Microeconomics
Download as PPTX, PDF
5 likes613 views
This document is a presentation by Hemant Meena on microeconomics concepts. It discusses consumer surplus, willingness to pay, how to calculate consumer surplus. It also covers the three types of returns to scale: increasing, decreasing, and constant returns to scale. Examples are given for each type of returns to scale. The law of returns and diminishing returns are explained with a historical example of firebombing in war. Graphs are included to illustrate the concepts discussed.
Microeconomics
- 1. SUBMITTED TO:- Miss.Tanu Verma PRESENTED BY:- Hemant Meena Branch (ECE) 2nd year MICROECONOMICS 8/2/2015 1Hemant meena BRANCH:-Electronics & communication Engineering Title
- 2. CONTENT 1. 2. What is consumer surplus 3. What is Willing to pay(WTP) 4. How to calculate Consumer surplus 5. The return of scale (a). Increasing return of scale (b). decreasing return of scale (c). constant return of scale 6. The law of return 8/2/2015 2 What is microeconomics Hemant meena
- 3. What is microeconomics Microeconomics is branch of economics that studies the behaviour of businesses and how decisions are made based on the allocation of limited resources. 8/2/2015 3Hemant meena
- 4. What is consumer surpuls it is the difference between the total amount that consumer willing and able to pay for goods and service and the total amount that we actually do pay . i.e. the market price 8/2/2015 4Hemant meena
- 5. What is Willing to pay(WTP) The maximum amount that we able to pay. it is also known as reservation price. 8/2/2015 Hemant meena 5
- 6. How to calculate consumer surplus SLICE 1 2 3 4 5 6 WTP 6 Rs 5 Rs 4 Rs 3 Rs 2 Rs 1 Rs 8/2/2015 6 P* = 3 , Q = 4 CS = (6-3)+(5-3)+(4-3)+(3-3) CS = 6 Rs P* = 2 , Q = 5 CS = (6-2)+(5-2)+(4-2)+(3-2)+(2-2) CS = 10 Rs Hemant meena
- 7. Why are economists interested in the consumer surplus? Economists are interested in consumer surplus because it measure economic welfare, plays a large part in changing market prices, plays a role in the price elasticity of demand and allows for price discrimination. 8/2/2015 7Hemant meena
- 8. The return of scale It explains the rate of increase in output relative to increase in input.While economiecs of scale show the effect of an increased output level on unit costs, returns to scale focus only on the relation between input and output quantities. 8/2/2015 8Hemant meena
- 9. The causes of increasing return of scale 1.Technical and managerial indivisibilities 2. Higher degree of specialization 3. Dimensional relations 8/2/2015 9Hemant meena
- 10. When firm increases the inputs proportionately there are three possibilites 1. total output may increase more than proportionately 2. total output may increase proportionately 3. total output may increase less than proportionately Accordingly there are three kind of return of scale 1. Increasing return of scale 2. decreasing return of scale 3. constant return of scale 8/2/2015 10Hemant meena
- 11. Increasing Returns of Scale Increasing returns of scale occurs when a firm increases its inputs, and a more-than-proportionate increase in production results. 8/2/2015 11Hemant meena
- 12. Decreasing return of scale Decreasing returns of scale is closely associated with diseconomics of scale.Decreasing returns of scale happens when the firm's output rises proportionately less than its inputs rise. 8/2/2015 12Hemant meena
- 13. Constant return of scale When the change in input is proportional to the change in output.it exhibits constant return of scale 8/2/2015 13Hemant meena
- 14. Law of return If the factor of production is increased, there comes a point where it will become less productive and therefore there will eventually be a decreasing. 8/2/2015 14Hemant meena
- 16. MP QL graph of Diminishing Returns 8/2/2015 16Hemant meena
- 17. Historical example In the war of America and Japan , America is use firebombing and reduce numbers of soldiers . This uses law of diminish of return 8/2/2015 17Hemant meena