First, I would like to talk about opportunity cost, which involves a sacrifice or we can say giving up. Choosing one thing in the correlation of other which gives the most noteworthy fulfillment and net advantage. Each decision has an opportunity cost and a net advantage while contrasting options we analyze the advantages and their expenses. For an instance, the organization ABC who trades and manufactures the plastic containers want the readymade containers from suppliers without manufacturing it so that they can sell fast, which could cost them around $40,000. On other hands, after making the calculations of manufacturing they found that spending $16000 in material, $15000 in labor and $5000 in machinery would be cheaper than buying it from direct suppliers. This could cost them around $36,000, so they decided to start manufacturing their product and sell it in time. So here the opportunity cost will be the readymade containers from direct suppliers which could cost them around $40,000.
Second, supply and demand is the another concept which explains the relationship of market and end users. Demand is the want of a purchaser and his capacity to pay for a specific ware at a particular cost. Supply is the amount of a product which is made accessible by the makers to its buyers at a specific cost. At the point when demand expands supply diminishes, which states the opposite relationship. Considering the scenario of the organization which makes mobile phones. The cost of per piece is $1000. The number of customers decreased as the cost of product is high, so the amount got lowered to $900. As soon as the price decreased the number of customers increased which caused company to make profits. Now, here if they had decreased the price to $800, which was equilibrium cost, i.e.; the point at which both supply and demand wants the product to be in same price. But the company decided to reduce only $100 and check whether the demand is increasing or not, which helped them and they made profit out of it.
Talking about Elasticity is an idea which includes looking at how responsive request is to an adjustment in another variable, for example, cost or salary. Elasticity is imperative since it depicts the major connection between the cost of a decent and the interest for that great. For instance, if in the company the price of new car is higher the customers will switch to the older version of that car which is cheaper. E.g. Honda civic 2016.
Inelastic demand is the point at which the amount requested ascents by a lower percent than the value drops. Example milk, if the price increases it will not affect the customers because milk is their need and they have to buy it. Unit elastic demand at the point when the extent of progress sought after is precisely the same as the adjustment in cost. E.g. on the off chance that the cost of the cell phone is expanded by 7%, the amount of cell phone is diminished by 7% which is called unitary.
Consumer surplus is inferred at whatever point the value a customer really pays is short of what they are set up to pay. Example, if a customer wants to buy a camera and his/her budget is $1000, the actual cost of camera is $500, which allows customer to buy one more if they want. Producer surplus is the extra private advantage to makers, regarding benefit, picked up when the value they get in the market is more than the base they would be set up to supply for. Example, if someone wants to sell their product at specific price and due to some reason they get the higher amount of product then expected.