DFFCIL Economics Study Notes
We have provided the Economics notes which are provided below:
What is Economics?
Economics is defined as the social science which is concerned with the manufacture, supply, and consumption of goods and services. Through Economics we are able to study how individuals, businesses, governments and nations make selections regarding how to distribute resources among the citizens.
Economics mainly focuses on the actions of human beings, on the basis of assumptions that humans act with logical behaviour.
Economics can be mainly divided into 2 main types which are microeconomics and macroeconomics
- Microeconomics focuses on the individual consumers and producer’s behaviour
- Macroeconomics deals with the overall economies on a regional, national and international scale
Production Possibility Curve (PPC)
PPC highlights the possible combination of two goods that can be created with the help of available resources and technology.
Marginal Opportunity Cost (MOC)
MOC along with POC of a specific good is the amount of other good which is lost for production of an additional unit of another good.
Marginal Rate of Transformation (MRT)
MRT is defined as the ratio of the one good sacrificed to produce one more unit of another good.
What is Demand?
Demand is defined as the amount of a product that a consumer is able and willing to purchase at a given price in a given period.
Demand Curve: It is a graphical interpretation of the demand schedule
Individual Demand: Demand made by an individual consumer is called individual demand
Factors affecting the individual demand of a commodity:
- Commodity price
- Consumer’s income
- Price of the related goods
- Consumer’s taste and preference
- Expectations of future price change
Factors of Increasing Demand:
- Increase in consumer’s income
- Consumer’s change in taste and preference
- Increase in the price of a substitute good
- Decrease in price of complementary good
Factors of Decreasing Demand
- Reduction of consumer’s income
- Decrease in consumer’s taste and preference
- Fall in price of a substitute good
- Increase in price of complementary good
Type of Goods
Goods are mainly categorized into 5 categories which are substitute goods, complementary goods, inferior goods, and Giffen goods. The details of these type of goods are given below:
The goods which can be substituted by the consumers and when there is an increase in the price of one good then the demand for other substitutable good increases. For example, Tea and Coffee are substitute goods.
The goods that are paired to each other are complementary goods. When the price of one good increases it results in a decrease in demand for the other good. For example, Petrol and Car are complementary goods.
Normal goods are used in consumer’s day to day life. These goods have a direct relation with income. When the consumer’s income increases the demand for normal goods also increases.
Goods that have a negative relation with the income. These goods have less demand at higher income and high demand and lower-income.
Giffen goods is a kind of inferior goods that customers consume more as the price increases, violating the law of demand.
Types of Demand
The demand which is mainly dependent on the prices of related goods is called cross demand. The complementary goods and substitutes are known as related goods. Complementary goods such as pen and ink are inversely associated with the prices of other goods but the case in substituting goods are just contradictory. Demand for substituting goods are directly proportional to the prices.
The demand which is mainly dependent on income is called income demand
The demand for goods and services directly made by the consumer is called direct demand.
The demand of goods and services made as per the direct demand of consumer is called derived demand.
The demand which is made for two or more goods and services to fulfil the single need or want is called joint demand.
The demand which is made for a single commodity made in order to use for different objectives is called composite demand
What is Law of Supply?
Supply means the goods which are offered for sale at a particular price for a specific period. The supply depends upon the capacity and intention of producers to produce goods and services for sale at a particular price.
The law of supply creates a direct relationship between price and supply. Organizations/ individuals supply less at lower rates and more at higher rates.
What is Market?
The market is defined as a place where buyers and sellers meet for the exchange of goods and services through sale and purchase.
It is defined as the number of organizations/ individuals operating in the industry, type of product and nature of competition between them.
What are the types of market?
There are mainly 4 types of market namely perfect competition market, monopoly market, monopolistic competition market, and oligopoly market.
Perfect Competition Market
Perfect competition refers to the market condition where there are a large number of buyers and sellers. Organizations/ individuals sell identical products at a uniform rate.
Feature of Perfect Competition Market
- A perfect competition market will have a large number of buyers and sellers
- A perfect competition market will have homogenous product
- A perfect competition market will have free entry and exit of firms
- A perfect competitive market will have perfect knowledge
Monopoly refers to the market condition where the market is dominated by a single seller who has full control over the price.
Features of Monopoly Market
- A monopoly market will have a single seller of a commodity
- In a monopoly market, there will be an absence of a close substitute for the product
- It will be difficult to enter a monopolistic market
- A monopolistic market will have a negative slope demand curve
- A monopolistic market will have full control over price
- There is price discrimination and abnormal profit in a monopolistic market
Monopolistic Competition Market
A monopolistic competition market refers to the market condition in which many organizations/ individuals sell closely related but differentiated products.
Features of Monopolistic Competition Market
- In a monopolistic competition market, there will be a large number of buyers and sellers than perfect competition
- There is product differentiation in monopolistic competition market
- Firms/ individuals have freedom of entry and exit in a monopolistic competition market
- In a monopolistic competition market, there is a lack of the right knowledge, hence, there is partial control over price
An oligopoly market refers to the market condition in which there is a fair number of sellers and a large number of buyers.
Features of Oligopoly Market
- In an oligopoly market, there are few dominant individuals/ organizations who are large in size
- There is a mutual interdependence in an oligopoly market
- There is an entry barrier in an oligopoly market
- There is both standardized as well as distinguished product in an oligopoly market
- Prices are rigid in an oligopoly market
Gross Domestic Product (GDP)
GDP is defined as the aggregate money value of final goods and services produced within the country’s territory. The formula of GDP at Market Price is P * Q, where P is the Market Price and Q is the final goods and services.
Gross National Product (GNP)
GNP measures the monetary value of the final products produced yearly in a counter plus net factor from foreign. The formula of GNP is GDP plus net factor income earned from abroad. Here is net factor income is obtained by reducing the factor income earned by foreigners from the country excluding the incomes earned by the residents of that country from abroad.
Net Domestic Product (NDP)
NDP is defined as the difference between the NNP (Net National Product) and NFI (Net Factor Income) from abroad. The formula of NDP = GNP – (Depreciation + NFI)
Net National Product (NNP)
NNP is defined as the monetary value of final goods and services produced at the current price produced annually in a country.
What is Inflation?
Inflation is defined as the increase in the price of basic goods and services which leads to the decline of purchasing power of consumers. There are various types of inflation namely comprehensive inflation, sporadic inflation, open inflation, suppressed inflation, hyperinflation, deficit inflation, demand-pull inflation, cost-push inflation, etc.
When prices of all commodities increase throughout the economy then it is called comprehensive inflation.
When prices of a few commodities increase in specific regions then it is called sporadic inflation.
When prices of goods and services are not controlled by the government, then it is called open inflation. The government does not attempt to limit inflation then it is called open inflation.
When government controls price rise through price controls, regulating, etc. then it is called suppressed inflation.
When inflation rises so rapidly that it becomes difficult to control by government or authority. In quantitative terms, when prices increase above 1000% per annum then it is called hyperinflation.
This type of inflation occurs due to a deficit of financing by the government or authority.
This type of inflation occurs due to excessive money supply in the economy or disproportionate credits from banks.
Scarcity inflation takes place due to the hoarding of basic commodities by black marketers and unscrupulous traders.
This type of inflation happens due to various factors such as exploding population, rising income, etc. which leads to excessive demand that does not meet the supply and tends to increase in the price of goods and services.
Cost-Push Inflation occurs when the cost of prices of goods and services rise due to the increasing cost of production or raw materials.
DFCCIL Marketing Study Notes
Here are the details of marketing, steps and types for the DFCCIL Exam:
What is Marketing?
Marketing is defined as a activity in which institutions/ individuals/ organizations communicate and deliver a value to customers/ partners/ clients/ society at large. The purpose of marketing is to connect consumers, the public to the marketer through information. The information focuses on the issues related to the product of the marketer. The product can be tangible or intangible.
Marketing is different from selling, as in selling the main motive is on profit while in marketing creating value is also considered an important factor.
So, marketing is a collective effort to create, discover, raise and satisfy customer needs with values.
Steps of Marketing
- Create a customer database
- Identify the main customers and creating details of customers
- Connecting customers through different channels
- Engaging customers and maintain a relationship
- Maintaining the marketing network and consistent business
- Creating a brand value
- Addressing the customer grievances
Types of Marketing
There are mainly two types of marketing which are niche marketing and relationship marketing. The details of these marketing techniques are listed below:
Niche marketing is a sort of marketing in which marketing is done on a specific targeted group. The idea of this type of marketing is to focus on a particular segment of consumers who have unique and similar needs.
Relationship Marketing is a sort of marketing that involves creating and maintain a relationship with customers, dealers, contractors, suppliers, shareholders, employees, stakeholders, etc.
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