total cost is 0.503 0.80 -3.30 which give us 0.50 And the change in total quantity is two minus one, which is equal to 1.5 0/1 equals to 0.50 Similarly, moving on, the change 2-3 unit quantity and the change in total cost is 4.50 -3.80 which give us 0.70 We simply have to divide 0.70 with the change in total quantity, which gives us 0.70 This is how we can calculate the value for marginal cost and for making the graph marginal cost. We have to take the marginal cost values on y x and the number of unit, or the quality produced on x x. As we have producing one number of unit, we are giving 0.30 marginal cost. For the production of two units, we need 0.50 And similarly go on. After that, we just have to simply join the draw dots, which give us the marginal cost curve. 48. Costs concept in table form: Dear students, welcome to our today lecture. In our previous lectures, we have discussed the different types of cost. Theoretically. In our today lecture, we are going to discuss that how can we see all these costs in a single table? After this lecture, we will make the graph all of these costs separately. Now let's discuss that. How can we calculate different type of cost? The first column is showing the number of units that are being produced. The first column is showing the total cost, second column is showing the fixed cost. As you can see, that when you are producing zero unit, you are still paying the fixed cost. As I have mentioned in my previous lectures, that fixed cost is a cost that is not related with your output either. You are producing nothing, you are producing multiple goods. You have to pay this cost. This cost remain the same with changing output. The fixed cost is remain three throughout the production process as it is not changing with changing output. The next column is for variable cost. The variable cost is that change in changing output. If you are producing something, then you have to, then you have to be at this cost. If you are not producing anything, then there is no need and there is no expense on, for the production, for this cost. For example, when you are producing zero unit, then your variable cost is zero. Let's say. When you're not producing any kind of good, you do not need any labor. You are not consuming electricity, You are not taking raw material. That's why when you are producing nothing, your variable cost is zero. When you are producing one unit for the production of unit, you need labor, you need technology, you need electricity, you need raw material. This will cost you. Now, when you are producing something, you have to be at the cost. And when you are producing nothing, you do not need to be at this cost. That is variable cost when you're producing two goods. Now you are producing two goods so that you need more labor. You are consuming more electricity, you need more raw material. Your cost increases from 0.320 0.80 Similarly, when you're producing three unit, you need more labor, you need more electricity, you need more raw material, which ultimately increases your variable cost from 0.8 to 1.50 and so on. When you add fixed cost plus variable cast, it will give you the total cost, Three plus zero equals to 33 plus 0.3 gives you 3.303 plus 0.80 will give you 3.803 plus 1.50 gives you 4.503 plus 2.40 gives you 5.50 On when you add fixed cost plus variable cast, it gives you the total cost. While calculating average fixed cost, you have to divide the fixed cast with the number of unit produced. Here you are producing one unit and your fixed cast is three. So far the calculation of average fixed cast, you had to divide fix cast with the number of unit produced. 3/1 equals to three, then 3/2 equals to 1.5 then 3/3 equals to one, then 3/4 equals to 0.75 then 3/5 equals to 0.6 and so on. For the calculation of average variable cost, we have to divide the variable cast with the number of units produced. Variable cast is 0.3 and the quantity producing at this point is 10 point 3/1 equals to 0.3 The variable cast is 0.8 and you're producing two units. When we divide 0.8 with two, we have 0.40 as average variable cost. Here we are producing three units. And variable cost is 1.50 We have to divide variable cast with the number of quantity 1.5 0/3 equals to 0.50 And similarly, you can calculate the rest of the values average total cost, we can calculate average total cost by using two different formulas. The first is that average total cost is the sum of average fixed cost plus average variable cost. When we add average fixed cost plus average variable cost, we have average total cost three plus 0.3 equals to 3.301 0.5 plus 0.4 equals to 1.901 plus 0.50 equals to 1.500 0.75 plus 0.60 equals to 1.35 In this way, we can calculate the rest of the values when we add average fixed cost plus average variable cost. The second formula for the calculation of average total cost is that when we divide total cars with number of codes produced here, total cost is 3.30 The quantity is 13.3 0/1 equals to 3.30 Here the total cost is 3.80 and the number of produce is 23.8 0/2 equals to 1.904 0.5 0/3 equals to 1.505 0.4 0/4 equals to 1.35 And similarly, you can calculate the rest of values. The last column is showing the marginal cost. Basically, the marginal cost is the change in total cost due to the change in number of unit produced. As you can see that from this point to this point, you can calculate the change in total cost by subtracting this value from this value. 3.30 minus three will give you the change in total cost of 0.30 Change in total quantity is one minus zero, which is one. So when you divide 0.30 with one, it will give you the marginal cost of 0.3 $0 Similarly, when you are producing two unit, your cost increases from 3.30 to 3.80 In order to calculate the change, you have to subtract this value from this value, 3.80 -3.30 which gives you 0.50 That is change in total cost. And the change in quantity is two minus one, which is equals to 10.5 0/1 equals to 0.50 When one to calculate the marginal cost for the third unit, you have to subtract this value from this. 4.50 -3.80 will give you the change of total cost, 0.70 Change in total pointy is three minus two, which is equal to 10.7 0/1 equals to 0.70 You can calculate the rest of values by using this formula. 49. Total revenue: Students, welcome to our to day lecture. In our today lecture, we are going to discuss that what is meant by total revenue. Basically, total revenue is the amount of money, or income, which a firm get after selling the specific amount of goods. We can calculate total revenue through basic formula, which is multiply by Q. P is representing the price and Q is the number of unit which a firm sold. Let's say the price level is ten and the firm sold 50 units in a single day. We have to multiply this 50 by ten. It will give us total revenue of the firm which is 500. Keep in, remember that total revenue curve can be start from zero as you are not producing any good and you're not selling any goods. Total revenue curve can be start from zero. 50. Average and marginal revenue: Of students. Welcome to our today lecture. In our today lecture, we are going to discuss the two topics of revenue, which are average revenue and marginal revenue. Basically, average revenue is the per unit revenue received from the sale of commodity. Average revenue can be calculated by total revenue with the number of quantities sold. Here is representing total revenue. We can calculate average revenue by total revenue dividing by quantity. As we know that total revenue is equals to price multiply by quantity, we can write total revenue is equal to price multiply by quantity. In this way, this q and the denominator Q will be cancel out with each other, and we have remaining average revenue is also called the price line. Average revenue is always equal to price, both in perfect competition and imperfect competition. The next is marginal revenue. Marginal revenue is the revenue which a firm received after selling one extra unit, or the change in total revenue, which results from the share of one or more unit of output. We write marginal revenue by M R. We write this theory in a single mathematical form like this, change in total revenue divided by change in output. We can write this change by delta sign, simply change in total revenue divided by change in quantity, which gives us M R marginal revenue. A marginal revenue is also the slow for the total revenue curve as average revenue and marginal revenue both are different in perfect competition and imperfect competition. I am not going to make these curves here or we are not going to discuss these Table farm here. We will discuss all of these in our upcoming lecture of market structure in perfect competition and imperfect competition. 51. Explicit and implicit cost: Dear students, welcome to our new lecture. In our today lecture, we will discuss about the explicit, implicit, and the sunk cost. Basically, explicit and implicit cost concept which makes the accounting and economic cost different from each other. And also the economic and accounting profit from each other. Explicit cost is the cost that's transaction is arable and is recorded in the expansion sheet or the balance sheet. For example, explicit cost contain the purchase of new assets. For example, are buying a new machinery. When you are buying new machinery, you have to pay the amount of money or pay the price against that machinery. You can see the cost. Similarly, when you are hiring new workers, in order to hire new workers, you must have to pay them wages, which is your expense. And you can see that expense on purchase of raw materials. When you are purchasing new raw materials for the production process, then you must have to pay an amount or price for that raw material. The idea is that explicit cost is the cost which you can see by yourself physically. But on the other hand, implicit cost is the cost which is not measurable and you cannot see the cost. A decision which leads to lower income but is not recorded on balance sheet. That is called implicit cost. We also call it as opportunity cost. For example, when you are giving your workers a day of as a bonus, this will reduce your production. As a result, your sale decreases and ultimately your revenue and also decreases. You have beer, a cost which is not regarded, but you have forgone the amount of income which you can earn if you did not give your workers a day off, but now given a day off to your workers. This will, this cast is called implicit cost or the opportunity cast. The journal idea behind the explicit cast and implicit cast is that explicit cast is regarded and implicit cast is not regarded. Explicit cast values can be seen, but implicit cast cannot be seen. When we are discussing a economic cost, we are considering both explicit and implicit cost. But in accounting cast we did not include implicit cast, we only include explicit cost. That's why accounting profit is always higher than the economic profit. Because in accounting profit, they did not implicit cost, they are including only explicit car. That's why the profit is always higher than the economic profit. The next one is the sunk cost. Basically, the sunk cost is a cost that cannot be recovered. For example, if you take a land on rent from some person you have built over there after the end of the agreement. When you are leaving that land to the owner, the money you have spent on the construction of the roads or the construction of that building, you cannot recover that cost. You can, you can destroy the building, but you cannot recover that cost which is being spent on the production of the building on the road. The sunk cost is the cost which is not recoverable. That is called Sun Cost. 52. Characteristics of perfect competition: Hello Stoma students welcome to our today lecture. In our today lecture, we are going to discuss the characteristics of perfect competition. Basically, there are two types of competition are prevailing in the market. One is called perfect competition and the other one is called imperfect competition. In case of imperfect competition, we have multiple cases, like oligopoly monopolistic competition. But in our today lecture, our only focus is on the perfect competition. In our today lecture, we will only discuss the characteristics of perfect competition. That, how can we know about that any market is showing perfect competition or imperfect competition? Let's begin our today lecture. The first characteristics of the perfect competition is that large number of buyers in any market. If you see that there are a large number of buyers, so it means that that particular market is representing perfect competition. A large number of buyers means that there are so many buyers in the market. If some few buyers decided to not buy that product there, this decision will not affect the price, demand, and supply of the market. Basically, it means that no individual can affect the price of the market. This is the meaning of the large number of buyers. And the second characteristics of the perfect competition is that large number of sellers. Similarly, in case of the buyers and in the case of sellers, no individual can affect the market price. Large number of sellers mean that there are so many sellers in the market. If 235 or ten producer seller decided to not produce that product, they decided that they are not willing to sell their product. The decision will not affect the market price, demand and supply. Large number of sellers mean that you cannot affect the price. Free entry and free exit. Free entry and free ex, mean that there are no restriction. There are no rule and regulation from the government. Everybody can came to the market and set his or her business, and when he decided to leave the market, he can easily leave the market. There are no restrictions attached to the entry and exit in case of perfect competition. The next characteristics is homogeneous product. Homogeneous product mean that all the firms are producing same product at same price and same cost. The product is quality wise, shape packing wise must be same, that's why it's called homogeneous product and every firm is facing same cost. The fifth characteristics is that firms are price taker and it is the most important characteristics. Basically, firms are price taker mean that no individual or no individual firm can change the price. If you want to sell your good, you have to sell it on the price which is already prevailing in the market. You cannot decide the price by your own. For example, we say that the current prevailing market in price of any product is ten rupees. You are new in the market and if you want to sell your product, you must have to sell your product at ten rupees. You cannot sell your product less than ten or more than ten. If you decide to sell your product more than ten, like 12 or 14, then in this case, nobody is willing to buy you a product Because similar product is available in the market at less price which you are offering, you will lose the competition or share in the market. Similarly, in case of less price in the market, you have decided to sell your product at eight piece. In this way, you will also be facing losses because a cost is higher and you are selling your product at lower price. So you have to shut down. If you continue to sell your product below than your cost firm, the price taker, you have to sell your product at the prevailing market which is already decided in the market. Basically, no firm has market power. Simply we can say that in case of perfect competition, no firm has market power. And the last characteristics is that perfect knowledge about the market, that the buyer and seller have the perfect knowledge about the market, that they will buy or sell this product anywhere in the country at this specific price. So these are the characteristics of the perfect competition. No, we will move forward. What are the examples of the perfect competition? Basically, in case of perfect competition, there are no exact examples of perfect competition because nobody is perfect. Similarly, there is no market which is perfect. But there are some examples which are most closely related to the perfect competition. The first example for the perfect competition is the agriculture sector, where many farmers produce the identical crafts and have little control over the market price. Similarly, the second case is stock market, where a large number of buyers and large number of sellers present at that point. The next one is foreign exchange market and foreign exchange market, where the global currencies are traded. And last one is commodity market, where the different commodities such as oil, gold, and wheat, our characteristics and nobody can affect the price. So basically, they are not the exact example of the perfect competition, but they are most closely related to the perfect competition. So I hope you guys have some views on this lecture, and you are able to learn something new. If you have any question, you are easy to ask me. You are free to ask me. 53. Output Decision under perfect Competition: Lamar students. Welcome to our to day lecture. In our today lecture, we will discuss about the firm output decision under perfect competition. For deciding the output decision under perfect competition, there are two rules. There are two condition. The first condition is that firm will maximize their profit where marginal revenue is equals to marginal cars. That is the first condition for deciding the out output level or the maximum output level, where the profit is maximum. The second condition for decision of the maximum or optimum level of output, or the point where the profit is maximum, is the point where marginal cost cuts MR from below. Basically, these are the two conditions for deciding the optimum level of output or the maximum level of output at the quantity. As you can see that, we have two graphs. On the left hand side, you can see that this graph represents the industry, where the supply and demand forces are deciding the price level. So as we discussed in our earlier lectures that in case of perfect competition, no individual, no individual firm can change the price. They have no market power. So they have to sell their products at that price, which is already prevailing in the market. So here we have decided the price, which is decided by the demand and supply forces. So we know that in case of perfect competition, average revenue and marginal revenue all are same as we discussed in our previous lecture. If you want to study that y, all these are equal. They are equal. You can see the previous videos. No, we will draw marginal cost curve and it will give us the, the optimum level of output where our profit is maximum. As you can see that this graph is for MC and this is for marginal revenue, average revenue, and price. There are two conditions for the output level decision. First, MR equals MC. As you can see that in this graph, MR is equal to MCMC or MR. Our MC is cutting M R from two points. First point is here and the second point is here. First condition we are able to achieve first condition on both of these two points. On this point, M R is equal to MC, and this point also MR is equal to MC. But at this point, we are able to achieve the second condition. What is the second condition? The second condition is that MC cuts M R from below. At this point, you can see that MC is cutting up point. It is decreasing basically at this point. So at this point, MC is cutting MR from below. So this is the point where we have to decide our output. And at this level of output, our profit is maximum. For further guidance, I will draw the curve again on a new slide or a new whiteboard. In this way you can understand the graph easily. I will draw the marginal cost and marginal revenue again, so that you can understand them very well. We will drying these curve again. On x, x we are taking quantity, on y, xs, we are taking revenue and is far cost. As we know that in case of perfect competition, the price average revenue, marginal revenue. The same for output decision. We just have to draw marginal cost curve. It will give us the maximum level of output where our profit is maximum. This is the marginal cast curve. Marginal cast curve is intersecting marginal revenue at two point. First point is here and the second point is here. For example, if we say this point and this point at B, there is only one point which is meeting the boat two conditions. First condition is MC equals to MR. The second condition is MC cuts M R from below. Mc is equals to M R at this point, and also at this point, MC is equals to M R. But only at point B, MC is intersecting MR from below. Our optimum level of output is at this point steric. This is, the second thing is that at this point we are producing more number of output as compared to this point. When we are producing more number of unit, our cost is declining. Any quantity after this point will become our loss. For example, if you are interested to produce at this point, your cost is this and your revenue is this. This area shows your loss. Similarly, if you're producing less quantities beyond this point, for example, let's say this point. At this point again, you are facing losses because your marginal cost is greater than your marginal revenue. The only option where you can produce output which give you the maximum profit. At point B where both conditions are meeting, marginal cost is equal to MC and MC is cutting MR from below. 54. Normal profit under perfect competition: Aslam, welcome students to our today lecture. In our today lecture, we are discussing that when firm is earning normal profit under perfect competition, basically, firm is earning normal profit under perfect competition when average revenue is equal to average cost. At the point where average revenue is equal to average cost, at that point, firm is earning normal profit. Before that, we have to draw that optimum level of output. After that, we will see that firm is earning normal profit, abnormal profit, shutdown our abnormal losses. First we will draw output decision. After that, we will draw normal profit under perfect competition on x, x. We are going to take quantity on y, x, we are going to take revenue and cost. As you can see, that price average revenue, marginal revenue are same in case of perfect competition. Now we have to draw marginal cost curve in order to decide the optimum level of output. At this point, marginal cost and marginal revenue are equal. This will give us optimum level of the output, the output where our profit is maximum. Now we have to draw average cost curve in order to see the normal profit under perfect competition. We simply draw average cost curve at this point here. At this point, average revenue is equals to average cost. At this point, firm is earning normal profit. If you want to draw average fixed cost curve and average variable cost curve, then you can the curve below the average cost curve. This is variable cost curve, This is the average fixed cost car. I hope this lecture is helpful for you. If you have any questions you can ask me. 55. Abnormal Profit Under perfect Competition: As Lami come students, welcome to our today lecture. In our today lecture, we are going to discuss that when a firm is earning abnormal profit under perfect competition, a firm is earning abnormal profit when its average revenues are greater than its average cost. When the firm's average revenue is greater than average cost, then we can say that at this point, firm is earning abnormal profit. Now let's draw the area for the abnormal profit and perfect competition. For this, we have to take the marginal cost, average cost, and average revenues on x x. We are going to take the quantity on Y Xs. We are taking revenue and cost as we know that in case of perfect competition, price, average revenue and marginal revenue R s, because there is no change in price. Now we have to draw MC curve in order to decide the maximum or the optimum level of output. The point where MC is equal to MR. At this point, this point will give us the equilibrium point because at this point, C is equal to MR. Okay? At this point now we have to draw average cost curve in order to find out the area for the abnormal profit. From this point, we can draw the cost for this output level. This point will give us the cost far producing this number of unit, we have to be this cost. And our total revenue will be this by multiplying into Q, the area below this price line. The area below this price line to yellow line. This area shows the abnormal profit for the perfect competition. Let's me highlight this area, this highlighted area. All this highlighted area shows the abnormal profit under perfect competition. I hope this lecture is helpful for you. If you have any questions you can ask me. 56. Abnormal loss under perfect Competition: Aslam come. Dear students, welcome to our today lecture. In our today lecture, we are going to discuss that when a firm is facing abnormal loss under perfect competition, firm is facing abnormal loss under perfect competition when its average fixed cost is equals to average revenue. Now let's draw the abnormal perfect computation for any firm. For this, we can take quantity x x revenue and cost on xs. As we know that in case of perfect competition, average revenue and marginal revenue are same. Because there is no change in price. For output decision, we have to draw marginal cost which gives us the output level. At this point, marginal cost is equals to marginal revenue. It will give us the output decision under perfect competition. As we mentioned here, that firm is facing abnormal loss when its average fixed cost is equal to average revenue. Now we have to draw average fixed cost curve in such a way that average fixed cost intersect or passes through from this line. This is the average fixed cost curve. Average variable cost will be higher than the average revenue and average cast also will be higher than the average variable cost curve. It will give us the total cost. Keep in mind that always decide our total cost from the average cost. When we multiply average cost with quantity, it will give us total cost. This shaded area, from this blue line to this price line, it shows the abnormal loss under perfect competition. 57. Normal loss under perfect competition: As normal income to your students. Welcome to our to day lecture. In our today lecture, we are going to discuss that how and when a firm is facing normal losses under perfect competition. Basically, a firm is facing normal loss under perfect competition when its average variable cost is equals to average revenue. Definitely, it means that its average cost is greater than average revenue. Now let's draw the normal loss under perfect competition. For this, we are going to take quantity on x x revenue and cost on y axis. As we discussed in our earlier lectures, that in case of perfect competition, average revenue and marginal revenue R, same because there is no change in price. Before drawing the area of normal loss, we must have to draw the output level for the firm. The firm output decision depends on the point where marginal cost equals to marginal revenue. We have to draw MC curve in order to now the area of output decision. At this point, firm's marginal cost is equal to marginal revenue and it is the equilibrium point. Now we have to draw marginal cost, we have a draw the marginal cost curve. Now we will draw the variable cost which is higher than the average revenue curve. We will draw the average variable cost curve. Average variable cost will be above the average revenue line. I'm drawing average variable cost. As we know that average cost is always higher than the average variable cost and average fixed cost curve. The average cost curve must be higher than this curve. The average variable cost is less than the average revenue curve. This will be the curve average fixed cost. This will give us the cost for producing this number of output. This shaded area, this shaded area will show the normal perfect computation as the firm is covering on its fixed cost is giving all of the average variable cost, or the variable cost for pocket. This area will show the normal under perfect computation. 58. Shut down under perfect Condition English: Alameda of students. Welcome to our today lecture. In our today lecture, we are going to discuss that when a firm will shut down, basically a firm will shut down when it is not able to cover rates, fixed cost. The shutdown condition is that when firm is not covering its average fixed cost, in this situation, the firm will have to shut down its business when average fixed cost is greater than average revenue. Then the firm will shut down its business. Before discussing the shutdown point, first we have to draw the output level. Then we will draw the shutdown point under perfect competition. For this, we are going to take quantity on the Xs, revenue and cost on the Xs. As we know that price average revenue and marginal revenue is same in case of perfect competition because there is no change in price so far, output decision, we have to draw MC curve. Here is the MC marginal cost curve. At this point, MC and MR equal which gives us the optimum level of the output. As we mentioned earlier, that firm will shut down when its average fixed cost is greater than average revenue. We have to draw every fixed cost in such a way that it should be higher than this point. We will draw average fixed cost as here, okay? And as we know that average variable cost is greater than average fixed cost. As we also know that average cost curve is the sum of average fixed cost and average cost. It should be higher than the average variable cost. As you can see that the total revenue is at this point and the average fixed cost is at this point. The firm is not covering its average fixed cost. In this situation, the firm have to shut down its basis because have to pay the fixed costs from its pocket and as well as the labor costs or raw material and the electricity costs from its pocket. So when a firm came into a situation like this when it is not able to cover its average fixed cost, in this situation, the best option for the firm is to shut down its business. 59. Characteristics of monopoly: Slam students, welcome to our today lecture. In our today lecture, we are going to discuss the characteristics of monopoly. Basically, monopoly is a type or subsector of the imperfect competition. In case of monopoly, there is only one seller in the market. No close available in the market. Basically, in case of monopoly, the simplest definition for the monopoly is that there is only one seller in the market, there are no close substitutes available in the market. The second characteristics of the monopoly is that large number of buyers, there is only one producer, but the buyers are in very large. The third characteristics of the monopoly is that firms are price set. If you remember that in case of perfect competition, we discussed that firms are price taker, but in case of monopoly, firms are price set because there is only one producer in the market. And he has a 100% control over the market share. And he has 100% share in the market. So he can change the price according to his own choice. So that's why we say that in case of monopoly or imperfect competition, firms are always earning more than the normal profit. So basically firms are price settle mean that they can charge the price according to their own will because there is no competition in the market and nobody can take their share of the market. So they are free to charge price which they want to charge. The next characteristics is that free entry and free exit. Basically, in case of no free entry, free exit, that nobody can enter in the market freely. There are some restrictions, there are some barriers attached to this characteristics of monopoly. Because you have to take permission from the government or you have to take the lessons from the government. In case of monopoly, there is no free entry. And free exit like you can take the example of post offices, railways, airlines, the medical businesses. You can enter into that business freely. And if you want to close that business, then you can also not close that business freely. You have to consult with the government before closing down the business. And the next characteristic is that no perfect knowledge about the market. Basically, it means that there is price discrimination in the market. As you know that when you are traveling in railways or in airlines, uh, you see that there are different prices of tickets according to the class, like economy class or the business class. You know that they are charging different price according to the classes. There is price discrimination in case of the monopoly. The six characteristics of the monopoly, and basically it is the characteristics of more, you can say that of imperfect competition. That is heterogeneous product. In case of heterogeneous product, it means that the product are differentiated, product are different in case of shape wise and they are facing different cost. Uh, they have different shapes. So these are the characteristics of the monopoly. And if we say that in case of monopoly, what examples we can take? We can take example of the post offices, We can take the example of railways, we can take the example of airlines. Or we can take the examples of electricity, electricity production of the government houses. Basically, monopoly can be done by an individual, for example, that if your area there is Dr. who can treat a specific disease that nobody can does that treatment in this case that Dr. has the monopoly over control or over the over the solution of the disease. For that purpose, monopoly, monopoly maybe exists in a firm monopoly maybe belong to a person. You can take any example in that particular cases. If you have any questions regarding this characteristics of monopoly, you are free to ask me. 60. Output decision under monopoly: Am dear students. Welcome to our today lecture. In our today lecture, we will discuss that how a firm will decide its optimum level of output under monopoly or imperfect competition. Basically, firm will stop reducing at point where its marginal cost equals to marginal revenue. The second condition is that marginal cost are from below. These are the two conditions for deciding the output level. As in our previous lecture, we have discussed that in case of imperfect competition or monopoly, the average revenue and marginal revenue car both are different. Because price is not constant and average revenue will be the same. But average revenue and price are not equal to each other due to difference in prices. In our today lecture, we will discuss how a film decide how much unit he is going to reduce for that. First, we will draw a marginal revenue curve on x axis. We are taking quantity on y, x. We are taking revenue and cost. As we know that the slow path marginal revenue is greater than the slow path average revenue. Marginal revenue will be below than the average revenue. We have average and marginal revenue curve. Now we have to draw only marginal cost curve in order to decide the output level, we will draw marginal cost. Here is the graph of marginal cast at this point M, C and MR equal. It will decide the optimum level of output. When we join this equilibrium with the price line, it will give us the price for this output level. In this way, we can find that how a firm will decide its level of output in case of monopoly. 61. Normal profit under monopoly: As Slam students. Welcome to our today lecture. In our today lecture, we will be discussing how a firm is earning normal profit under monopoly. Firm is earning normal profit under monopoly when its average cost is equals to its average revenue. When this condition prevail in the market, it means that firm is earning normal profit under monopoly. But before drawing the normal profit area or abnormal profit or loss in any case, first of all, we have to draw the output decision. Then we will see that firm is earning normal profit, abnormal profit, or he is facing losses. So first of all, we will decide about the output level. For this, we are taking quantity on x x revenue and cost on y xs. This will be the graph of average revenue, price or demand car. This will be the graph of marginal revenue. Now we have to draw MC in order to decide the level of output. The point where MC is equals to MR, it will give us the level of output. If we join this equilibrium with price line, it will give us the price for the output which we are producing at the moment. Now we have our out our optimum level of output for drawing normal profit. We just have to draw average cost curve. Then we will see how graphically a firm is earning normal profit. So we have to draw average cost curve in such a way that it will cut the average revenue from this point, the point where we have decided the output level. Now I am going to draw the average cost curve. Here is the average cost curve, as you can say that at this point where I'm going to make a cross, at this point, average cost and average revenue are equal. It means that firm is earning normal profit under monopoly when its average cost average revenue, both are equal. 62. Abnormal profit under monopoly: A family. Come to your students. Welcome to our today lecture. In our today lecture, we are going to discuss that how a firm is earn abnormal profit or supernormal profit under monopoly. A firm is earn abnormal profit or supernormal profit under monopoly when its average revenue is greater than average cost. It means that firm is earn abnormal profit under monopoly. As I mentioned in earlier lectures that either we are interested in normal losses or abnormal profit. First of all, we have to draw the output level. Then we will draw either of the cases, Either it is normal profit, abnormal profit, or lasses. First of all, we are going to draw the output level under monopoly. Then we will discuss that firms earning normal profit, abnormal profit, or loss. Now we will draw the output level. We are taking quantity on x x revenue and cost on y axis. This will be the average revenue. It will be the graph marginal revenue. Now we have to draw marginal cost curve in order to find out the optimum level of output. At this point, MC and M are equal, it will give us level of output. If we join this line with price line, it will give us the price for this level of output. As we write here, the condition for abnormal profit farm is earning abnormal profit when its average revenue is greater than average cost. Now we have to draw average cost curve in such a way that it should be below. Then this point. This will be the graph average cost curve. From this point to this point. It will give us cost. We are deciding cost from average cost line, the area between to C. Let me shade it for you. The shaded area. This one, this whole area is showing the abnormal profit. Imperfect competition or monopoly firm is earning abnormal profit when it's average revenue is greater than average car. So as you can see this point, this point is average revenue point. And this point is average cost. Average revenue is greater than average cast. When average revenue is greater than average cost, it means that firm is earning abnormal profit either the case of perfect competition or either the case of imperfect competition. Both cases the firm is earning abnormal profit when its average revenue is greater than average cost. 63. Giffen goods: Hello everyone. Welcome to our today lecture. In our today lecture, we are going to discuss the Giffen goods. Basically, Giffen goods are those goods on which low demand is not applicable. When price increases, the demand increases. And when price decreases, the demand decreases. Basically love demands that when price increases, demand decreases. But in case of Gif goods, when price increases, demand is increasing. When price is decreasing, demand is increasing. In case of Giffen, good price effect positive and income effect is negative. When income increases, you are less willing to buy those products. When income decreases, you are more willing to buy those products. In case of Giffn goods, the examples are, vary from person to person. For example, if we say that if in a certain day a person is selling any commodity by the side of road. And the price of that commodity, price of that, for example, let's say bread. Price of that bread is, we can say that 50 apiece. And the next day that person is now selling that product at five pies. The question arise or came into her mind that why this particular person is selling this product so much cheap. So by considering this scenario, we will assume that there should be, there must be a compromise in the quality of that product. So that's why that person is selling that product at a bari, lower price. So now we are not willing to buy this product, a rational consumer, we think that the price of this product should not be as much low as this price. So when price decreases so much 50-5 pees, we are not willing to buy this product. When price decreases, we are less willing to buy this product. And similarly, when income increases, so now we have more money, so we are preferring normal goods. We will move forward to branded cloth or branded shops. So when income increases, we are less billing to those products whose price is very low in given good price effect is positive as price is increasing, demand for those product is increasing. And in case of income effect is negative, when income is increasing, demand is decreasing. 64. Inferior goods: Hello everyone. Welcome to our today lecture. Today, we are going to discuss about the inferior goods. Basically, inferior goods are those goods which are negatively related with income. When income increases, the demand decreases. When income decreases, the demand increases. They have negative relationship with the demand. In case of inferior goods, when income increases, the demand decreases, income decamdcreases, They are negatively related with the income. Income effect is negative in inferior good. Price effect is also negative in case of inferior goods. When price increases, demand decreases, or when price decreases, demand increases. Inferior goods are negatively related with price. In case there is no exact example of inferior good, inferior goods are vary from person to person. For example, if there is a person who is selling fruit chart or any kind of commodity beside the road and you are walking that road, if the price is lower, then you will easily willing to buy that product. But if he increases the price of its product very highly, then you are not willing to that product because due to quality effect. Uh, then in your mind being a rational behavior, you think that if you have to pay higher prices, then why not buy that product from some kind of a man in case of inferior good, basically. In case of inferior good mostly exists the example of perishable goods. So for example, if a person is selling a food chart or any commodity beside a road and its price, for example, let's say piece 20. And suddenly he increases its product price, 2,200 piece when price increases from 2,200 pees. In this case, you will prefer to buy that product from a mall. Because if you are paying such a high price, then being a rational consumer, we will compare the utility and price. So if we are getting the utility from that price, then we move on to a mall. And if we have to pay a higher price, then we will be preferring the quality of that product. So in case of inferior good, income effect is negative. And price effect is also negative because when income increases, people are less willing to buy that product. And when people have less income, so they have no other option to buy some other products. Inferior goods are easily in the range. With the low level of income, they are more willing to buy that product. 65. Normal goods: Hello everyone. Welcome to our today lecture. In our today lecture, we are going to discuss about the normal goods. Basically, normal goods are those goods when income increases, the demand increases. And when income decreases, the demand decreases. They are positively related with income. When income is increasing here, why is your income when your income increases, demand for these good increases? Or when income decreases, demand for normal good decreases. Anything which is positively related with your income, that particular good is said to be normal good. Basically, normal goods are vary from person to person as the income level in the society is vary from person to person. So normal good example is vary from person to person. In case of income effect, income effect is positive in normal good as you mentioned here, income increases, demand is increasing, income decreases, demand is also decreasing. They both are moving in same direction. In case of income effect is positive for normal goods, and price effect is negative. In case of normal goods, when price increases, demand decreases. Or when price decreases, demand increases. They both are moving in opposite direction. Price effect is negative in case of normal goods. So basically, in case of normal good, we can see the example of when you have low level of income you prefer on public transport. When your income increases, when your income increases, now you have by your own car or your bike. In this way, the bike will become your normal good. When income is increasing, you are increasing demand for these goods. And when your income increases, you are decreasing. You are preferring less to travel on the public transport. In this way, the public transport will be inferior goods according to you. As I mentioned before that normal good is vary from person to person as the income level of the individual is varying from person to person. So normal good examples are different from person to person. But any commodity whose demand increases with increase in your income and the good demand decreases, decrease in your income. That good would be normal good according, according to your preference or according to your choice. When price is increasing and you are decreasing the demand for any product, that is called Normal Good according to, basically these are the examples of, we can also take the example of sales in malls on branded good, sales in on different branded goods. People are more willing to buy that product when there is sales offered on different products. On branded goods, they are basically selling their product at a lower price. In the normal routine, more people are willing to buy those products. Sales on branded goods are or are said to be the example for normal goods.