CLASSTIME Pg. No.

Date
tconomico
Pree Goodo aeply 7 dumand Ex au

Economic Gooda: - Supply damand

they haw n exehange valu .

achvihes
Scpe d Etonomic evoues around achvheo
Tahcnal human buing a u e l Q rocluthion,
dustribuhin and ewdiphion etonamicauods
P NoYmatire econ omies is based em acal, mpral
hitosophical reuqiouo bu'ep t u pesple
Posiie economico involreA ezplanah on and brolichon
econguc bchaviow asE1 mot ushot it
Ouah t

Goood Comnodit ov sevvice which gives sahistacicr

to umaw OM cououmphon_1

Citerias difertnhiah ngods.

Fre Fr Gondo Econuuc sDdo.
Tydo: o t beay a Thu bear a pmce

Suppy 2 Demand Suppiy <Demana

Thay
They ave not eychange Th dre exehanged
ExAv, Sunuqh, ExBread, 9nndes

Same 00ol be comne econornmc Y dypendi'n

PeYs on place Or situanon. E mother tatinq Uoore ba

nanny tuhng Care

beuh on-econom'e

Economic
 CLASS TIMEPg No
Date /_
Capital Gooolo Cowou mi Goods
Thay help i_pro duchon Thu he dincHy Cowoumeb
aihu qavch by humam.
Ex: Macwne raw bread 2ulk
Maton alb

A pariculor qaud can becuma capitr c o um

sod dependn_an type we
Mik t dring 1 Mille to brodlu ce mitk pvoducs
Cw umw_ Capital

Cowume qoodo
clas Pevishabl Gvdo Short s h t ufe. . Veaohblus
icaion 9Non - benshalal

cdami h Durrbe Jong woreing fe

- (canon Nom- durable

Veblen len Gooea; A t4pe caoumuy goed t h

viole e law d dlumand. ee
demand ncreooe a bmcL increasca

Transtemabl oclo Non tran sterrabl qado

Land fruildina Beauty oamodul,
þexsan teach knowldge
epn be tvanstere to
cann be eMsfevved
 CLASSTIME Pg. No.
Date _/

Compumenray Substiue
When 2
When 2 v mo gooco 0v more ooco
tp Sahsty simila wams,
a qd, tge7hs
sahsy 1wan
Ex Ine 2 Pen . Wheat 2 c e
fea :2 Cotea.

Matemal unds NOm-Matomal 4rods

Ave tanqiblt L har AreArc intanqblL. uke
phyricalL ex'stenu. n's wn 9ualuh es

land, waler, buildina, Muoula gtrenTh

ma tninry elc benehiual lahon

Navmal qavelo :-Demand increas es wT ncreape in.

rCeelanicts. in cavne
mcaative. -Ex. C T 2 enuLs

iton 4oda
unth
Demand decreaseo as inurare Paradoi cally, demand
in inama Increaeo wtth incee in

Pn elanhahy it þositive Pnc elastich ( posihve

Substiui m efet is more mcme ek More
promine.
Yominnl.
( Privaht qoodo Pulsu Govdo
OWnad by ne person who No incuvidual can be
be
penchts fom itLþreven cxcludd fom Its w
Sthwkom wnq it.
E u d a b l e 2 Rival Tous N n - exdludablu 2n on
val rous
 CAIMEP No
D.
Public g00olo ay
may d tines be Subjec tD exc essre

we coulhn4 n meqahre exraraunes affechng all

wwenr uke air bo Uuh on 2 traffic
Euda ble
Nn-etdudable
Rival rdus. Privofe govcdo toud Cammm g aodo 6mber
hause ,ropety munera

Nm
nvalrou Cub gooclo: ubrury, Pubttc g ooco AY, Y0ac
theatre e

Indferrnu uYre Analysf

IE IE is the lo un ents whch rebrcoent Combinahon

two cmmodteo M N wwch yiel d equal
gehistahm

Charattunsh cs
s ntgahivels sloped conver t the
the onqin.

2 ind{|. curre do not intorset2 qhe woualy

baralll to each othev.
Indu. CLrC
wdrd ngh ymeanw ughy Lerel d
Sahisfacki on,

Marqinal Ratt Subtitutn: (MRSMw

(MRSM
reFers to the 0m our N that a woeY ls wiUu'ng
t oregoin ordir 0in 1 addutional wut
M and shu hae Sa me uel
o
of Sahsfa choy
 CLASSTIME Pg. No.
Date
On moVinq down Th ind Curre, MRS MN olimuiushuo.

M
Commocity M

Budget Cowtranr Line

Showg th
diferenc Combinah'mo Commoad h'e a
CO umer Can purehanc e n tAD W monuy, Inomu
n ' u s t h e Cammodheo.(AB i Th budger une)

Coou Equubnum

Whon his budqer une reacheo t higheor possible_

Curre
n the above eXampla camumUY_equub" Nached
t E On C y ,

Pnu Ee

ImpacF o hange in price Of M on_ Cow umUY's

dimand2Cowaumptim h kupinq th pn b
N oWOuMw's tase mony inML UMlaNr

PccPria Cooumpton CuYe i The w cs point

Cow umurs eqwubN eultng when On u

pnce M k vaned
 CLASSTIME Py No.
Date
Coou mer's Demand CHYVC Show amoun M
a wOul purchase a vgnou pnce
M

8|Pnc Ef ect nceme efeu T Subsh'tuim effu.

Appu'cah'on Incuferenu Currt

uoedwoed td cal ula þnce elashicdh dumand for
the proouer uhch ha mumwous dase Subshiueo
IEwiuL hare Large suhehtuhon efts.
ued to dterenhiare qoodo Juxury as

necessity uury qoodo wl have sfrong inume

V

uwe to d torenhiate Suhstitue Lcomplimenlary_zoek

suostiturnon eeur uiul be ery kh far Subshute
g0ods.
goods 2 not 90 hiah for cmplmnranygoode

4 Wch becomLo a war 1 it is Supporree by Tn

abiuty to uuhl it
WANTS

7 NeciHen-Baoic foY 0uT e chen

Are 3 type
G) mecessih foY exstence
fov etieny
(i) canvenhiomal necesites
 CLASSTIME Pg.No.
Date

wants tnat enhan ce comfovr ulhmakely

Comtorts
enhance effhicren y

Luzunen Thy ak wane fr buaowr Thy

mutheNmuor fov auw ushn
noy enhanu þroduehinhy/elhaen

OL wiu uke t o fulfil wanr wth wghw

inTemit v
On uhu üke to hae more o a od if
pnc i s 2 ww pna is mor.

awish i s supporkrdby abru' 2 wi'Wna

pulfL, it, becsmus a dimand

oLAWOF DEM AND

4 inama d secoon ett

haupehold, fashon
remaun CowaAT domandisinvorrely proporhonal
to pm CQ
D La Demaue
P

Bemand curre has ugatre slope 2 the Sum

U
totul ddemand by a l indi vidualo (or howoehold)
s called mayker dLmand.

When price d a a good remaia bur

Pame bur
olmandincreaseso ols erecas eo oluu oThw
fauors it i known aezpamion or conTYach'om
in dumand epechrels.
 CLASSTIME Pg No.
Date

EXCEPTiON
also
Gpen gooolo When price fallo, damand
falls 2 vie versa

Thu's happem because whin price tulls, purchasing

POwe t h Cowoumy increases Switth
td Suypeno Suhsinuto

Aeotig e Grods Cowpicuauo Cowumphion Veblen

cHee
Some uxury goodo are baug ht be cause thy
are high_pyced Lcan be t
boast.

Pncc
Pnce ezpetahion f priceo are expeched to nse
urthuv, the intal demand
incrcaACs.

Pn'u elaiah Demand

Raho bYoboYn'cnake change in dumand unth
propornonak change in_pna
.

calleopnce
elash'ts demand. onqina
Chana e in
frice elatiuit demand
CoeicientEe) =
x(P)
P) P
Chanqe
in pnR
Onqinat
ddmand

Oes
 CLASSTIME Pg.No.
Date
achet T4 elaneiy mplicaHow
4 e = 0 PeYfe cty Chanqe in price doecn't affeor
inelahE demand

Graph D

P
(Pnie

(uahhity
than 7. change in demand is ls
Len
w t elamc than " . change 'n p n .

ed Lt elartic . change in demand =.

ehange in_pnce.
D

M o r e than - 7. chanqe in demand 7. change

u t etashe in phce

D
P
P
 CLASS TIMEP No.
Date

e a-oc Perfecrty Any change i pna C o u e

eläoh innire change n demand,

P PT

6e0 Normal qoo p«

P

e z 4ittn qoo D «P

P
P
 CLASSTIME Pg. No.
Date

Deerminantr d Pnte Elash'ety

Swotw'nabiuty f m o e subshirueo are arailab

the damand wiu be more elasHc

Proclu cfs wrtn multipu uweo ha

hug hur pnce elastía than eingu - use

ad

Relahie size d ependhue n_rocu e cmcenned

Small amounr d tot exp endi tuk is spe
Spent M
th csmmo.dity, thun relahive efeer on dumand fs .

Necssity s Luury
: -Cowoumn' perption fh
procu ao a nec(SIty oV
uury
4Tine_berod dumand cuYe
A subshtute mau be feund in the Leng un. h,
in shovt Yun,1t may be_pninelashc bul in the
Lonq run it miq h becamL pricL elaotic

APPLICATI ONS

A guidi fov seing pnus If ed7I then

7 d P . Then it is aolvisable to u p he pna Low
a u maky Lswe pnu garnur wgher tuYnovou
Such roclu .
 CLASS TIMEP No.
Date

As a shifting tax burden (indirecr tax)

4Cd<, thn Q< dP Thus, if an indirec
t evied on The pra olu cr proolu cer can s f
Larqe burden tax tD eusto mir 2 vice verra.

DisDis coun Sales

Fimo take in coidrah'on, e_ h l e
di's cowTS So as to duerm'ne uhelhn dirhunt
w d agvaer enaugh adlittomal cusTomLrs tD
et the lewer evenuuo ew unwt.

MEA SUREMENT

Total Outlas (Ezpenditure Mned

NaUR Chenge
pencunu e
Nau
ed
mcreanes|EL Elanc
Etjecr i inorae Pecreaeoeeak Imelac
in pnce CootaN'|eaE
e a e | Un+ Etamc

Ayc Murhod
Meaoure T h avq. reo ponsíven
p i t athane
APP
ezhbind by domaud ure B
OveYa a . sretth P

Abgott- P
change.aP= P,-P 40 ,-0.
P PtP. CQ + ,+ % Any vatuw PLRma
OccY butweenP Pa
2
J 9,c eopesinely.
 CLASSTIME Pg. No.
Date

-A0 , - PTP
AP P-P

-0. P.+Po
P-P

Poit Melhoo:Points where dPo d =o

shoud not be taken nto
caidewanon.
2
arc AB is made gmall
Smally wingum

e? e AN
A e MA

edes
N

lnom Elanhty Demand

Raho pYopovhonate ehange in demand unth proporhma

change in incme ()

(yYOninal incunne.
40
Y
Infemov
ey70 Normal qood
Necessi
71 uuYY.
 CLASS TIME N
Date
SIGNIFI CANCE

qoodo wrth Low e, ae Hcescrom proo.ie their

Sales a e stable in econemic downtur

TO then t h finm mut p ecr deeline

in demand a economy 9 raws.

Locan'm.
info.info. is alro considereed fov planning
Lexpamim o_fivm advevnsing promoton
produci

Crots Elastíct Demand

Proporhionae change in_domand ez commacut M

du TDpYopoytiemak change n_price Commao'h

P
Pa M
= e
commodu h ea ase subsh huro
e cmmocuheo are compumanaTy.
e 0 Unelatrd commoduhes

SIGNIFICANCE

i r m rd: hlps in formulatm mavkeninq

STraegy
InduTYy Luel: inducaes whlhw r net a
Sulsstti
exist.
 CLASSTIME Pg. No.
Date
Price elasniaity upply
Propovtionake change in suppy oL to proportfomahe
change in_pnce.
P
Sorainal uPy.

DETERMINANTS

Natue d_Commodi.-Pevisha blu qoodo hae u s

etaiet
SPP INELASTIC.
chelt ue
Durable q0odo ha m0re
suppy Rlahty
MoRË ELASTIC.

Chances increaning Oulu

Availa biur inpui 2 ar uwich_stage m-t-
SLal,_Yocluchidm is beinq cavned

Techniquen Produthm:-Easy 2 uw time comuu'na

techniq wo Elanthic spply
- Complai , more time comumins
tchniqu equirin huav
invesmen Lem dlanti supply
Monopou stic Compennm
As m0. dsellurs are large, thu do not hare
Knowl edg Mayet shqve theiy vvals. So, tnuy
Conurate n t i r own mayke and try to enhance
 CLASSTIMEPg No.
D.

No. firmo Ndture Produer

Hekerogenauo/ DifereAhahed
HOmogenauo

()May Pexrfe compehtim Monobeu'shie campehitim

(uFew Ougopa
w) One
Monopoy

MON EY
Bayhuw system a in cmventent so mony
mon w
introcluced CuO medium 1change

Eeruc t wed t be caltle,then_pebblko, pvecious

Stono meral wene erenrualy refer4 becauwe
he_conenienr size.

N FLATION

*i b monary_phon omenn here nces nie dus hb

inchease mony in ivcuulanon Lis mot accempqnte
by t Such an "incrcane in ourpul

I n a duweloped ecnomy, inftatim e n crally ocus

afe staqe fuu employmenr re durces
I n a developinq econony, inftahion m y CO-exist
wITh undur-employmunr auUrces.
Ths may be m aLotunr shortage-cap tal
eqp m , pooy pouey fau Uheo ere.
 CLASSTIME Pg.No.
Date

CLaificatims

Cause i ) Demand Pull Inftany

( ) Suppy Puoh Intaho

RareRate (i) Creeping Intahm

() RUnning
() qalloping
HHper.

Demand Pul InHahon

Most CoTm mOn
ere iinq dumand ona staqnant slooly
increaing9 3pp
 CLASS TIMEPy No.
Dat

PYoCs4

( Inereawe in mony Supp

( Fal in interest rak
( ) 1nceaoe in inwatment in the ecomnmuy
(iv Ineear in monty inuome factors 4roouchOn
(v Ineitablu mcease in expenduhurt on cawoumphon qCde
Ui FuYthay incmane in moLy income

U Snu the economy is alh eaoly operatinq at the r e l

ulemptoymut ov t h a u p u r ann ot b e

încrcastcd duui to unavoidable rtaom an increane

in inwstment expcnditure wil uad to dumand inftaha,

mdicaYs
Gqeneral shovtaqe gbolo 2 gervias
(u wngtuning ueus

u) Increancd impovts.
i ) Risina Wageo
() Rising_proht mavgin

Coot Pull Inftahm

Cowed due to incrane 'o_produchion coot whoh
maybe duu to
( Incrcane in waqes
(uIncreame in ront-marqin.
mposifen havy COmmodi'ty tazso

IE 1 coanaqisus to oThwindwstr e it wst-infta

n's eo n one indwstry, becaue
variouo ecsnomic
Setor ghc clorely linkeo toeach
to her
 CLASSTIME Pg. No.
Date L /
( Onbanis Rak ntaton
Creeping Infianim upo 37. ber annum -
Moderae
intaim
ereepiaa+
Walkinga Intan'om: 3-9.
p r annum walking
A A single diqit intahm te cowoi dered govd fUY an
econoMH.

Running Intuim D-20 / bey annum

GallepingHypo Iahion 20 : pey annum

Inrftantm ghuy dunawinah'on is not diirabu. lE

Cae econOmic oustoYhcwo 2 dustuybanuo

ndian intanim w 25/.

Avgentina, Braul, lkrall_have eypenenud 7 lod) in

What happewo wnn pic ite is alamin y wgh

dunng wypernhahon
Awo n sudh situaunm. voalun Matonal CHYreny redu cuo
to almost O Papr mons beuoms wOYthuUA 2
ptopla sTar tyadinq eitu gotd a sirer
E. Hung ar1-1996 Zimbabwe 200 09.
 CI4S TIME Pg No.

CONTROL OF INPLATION

T o ontreldemand-puu inttaken),The target rt to

hando
mop up Surpupurchaoinq_powe rom thu
thepubbc.
T' can be acv'emd by sneein9 tuzto 2
decreaoine Subsidies.

2 Cost-puh inttah'en is diteult to control ecure

any alempt to aur doum waqeo by authonNea
wid be mer by Strong regis tanu f m works.

Businu Cyde

Rythmfc fuchuatono a n econmy e _benocdo

Yos perh fouawed by povioco daprrasin
Warco be _
bros pemty 2 deprmim ud nat be
t 2ae lng h anp Lituds.
Peak
ReceigioT
Lercl d
euunowc
Protevi
bad m

arivity
pepressm

RevivaL
Depreisiom

No. dyeAYs
 CLASSTIME Pg. No.
Date _
Fi h an eo trade yole

Deprecsim.
C T e s a persisten Lack ddumand
Manag ennLnt_introdlueuo ecwmomic measur '
Stoppage waok,_greahr ciYcinq, wage cutting
rench munt 8Ta. (educing csrt producHim unw't
(ia) Re duuchion in pnice, wch uaclo to law_profít magn
eannot
(iv) Retrenchad wovkovs do not hae galary
dumand 3ame brodueh L geyufcto thy were olumandun
eaer.
C a o cading elfeur am olhw seuo, whch alco hae a

Lack damand mow,

dura ble
Total ol L employment_fuehuak more in
caprtal_goodo in dusriea, Thy' i_paos ed n to nm-
duya ble Cono umw_gDcdo industrie

2 Recorery bhane
C) To credte dumand, techno Loq1 cal innovahiono in eushng
pYoduca are: madL which theyeby increage value.
Gvadually there lsrcatey olundnd foY_gordo 2
servicco and comequinly incrcaned productio
u Pnus start nsinq 2 wiM it, waqe ,intreat 2_profia tro
(C) Employmunt 2 incu increae w hich increasea nahnal
nom
nCrane i n inrestmu, bank Lo an and aodvanus.

FullL Empluyminc phase Re covery Conthinus nu Thue

ful empoynmenr
fuu Vesourcto. wageo, inherests proftx
q Agh oulput an enpley mit a hiqleot unde
qiren tthnotugical circumtanu, There
vountavy unimploy munt,
ma
be snme
 C t 4 F I P , No

( ftatim Phaoe
employmur, ire in
incotw ado
uads
OBeyond fuul
H0Ura.
tinceaned preoiure an
higher monuy, it dits
y any oource aok fo leaoo to cessim
the cort-calculath'on, whu'ch

Rece4ion
G)Oraoh bovm îr sudden L sharp.
Buinu expansiomo gtup, ord7s ge can ulled 2

are Laid dt
workers
(uWiduopnad wnemp loymenT is thene