Various aspects of demographic trends in India are:
(i) Size of population
(ii) Rate of growth
(iii) Birth and death rates
(iv) Density of population
(v) Sex-ratio
(vi) Life-expectancy at birth
(vii) Literacy ratio

The shape of an indifference curve provides useful information about preferences. Indifference curve replaces the concept of marginal utility with the concept of the marginal rate of substitution.

Alfred Marshall introduced the concept of Quasi-Rent. He defined "Quasi-Rent is the income derived from machines and other appliances made by man".

The result of the total product divided by the total units of the input employed. In other words, it refers to the output per unit of the input.
Mathematically; AP = TP/N
Where,
AP = Average Product
TP = Total Product
N = Total units of inputs employed.

(a) Monopoly - Single
(b) Duepoly - Two seller
(c) Oligopoly - A few sellers

Personal - Different prices are charged for different individuals. (eg) railway
Geographical - Different prices are charged at different places for the same product.

(i) In deductive method we move from general to particular.
(ii) It is also called as analytical (or) abstract method.

F. W. Edgeworth and Vilfredo Pareto criticised the Cardinal Utility Approach. It is otherwise called "Indifference Curve Approach". J. R. Hicks and R.G.D. Allen Approach. J. R. Hicks in his book "Value and Capital" gave a final shape to this "Indifference Curve Analysis". 
Scale of Preference: This theory is also based on scale of preference. A rational consumer usually prefers the combination of goods which gives him maximum level of satisfaction. Thus, the consumer can arrange goods and their combination in order of their satisfaction.
Such an arrangement of combination of goods in the order of level of satisfaction is called the "Scale of Preference".
Assumptions:
(i) It assumes that the consumer possesses 'complete information' about all the relevant aspects of economic environment.
(ii) Consumer behaves rationally.
(iii) It also assumes 'continuity'. This means that the consumers are capable of ordering or ranking all combination of goods.
(iv) The consumer is not interested in anyone commodity as that utility analysis, but is a combination of goods.
(v) It assumes that the consumer has before him in indifference map for a pair of commodities.
(vi) The prices of these goods are given in the market and are assumed to be constant.

The importance of microeconomics are:
(i) To understand the operation of an economy.
(ii) To provide tools for economic policies.
(iii) To examine the condition of economic welfare.
(iv) Efficient utilization of resources.
(v) Useful in international trade.
(vi) Useful in decision making.
(vii) Optimal resource allocation.
(viii) Basis for prediction.
(ix) Price determination.
(x) Calculated to promote efficiency in production and the welfare of the masses.
(xi) Useful in public finance.

Density of population: It refers to the average number of persons residing per square kilometre. It represents the man-land ratio. As the total land area remains the same, an increase in population causes density of population to rise.
Density of population = \(\frac { Total\ population }{ Land\ area\ of\ the\ region } \)
Table: Density of population

Year	Density of population (No. of persons per sq. km)
1951	117
2001	325
2011	382

(i) Just before Independence, the density of population was less than 100.
(ii) But after independence, it has increased rapidly from 117 in 1951 to 325 in 2001.
(iii) According to 2011 census, the present Density of population is 382. Thus, the pressure of population on land has been rising.
(iv) Kerala, West Bengal, Bihar and Uttar Pradesh have density higher than the India's average density.
(v) Bihar is the most densely populated state in the country with 1,102 persons living per sq. km followed by West Bengal with 880.
(vi) Arunachal Pradesh has low density of population of only 17 persons.

Determinants of Demand:
(1) Changes in Tastes and Fashions: The demand for some goods and services is very susceptible to changes in tastes and fashions
(2) Changes in Weather: An unusually dry summer results in a increase in the demand for cool drinks.
(3) Taxation and Subsidy: If fresh taxes are levied or the existing rates of taxation on commodities are increased their prices go up. The subsidies will bring down the prices. Therefore taxes reduce demand and subsidies raise demand.
(4) Changes in Expectations: Expectations also bring about a change in demand. Expectation of rise in price in future results in increase in demand.
(5) Changes in Savings: Savings and demand are inversely related.
(6) State of Trade Activity: During the periods of boom and prosperity, the demand for all commodities tends to increase. On the contrary, during times of depression there is a general slackening of demand.
(7) Advertisement: In advanced capitalistic countries advertising is a powerful instrument increasing the demand in the market.
(8) Changes in Income: An increase in family income may increase the demand for durables like video recorders and refrigerators. Equal distribution of income enables poor to get more income. As a result consumption level increases.
(9) Change in Population: The demand for goods depends on the size of population. An increase in population tends to increase the demand for goods and a decrease in population tends to decrease the demand (if other things remain constant).

(i) The application of general theory of distribution to wage fixation is the marginal productivity theory of wages.
(ii) According to the theory wages are determined by the marginal productivity of labour and equal to it at the point of equilibrium.
(iii) Under perfect competition wage is paid equal to marginal product of labour (wage = MPL). But in real world where there is imperfect competition, there is exploration of labour and wage is less than MPL.

(i) As the profit is the difference between total revenue and total cost.
(ii) Cost minimization is a necessary condition for achieving the profit maximization goal of the firm.
(iii) Cost minimization implies that the costs of inputs have to be reduced for the purpose.
(iv) The costs of inputs include the prices of raw materials, wages and salaries of labour, expenditure on machinery and equipment, depreciation on machines etc.

(i) Psychological - it depends on consumer's mental attitude
(ii) Not equal to usefulness.
(iii) Is personal and relative.
(iv) Is the function of the intensity of human wants.
(v) Cannot be measured objectively; has no ethical significance.

Thiruvalluvar: The economic ideas of Thiruvalluvar are found in his immortal work, Thirukkural, a book of ethics. Even though scholars differ widely over the estimation of the period of Thiruvalluvar, it is generally believed that, he belongs to the Sangam age in Tamil Nadu around third century A.D. Thiruvalluvar's work is marked by pragmatic idealism. A large part of Valluvar's economic ideas are found in the second part of Thirukkural, the porutpal. It deals with wealth. Thiruvalluvar is a fundamental thinker. He believes that rains are the basic support of life. Since rain provides food, it forms the basis for stable economic life. Agriculture which is the most fundamental economic activity depends on rain, "It is rain that both ruins and aids the ruined to rise".
(i) Factors of Production: Thiruvalluvar has made many passing references about the factors of production viz., Land, Labour, Capital, Organisation, Time, Technology etc. He says, "Unfailing harvest, competent body of men, group of men, whose wealth knows no diminution, are the components of an economy". (KuraI61)
(ii) Agriculture: According to Thiruvalluvar, agriculture is the most fundamental economic activity. They are the axle-pin of the world, for on their prosperity revolves prosperity of other sectors of the economy, 'The ploughmen alone', he says "live as the freemen of the soil; the rest are mere slaves that follow on their toil" (Kural 1032). Valluvar believes that agriculture is superior to all other occupation.
(iii) Public Finance: Thiruvalluvar has elaborately explained Public Finance under the headings Public Revenue, Financial Administration and Public expenditure. He has stated these as
1) Creation of revenue,
2) Collection of revenue,
3) Management of revenue
4) Public expenditure
(iv) Public Expenditure: Valluvar has recommended a balanced budget. "It is not a great misfortune for a state if its revenues are limited, provided the expenditure is kept within bounds." He has given certain guidelines for a budgetary policy. "Budget for a surplus, if possible, balances the budget at other times, but never budget for a deficit." Valluvar advocates the following main items of public expenditure:
1) Defence
2) Public Works and
3) Social Services.
(v) External Assistance: Valluvar was against seeking external assistance. According to Kural No. 739, countries taking external assistance are not to be considered as countries at all. In other words, he advocated a self-sufficient economy.
(vi) Poverty and Begging: Valluvar consideres freedom from hunger as one of the fundamental freedoms that should be enjoyed by every citizen. According to him 'poverty' is the root cause of all other evils which would lead to ever-lasting sufferings. It is to be noted that the number of people living below poverty line, begging, sleeping on the road sides and rag picking in India has been increasing.
(vii) Wealth: Valluvar has regarded wealth as only a means and not an end. He said, "Acquire a great fortune by noble and honourable means." He condemned hoarding and described hoarded wealth as profitless richness. To him industry is real wealth and labour is the greatest resource.
(viii) Welfare State: Thiruvalluvar is for a welfare state. In a welfare state there will be no poverty illiteracy, disease and industry. The important elements of a welfare state are
1) perfect health of the people without disease
2) abundant wealth
3) good crop
4) prosperity and happiness and
5) full security for the people.

INDIFFERENT CURVE ANALYSIS:
Scale of preference: 
This theory is also based on scale of preference. A rational consumer usually prefers the combination of goods which gives him maximum level of satisfaction. Thus, the consumer can arrange goods and their combination in order of their satisfaction. Such an arrangement of combination of goods in the order of level of satisfaction is called the "Scale of Preference". Assumptions :
1. The consumer is rational and his aim is to derive maximum satisfaction.
2. Utility cannot be cardinally measured, but can be ranked or compared or ordered by ordinal number such as I, II, III and so on.
3. The Indifference Curve Approach is based on the concept "Diminishing Marginal Rate of Substitution".
4. The consumer is consistent, This assumption is called as the assumption of transitivity. If the consumer prefers combination A to B and B to C, then he should prefer A to C. If A > B and B > C, then A > C.
An Indifference Schedule: An indifference schedule may be defined as a schedule of various combinations of two commodities which will give the same level of satisfaction. In other words, indifference Schedule is a table which shows the different combination of two goods that gives equal satisfaction to the consumer.
Indifference Schedule

Apple	Orange
1 2 3 4 5	20 15 12 10 9

Table has five combinations of two commodities. Apple and Orange. Each of these combinations give the consumer the same level of satisfaction without discrimination. In the schedule, the combinations are arranged in such a way that the consumer is indifferent among the combinations. Hence, this schedule is called as, "Indifference Schedule". He will neither be better off nor worse off whichever combination he chooses.
An Indifference Curve
Different combinations of two commodities (as found in Indifference Schedule) can be presented in a diagram. Then consumer gets different points and when such points are connected, a curve is obtained. The said curve is called as "Indifference Curve".

Therefore, an indifference curve is the locus of all combinations of commodities from which the consumer derives the same level of satisfaction. It is also called "Iso-Utility Curve" or Equal Satisfaction Curve". Indifference Curve is illustrated in diagram. X axis represents apple and Y axis represents orange. Point : R' represents combination of 1 apple and 20 oranges, at'S' 2 apples and 15 oranges and at 'T; 3 apples and 12 oranges. Similarly UV points are obtained. These five points give the same level of satisfaction. The consumer will be neither better off nor worse off in choosing anyone of these points. When one joins all these five points (RS, T) U and V one can get the Indifference Curve: IC'.
An Indifference Map :
One can draw several indifference curves each representing an indifference schedule. Hence, an Indifference Map is a family or collection or set of indifference curves corresponding to different levels of satisfaction. The Indifference Map is illustrated in Diagram

In the diagram, the indifference Curves \({ IC }_{ 1 }\)' \({ IC }_{ 2 }\) and \({ IC }_{ 3 }\)  represent the Indifference Map, Upper IC representing higher level of satisfaction compared to lower IC.

Total Revenue:
Total revenue is the amount of income received by the firm from the sale of its products. It is obtained by multiplying the price of the commodity by the number of units sold.
TR = p x Q
where, TR denotes Total Revenue, P denotes Price and
Q denotes Quantity sold.
For example, a cell-phone company sold 100 cell-phones at the price of t500 each. TR is
Rs.50,000. (TR= 500 x 100 = 50,000).
Total Revenue - Constant Price

Quantity sold (Q)	Price (P)	Total Revenue (TR)
1 2 3 4 5 6	5 5 5 5 5 5	5 10 15 20 2 30

When price is constant, the behaviour of TR is shown in the table and the diagram, assuming P = 5. When P = 5; TR = PQ
When price is declining with increase in quantity sold. (Eg. Imperfect Competition on the goods market) the behaviour of TR is shown in the table and in the diagram. TR can be obtained from Demand function: If Q = 11-P, When P = 1, Q = 10

Total Revenue - Price declining

Quantity sold (Q)	Price (P)	Total Revenue (TR)
1 2 3 4 5 6 7 8 9 10	10 9 8 7 6 5 4 3 2 1	10 18 24 28 30 30 28 24 18 10

TR = PQ = 1 x 10 = 10
When P = 3, Q = 8, TR = 24
When P = 10, Q = 1, TR = 10

Welfare Definition :
Alfred Marshall Alfred Marshall (1842-1924) in his book "Principles of Economics" (1890) defines Economics thus: "Political Economy" or Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of well-being. Thus, it is on one side a study of wealth; and on the other, and more important side, a part of the study of man.
The important features of Marshall's definition are:
(a) Economics does not treat wealth as the be-all and end-all of economic activities. Man promotes primarily welfare and not wealth.
(b) The science of Economics contains the concerns of ordinary people who are moved by love and not merely guided or directed by the desire to get maximum monetary benefit,
(c) Economics is a social science. It studies people in the society who influence one another.
Criticism
(a) Marshall regards only material things. He does not consider immaterial things, such as the services of a doctor, a teacher and so on. They also promote people's welfare.
(b) In the theory of wages, Marshall ignores the amount of money that goes as reward for the services of 'immaterial' services.
(c) Marshall's definition is based on the concept of welfare. But it is not clearly defined. Welfare varies from person to person, country to country and one period to another. Marshall clearly distinguishes between those things that are capable of promoting welfare of people and those things that are not. Things like liquor that are not capable of promoting welfare but command a price, come under the purview of Economics.
(d) However, welfare means happiness or comfortable living conditions of an individual or group of people. The welfare of an individual or nation is dependent not only on the stock of wealth possessed but also on political, social and cultural activities of the nation.

Introduction:
(i) The law of diminishing marginal utility was extended and is called Law of Equi marginal utility
(ii) Law of substitution or Law of consumer's Equilibrium or Gossen's II law or law of maximum satisfaction.
Definition:
Marshall, "If a person has a thing which he can put to several uses, he will distribute it among these uses in such a way that it has the same marginal utility in all. For, if it had a greater marginal utility in one use than another, he would gain by taking away some of it from the second use and applying it to first.
Assumption
(i) Consumer is rational and wants maximum satisfaction.
(ii) Utility is measurable in cardinal numbers.
(iii) Marginal utility of money is constant.
(iv) Income of the consumer is given.
(v) There is perfect competition.
(vi) Price is given.
(vii) Law of diminishing marginal utility operates
Explanation:
(i) The consumer has Rs. 11.
(ii) He wants to spend it on apple ( Rs 1 each) and orange (Rs. 1 each)
(iii) He will be in equilibrium only when he gets maximum satisfaction ie.
\(\mathrm{K}=\frac{\text { Marginal utility of apple }}{\text { Price of apple }}=\frac{\text { Marginal utility of orange }}{\text { Price of orange }}\)
If is \(\frac{\mathrm{MU_A}}{\mathrm{P_A}}\) less than \(\frac{\mathrm{MU_O}}{\mathrm{P_O}}\) he would transfer money from apple to orange till it is equal.
He should buy 6 units of apple & 5 units of oranges. He gets (92 + 58) = 150 units satisfaction.
\(\frac{\mathrm{MU_A}}{\mathrm{P_A}}=\frac{\mathrm{MU_O}}{\mathrm{P_O}}=\frac{4}{1}=\frac{4}{1}\)

Apple				orange
Units of Commodities	Total Utility	marginal Utility	Total Utility	marginal Utility
1	25	25	30	30
2	45	20	41	11
3	63	18	49	8
4	78	15	54	5
5	88	10	58	4
6	92	4	61	3

Explanation:
(i) X axis shows amount of money spent
(ii) Y axis shows marginal utility of apple and orange.
(iii) If consumer spends Rs.6 on apple and Rs.5 on orange MU will be equal.
(iv) ie. AA₁ = BB₁ = 4 = 4. So he gets maximum utility.
Criticisms:
(i) Utility cannot be measured.
(ii) No consumer compares the utility and disutility from each unit of the commodity while buying it.
(iii) This law cannot be applied to durable goods.
Conclusion:
(i) The law of equi marginal utility is an improvement over the law of diminishing marginal utility because it can be used for many commodities consumed at the same time.

Introduction:
In his book "The general theory of employment, interest and money" in 1936, Keynes propounded the liquidity preference theory of Interest.
Theory:
Interest is the reward for parting with liquidity for a specified period of time.
Meaning:
Liquidity preference means the preference of people to hold wealth in the form of liquid cash and not in non-liquid assets like bonds, securities, bills of exchange, land, building, gold.
Motives:
Transaction motive:
It relates to the desire of the people to hold cash for the current transaction. M_t = f(y)
Precautionary motive:
It relates the desire of the people to hold cash to meet unexpected expenditures such as sickness, accidents, fire. M_P = f(y)
Both these motives depend on the income level.
Speculative motive:
It relates to the desire of people to hold cash in order to take advantage of market movements regarding the future changes in the price of bonds
There is inverse relation between liquidity preference and interest rate. M_s = f(i)
Determination of interest rate:

(i) The rate of interest is determined by the demand for and the supply of money.
(ii) The demand for money is liquidity preference for speculative motive.
(iii) The supply of money is determined by the policies of the government and the central bank.
(iv) The supply of money consists of coins, currency notes and bank deposits.
Equilibrium:
(i) In the short run supply of money is constant.
(ii) LP is liquidity preference curve M₂ M₂ is supply curve of money.
(iii) Both curves interest at E, which is the equilibrium point.
(iv) If LP increases from LP to L₁P₁ & money supply being constant, the interest rate increases from OI to OI₁. (fig a)
(v) Suppose LP is constant (fig b).
(vi) If supply of money is OM₂, the interest is OI₂ & if the supply of money is reduced from OM₂ to OM₃, the interest would increase from OI₂ to OI₃. If money supply increases, interest rate decreases.
Criticism:
(i) This theory does not explain the existence of different interest rates prevailing in the market at the same time.
(ii) It explains interest rate in the short-run.
Conclusion:
The Keynesian liquidity preference theory is an improvement over other theories.

Average fixed cost:
1. It refers to the fixed cost per unit of output.
2. It declines as output increases as fixed cost is constant.
3. It never touches the axis.
4. It is rectangular hyperbola.

Average variable cost:
1. It is the variable cost per unit of output.
2. It initially declines and then increases with the increase of output
3. This is due to law of returns.
4. AVC curve is a 'U' shaped curve.

Average total cost or average cost:
1. It is got by dividing TC by Q or by adding AFC and AVC.
2. It is u shaped.
3. Initially it declines, reaches minimum when the plant is used optimally & rises beyond the optimum output.
4. This is due to the law of variable proportions.

Marginal cost:
1. It is the change in total cost resulting from producing one extra unit of output.
2. First it falls due to more efficient use of variable factors.
3. It increases after the lowest point and it slopes upward.
4. It is 'u' shaped.

Q (in unit)	TFC in (Rs)	TVC in (Rs)	TC in (in Rs)TFC + TVC	ATC (TC/Q)(in Rs)	AFC in(Rs)	AVC in(Rs)	ATC (AFC + AVC)(in Rs)
0	1000	0	1000	α	0	0	0
1	1000	200	1200	1200	1000	200	1200
2	1000	300	1300	650	500	150	650
3	1000	400	1400	466	333	133	466
4	1000	600	1600	400	250	150	400
5	1000	900	1900	380	200	180	380