Economics Concepts : BASICS Part 1

This post deals with the basic economic concepts asked in GK or interviews. This is the basic thing that everybody should know. I would update it with other things provided you suggest me what to add or what you want to know?

First of all the father of economics and microeconomics is Adam smith, while father of macroeconomics is John M. Keynes.

Now, I would give you a view of a basic curve in economics commonly known as supply demand curve.

Here the downward sloping  curve represents the demand curve, while the upward going curve is supply curve.

Demand curve: As follows from the graph at high price quantity demanded is low and as price decreases quantity demanded is increased. Thus demand increases with lowering of price.

Supply Curve : it represents the supply at particular point price.

The equilibrium is attained by the point where supply and demand equate themselves i.e. where they intersect. This price point is fixed as the price of the item and the quantity at this point price is called economic quantity.

Now since supply generally remains constant the demand drives the price if demand is increased the demand curve shifts upwards as you demand more at any price point. Thus it would shift upward and hit supply curve at upper point thus price is increased. If demand is lessened then it shifts downwards and price of item decreases.

In next post i would discuss appreciation of currency and downslide of rupee against dollar which is most expected question this year for interviews.