The branch of knowledge that deals in production, consumption, and transfer of wealth are is known as economics. It deals from the very starting point that is purchasing power to the end is the satisfaction of desires. Therefore it can be said that economics plays a vital role in everyone’s life. The study of Consumer economics help people comprehends the world around them. Understanding business concepts, marketing integrity, and government policies are possible because of economics. The accomplishment of economics can be acknowledged by the fulfillment of the needs of the people.
The fundamental concepts of consumer economics:
It can be stated as the demand for goods or services being greater than the availability of goods or services. Scarcity is one of the basic problems of the economy as a whole.
Since scarcity is most prevalent, an individual has to allocate limited resources in the best possible manner to satisfy the need. The manufacturers of the economy should acknowledge this factor to satisfy the variety of the need of the consumers.
Every economy operates on the principle of demand and supply. Demand can be said as the need of the consumer which has to be fulfilled. On the other hand, supply is term as the allotment of the products or services to the desired consumer for their fulfillment of needs.
The principle states that the products and services should be made available to the consumers to the proportion it is demanded. Adam Smith is often referred as the to Father of economics, who explained the concept of demand and supply.
To summarize the demand and supply principle, it can be stated as the relationship between the quantity of a commodity that the sellers are willing to sell at a certain price and the quantity of a commodity that the buyers are willing to purchase at a certain price.
Cost and benefits
It is the principle that determines which policies should be adopted or abstain from. It is the analysis of the pros and cons of a given policy, situation, or course of action to determine its benefits or drawbacks.
It can be stated that an organization should opt for the policy, product, or course of action which proves cost beneficial to the organization. Unnecessary high expenses can lead to losses for an establishment. Thus the cost-benefit analysis can be summed up as the process of maximizing benefits and minimizing cost.
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Money or near-cash assistance provided on an optional basis to attract or retain business operations is termed as an incentive. It is the strategy that encourages an employee to work in a certain way.
Therefore all four concepts are interlinked in a certain manner such that – a consumer will have a scarcity of a certain product which will increase the demand for the product in the economy.
The demand would lead to the supply of the product which the manufacturers would generate in the cost-benefit principle. The incentives would be provided to the employees of the organization so that they work more diligently and quickly.