Indian Economy Part 2 - Micro Economics Quantitative Demand for UPSC / SSC / RBI / RRB / NABARD Video Lecture | Indian Economy for Government Exams (Hindi) - Bank Exams

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hello friends welcome to stereo so let
us continue with the microeconomics so
now in this session let us begin with
what is a difference between the change
in quantity demanded and the change in
demand so first let us see what is meant
by the change in quantity demanded they
are already discussed about the
determinants of demand and when we
discuss about the determinants of demand
we have said that there are many
determinants of demand but the most
important one despised surprise is the
most important determinants of demand so
when we learned about the law of demand
we learned about the relationship
between price and quantity demanded what
was it when price increases quantity
demanded decreases and when price
decreases quantity demanded increases we
have learned that there is an inverse
relationship between price and the
quantity demanded we have also seen the
graphical representation of the law of
demand that is a demand curve let us see
it again price P quantity demanded QD so
let us take it as 10 at 10 the quantity
demanded is 40 when price increased to
20 the quantity demanded comes down to
30 and V again when the price goes up to
30 let us assume that the quantity
demanded has come down to 15 so in the
first case when the price is 10 the
quantity demanded is 40 again this point
and this point when we join these three
points we get downward slopping curve
that we call as demand curve so here we
see that with an increase or decrease in
the price there are movements along the
demand curve that is when price
increases when price increases there is
an upward movement of that demand curve
and when price decreases there is a
downward movement of the demand curve so
when there is a change in price
in effect to that the demand changes it
is referred as change in quantity
demanded so a change in quantity
demanded of curse when there is a change
in the price so quantity demanded and
price are connected so we say that there
is a change in quantity demanded only
when there is a change in the price and
this would result in a movement along
the demand curve that this change in
quantity demanded will result in
movement you should remember this world
movement movement along the demand curve
now let us see what is meant by change
in demand
there are many determinants of demand
and we said that price is the most
important so there are also other
determinants or other factors other than
price so price is not the only
determinants of demand there are some
other factors also so let us take all
the other factors except price together
so we call it as other factors what are
the other factors income of the consumer
price of related goods like substitutes
or complementary Goods seasonal factors
weather conditions tastes and
preferences of the consume etcetera so
these are other other factors let us
take them all together let us take a
demand curve
this is price P and quantity so let us
take the prices 20 so at rupees 20 the
quantity demanded is 30 units this is
the quantity demanded and let us draw
demand curve and let us draw demand
curve that is d D so here we said that
other factors so price would be constant
and what changes other factors so price
is constant prices 20 there is no change
to price let us take some other factors
example income of the consumer suppose
the income of the consumer has increased
so when income increases what would
happen the demand or quantity demanded
would
increase so when quantity demanded
increases without a change in price
suppose the quantity demanded now is 40
rupees with an increase in the income so
without a change in price without a
change in price what would happen the
price is constant so the demand curve
has to change so the demand curve would
shift it is not a movement but it is a
shift demand curve will shift to the
right and suppose the income has come
down income has come down and so the
demand has also come down say to 20
units but the price here is constant so
the price is constant and the demand has
come down so what has happened the
demand curve has shifted to the left so
here we must remember the world shift
shift in the demand curve a shift in the
demand curve happens when there is a
change in the demand due to factors
other than price so here the reason is
other factors and this we call as change
in demand change in demand change in
quantity demanded and change in demand
now let us see what are the differences
that we have already discussed so a
change in quantity demanded happens due
to a change in price but a change in
demand happens due to a change in other
factors it can be either income tastes
and preferences price of related goods
weather factors anything so a change in
quantity demanded happens when there is
a change in the price and change in the
demand happens when there is a change in
other factors other than the price for
change in the quantity demanded would
result in the movement of the demand
curve movement of demand curve and a
change in demand would result in shift
in the demand curve in demand curve when
there is an increase in quantity
demanded the demand curve would move
upward and when there is a
crease in quantity demanded the demand
curve would move downwards then there is
an increase in demand due to other
factors the demand curve will shift to
the right when there is an increase and
when there is a decrease demand curve
will shift to the left
hope it is clear for you next concept is
price elasticity of demand it is a
degree of responsiveness of quantity
demanded to a change in price of a
product that this price elasticity II
equal to percentage of change in
quantity demanded divided by percentage
of change in price that is the degree of
responsiveness of change in quantity
demanded due to a change in price of a
commodity elasticity is of three types
oneness you unit elastic inelastic and
elastic let us see what are they so we
have learned that elasticity equal to
percentage change in quantity demanded
divided by percentage change in price so
let us take an example suppose the price
has increased by 10 percentage let us
take three cases in the first case
percentage change in quantity demanded
is 20 and percentage change of prices 10
so 2 by 1 that is 2 in the second case
change percentage change in in the
second case percentage change in
quantity demanded is 10 and the
percentage change in prices also 10 that
is 1 by 1 equal to 1 in the third case
percentage change in quantity demanded
is 5 and percentage change in price is
10 that is 1 by 2 equal to point 5 so we
got 3 so here we have 3 calculations let
us analyze 1 by 1 in the first case the
percentage change in demand is more than
the percentage change in price so we
call it as elastic demand elastic demand
so we call it as elastic demand if the
value is more
than one so if it is elastic demand
value would be more than one in the
second case we have seen that percentage
change in price and percentage change in
quantity both are same both are and so
this type of elasticity
we call it as unit elastic where the
percentage change in quantity demanded
and the percentage change in price is
the same and here we got one so unit
elastic will always be equal to one and
in the third case we have seen that
percentage change in quantity demanded
is less than the percentage change in
price and the value is less than one
this type of elasticity we call it us
inelastic demand hope it is clear for
you let us see it again the first one
elastic demand elastic demand means
percentage change in quantity demanded
would be more than percentage change in
price and elastic demand value will be
always more than one in the second case
that is unit elastic percentage change
in quantity will be equal to percentage
change in price and the value will be
equal to 1 in the third case that is
inelastic demand the percentage change
in quantity demanded would be would be
less than the percentage change in price
and the value will be less than 1 hope
it is clear for you now let us see how
would the slopes look like in elastic
demand as well as in inelastic demand
okay
let us first see elastic demand let us
take price P quantity demanded QD
suppose the price is rupees 10 and
quantity demanded is 40 the price
increased to 20 so inelastic demand we
have seen that quantity percentage
change in quantity demanded will be more
than the percentage change in price so
when the price is increased you 20 the
change in quantity demanded will be more
than proportionate let us
assume that the change in quantity
demanded is 210 units and when we join
these two points we get a demand curve
and this demand curve looks flatter so
the nature of the demand curve in
elastic demand would be flat now let us
see what happens in case of inelastic
demand inelastic demand is P and
quantity demanded QD in inelastic demand
we have seen that the percentage change
in quantity demanded will be less than
the percentage change in price okay
assume the price is 10 and the quantity
demanded is 40 now the now the price has
increased to 30 and quantity demanded
percentage would be less than the
percentage change in price so here the
quantity demanded slightly changed to 30
this is the new point and this is the
older point if we join these points we
will get a tip curve compared to the
elastic demand so the nature of the
demand curve in India lastic demand
would be steeper so when the demand is
elastic you would get a flatter demand
curve and when there is an inelastic
demand the demand curve would be steeper
hope it is clear for you so now let us
see what are the determinants of
elasticity of demand determinants the
first determinants of elasticity is
nature of the product nature of the
product can be divided into essential
product and luxury product if it is an
essential product what do you think
would be the demand elasticity in case
of essential commodities or necessities
the elasticity would be inelastic in
case of luxury commodities there will be
a elastic demand next determinant is the
availability of substitutes of
substitutes if substitutes are available
there will be an elastic demand and if
substitutes are not available there will
be an inelastic demand same like the
price elasticity of demand leo
also have income elasticity of demand so
income elasticity of demand is referred
as a percentage change in quantity
demanded in response to a percentage
change in the income of the consumer
that is e V equal to percentage change
in quantity demanded divided by
percentage change in income under income
elasticity of demand there are two
important concepts oneness given goods
which we also call us inferior Goods and
the second honest babblin Goods inferior
goods or Giffen goods we have already
learned what it is when we learned about
the determinants of demand water
inferior Goods inferior Goods refers to
those Goods whose demand decreases with
an increase in income of the consumer
and the demand increases with a decrease
in the income of the consumer so they
are related to the income of the
consumer so when income increases its
quantity demanded decreases and vice
versa also we have said that this is an
exception to the law demand next is web
blend goods and this name is given after
t web blend so what are their blankets
their blankets are those Goods whose
demand increases with an increase in
price and whose demand decreases with
the decrease in its price what is law of
demand law of demand states that when
price increases quantity demanded
decreases but this is just opposite to
that where blend goods are those Goods
whose demand increases only when the
price increases
what are those kinds of goods those are
which Goods which are associated with
the social prestige of individuals like
luxury cars
Kohinoor diamonds designer aeroplanes
etc so these Goods would have more
demand than the prices more so it is an
indicator of the social prestige of an
individual so if now let us see what is
a consumer sequa Librium consumers
equilibrium is defined as a situation in
which he or she spends
his income in order to derive the
maximum satisfaction
so that is consumers equilibrium we also
have producers equilibrium so what is
producers equilibrium producers
equilibrium is a situation in which the
firm produces that much units of a
commodity which would maximize the
profit of the firm so maximum profit for
the firm now let us see some types of
markets types of markets we can broadly
classify markets into four types one is
perfectly competitive market second one
mono/poly third one monopolistic and the
fourth one only go Polly let us see one
by one first one perfectly competitive
market what is a perfectly competitive
market it is a market where you have
free entry and exit there are large
number of close substitutes available
the nature of the commodities will be
homogeneous you can always find good
competitions like there there will be
very close substitutes then what is a
mono/poly market mono/poly market is a
market type in which the market is
completely controlled by a single
individual or a single firm example is
Indian Railway so there is no entry for
other firms so entry is prohibited
and what may be the nature of the
commodity it will be unique it cannot be
provided by others so the price fixer is
the producer himself that is mono/poly
next is monopolistic monopolistic market
is a type of market where you have
differentiated products the so products
will not be closed substitutes even
though they can be used as substitutes
there will not be very close substitutes
you have free entry and exit there will
be large number of firms in the market
the price is fixed set by the market
even though the firm has a little
control over the price mainly it is
determined by the market example of such
market would be soaps or like if you say
cosmetics etc so we have different by
of soaps they are not close substitutes
but even though they can be used as
substitutes then when it comes to oligo
poly
we have only fewer firms example is
mobile companies or aircrafts etc so
entry and exit is possible but it will
not be as easy as in the but it did
entry and exit is possible but it will
not be as easy as in case of perfectly
competitive markets so products will be
differentiated products it will not be
the same exact same of the other product
it can be used as substitutes but not
very close substitutes example of
perfectly competitive items would be
wheat rice etc so these are the four
types of markets next topic is resource
allocation resource allocation so before
we say about resource allocation we
should know some basic things let us
begin with what is economics we know
that there are limited resources in the
economy and there are unlimited wants so
we have limited resources in the economy
and unlimited wants so we should
judiciously
allocate these resources to the most
needed activities so this is known as
resource allocation and economics is
concerned about the allocation of this
resources so that is economic the study
of this resource allocation so we know
that there are unlimited wants and
limited resources so this is resource
allocation resources can be allocated in
two ways one is by the government and
the second harness by the private that
is by the market government and market
so then government allocates this
resources we call it as economic
planning and then market does this
function we call it as market mechanism
what is the difference between
allocation by the government and
allocation by the market so government
allocates on the basis of wants and
needs of the individuals and
market on the basis of demand and supply
for this the government uses taxes and
subsidies here the market uses the
demand and supply factors so which one
would be ideal allocation by the
government or allocation by the market
let us see what are the advantages when
government allocates resources the
government would consider the social
factors like unemployment poverty
education etc but market will not be
answerable to the social factors what
are the advantages when it comes to
markets market is more efficient and
when it allocates resources on the basis
of demand and supply the efficiency and
productivity would be high so we have
adopted a mixed set form of a location
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