PART 1 LESSON - 1MICROECONOMICS
Supply and Demand
Human wants are unlimited. This is the fundamental fact of economic life of the people. If the wants are limited then no economic problem would have arisen. But in reallife, when one want is satisfied, another one grows up. The important thing is that allwants are not of equal intensity. Because of the different intensities of the wants, peopleare able to allocate the resources to satisfy some of their wants.2.
Since the intensity of want differs, the people are able to allocate the scarceresources to satisfy their wants. The power of the commodity which satisfies wants iscalled utility. “The utility means levels of satisfaction which people get form consuminga commodity”. Different persons derive different amounts of utility from a given good. If a person derives more for that commodity, he expects greater utility from it. People knowutility of goods by their psychological feelings. Finally question of ethics or morality isnot unsolved in the use of word “utility” in economics.For example using alcohol may be considered as an activity by society, but nosuch meaning is conveyed in economics. So, alcohol possesses utility for some personswho use it.
As we have discussed earlier, the greater utility in a commodity attracts theconsumer whose wants they satisfy. The consumers desire for the commodity and theywill go for purchase. To purchase a good, he must have ability to pay. The demand for acommodity is consumer’s attitude and reaction towards commodity. It is that mere desireRukshiCA