Factor which contribute to the production of goods and service are known as factor of production.Combination of different factors are needed while producing a goods.When cimbining different factors,the combination should be done in such away that the cost will be minimum.While producing any commodity ,there should be an active role of land,labour,capital and organization etc. are required.

The factors of production are the owners or the supplies of there factors.

Consumer 's surpius:-

The theory of consumer 's surplus was propounded by the famouse french engineer Arsene Jules Dupuit in the year 1844a.d. While constructing a bridge over a river the possibility of public surplus came into his mind .for the calculation of the possible surplus he gave the concept of consumer surplus.An engineer rather than an economist his concept remained in complete.

Marshall in his book"pure theory of domestic value "explained this theory very cleary under the topic 'consumer 's rent .In his book 'principles of economic he replaced consumer 's rent by the theory of consumer surplus .The credit for developing the theory of consumer 's surplus scientifically goes to marshall.

Law of substitution:-

The law of substitution is fully based upon the law of diminishing marginal utility.Thus,law was propounded by the famous Austriam economist Herman Hen Serich Gossen in the nineteenth century.For this reason this law is also known as second ;law of Gossen .But many economist have taken this law of Gossen as the law of substition.This law point out how a consumer can get manimum satisfaction out of given expenditure on different goods.We have presumed that every consumer spends his money income on different goods not in a haphazard number but with a clear idea of manimizing his satifactioin.

It is clearly that human wants are unlimited and the resource fulfulling these wants are limited.According to the law of diminishing marginal utility,if a consumer is to use all the available resource in the consumption of a single commodity then marginal utility,derived from every additional unit will decrease successively.

Law of diminishing marginal utility:-

The law of diminishing marginal utility shows the general behaviour.According to this law,if the units of commodity increase with a consumer the utility abtained from each additional units of the commodity will decrease respectively .When such utility decrease only the marginal utility decrease not the total utility .Thus,according to the law of diminishing marginal utility ,the total; utility increase at a deareasing rate.

human wants and necessities are unlimited ,however ,among these unlimited wants some of the wants can be fulfilled with in a specified time.the credit for discussing the law of diminishing marginal utility for the first timer goes to Henry Gossen", thus,this law is also known as the first law of Gossen.According to Gossen", as the consumer acquires more units of a commodity and as he reacher closer to satisfaction a level ,the unsatisfied level will decrease .

According to Marshall",The additional benifit which a person derives from a given increase in the stock of a things diminishes ,other things being

Economic; Theory of consumer 's behaviour :-utilities:-

Generally the characteristics of a commodity is known as utility. But in economic 'utility' is the capacity of a commodity and service to satisfy human wants.So ,consumer consume good and service according to their utility .That is ,they acquire satisfaction with goods and service .According to Marshall ",utility is the measure not of useful ness ,not of satifaction ,but of the intensify of desire."

Good and service fulfill human needs utility means the wants satisfaction power of a commodity.Utility is the subjects concept .Due to this ,different person gets different level of utility from the same commodity under the same situation .Thus,utility is introspective .People demand different commodity on the basis of utility .So ,the demand of commodity and service depend upon the expected utility.If excepted utility is high ;then the demand for such goods and service is also high.

That is want for any goods is more if it has high excepted utility.But it should not be misunderstand that otility is applicable only to beneficial (usefulness of) goods and service for e.g.,liquor is harmful for health ,but still there is a demand for it. But in economics the utility obtained from goods and service by a consumer is only looked upon,not the effect.

Elasticity of demand:-

The law of demand states that there is an inverse relation ship between price and quantity demanded.Besides this,demand for goods is also affected by factor such as,income of consumer season,advertisement expenditure,desire,tastes,fashion etc.The change in demand or direction of change in demand due to change in determinant factors is studies mnder the law of demand.But the law of demand cann't give the amount of change in the demand that occurs.

To fulfil this economists cournot and mill have given the concept of elasticity of demand.This concept of elasticity of demand has been restated scientifically by prof.Marshall ,"The elasticity or responsiveness of demand in a market is great or small according as the amount demanded increase much or little for a given fall in the price and diminishes much or little for given rise in price.

Thus ,the elasticity of demand shows the amount of change in demand due to change in any determinants of the demand such as price.In general ,the elasticity of demand refers to the price elasticity of demand.But this does n't mean the elasticity of demand is only related to price.

Economic Supply:-

Supply is create when the producer brings the goods product into the market for sale.As there is close relationship between demand and the price of goods there is also a very close relation ship between supply and the price of the goods.There is an inverse relation ship between demanded and price.But the relationship between supply and price is positive.That is there is positive relation ship between supply and the price of goods ;generally change in the price of goods change the supply of goods as well .That is the law of supply stater that there is a direct relation ship between price and supply.

Law of supply state that other things remaning the same ,any producer will supply more when the price is high and supply less when the price is low .According to the economist Meyers,"supply is a schedule of the amount of a good that would be offered for sale at all possible price at one instant ofr time .

Economic :law of demand;-

The credit for propounding the law of demand goes to Alfred Marshall,According to him there is a negative relationship between the price and the demand for any commodity .That is increase in price decrease the demand and decrease in price increase the demand for any commodity .Thus,the negative relation ship between price and demand for a commodity is known as law of demand.

According to marshall:-other thing remaning the same the amount demanded increase with a fall in price and diminishes with a rise in price.

Thus,the law of demand reflects the close relation ship between the price and quantity demand .That is when price of commodity is low the demand is high and when price of commodity is high the demand is less.So,the law of demand shows the change in the price of the commodity demanded ,but it does n't tell any thing about the change in the amount of quantity demanded due to any change in the price.

Economic:Demand;-

Generally demand means desires for prossessing goods and services .however,all sorts of desire
aren't demand in economics.Three thinks are required to make a demand for anythings:-
Desire,Ability to pay,willingness to pay.


If anyone desire to posses any goods or service but is n't able to pay for the goods such wants cann't be the demand.Similarly if she|he has the ability to pay but has no willingness to pay ,again the wants can't be the demand.

According to G.C.pandey:-Demand refers to the amount of a commodity or service which will be bought aaaat any given price per units of time.

According to M.H.spencer:- Demand is the quality that will be purchased of particular commodity at various prices .At a group time and place.

According to bober says :-by demand we means the various quantities of a given commodity or service which consumer would buy in one market in a given period of time at various price or at various income or at various prices of related goods.