Principles Of Economics: The Four Principles Of Economics

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Principles of Economics Introduction: Economics the study way people make their living and societies make decisions about ways to use scarce resources to complete their wants and needs. We make choices about how we spend our money, time, and energy so we can complete our needs and wants. In which we study how people make the decision, how much they work, what can he buy and how much they save, and how they invest their savings. There few principles of economics which give an overview of what economics is all about. First four principles deal with about decision making. The next two is principles concern how people interact with one another. 1- People Face Tradeoff The society faces tradeoffs. Getting something you quality wants, you have…show more content…
The life tradeoffs is important in our life to because mostly time we make good decisions only if we know and understand available resources. Example: In our daily life example a family face tradeoffs weather he buy a car or spend to money on the saving for meeting the future needs such like higher education of their children. 2- The cost of something is what you give up to get it Making decisions requires in comparing the costs and benefits of alternative choices. The opportunity cost of the item is whatever must be given up to obtain it. It is relevant cost for decision making. The opportunity cost of the any item is whatever must be given up to obtain it. It is relevant cost for decision making. Example: Cricket Shoaib Akhter decided to quit his education in order to plat a professional cricket. 3- Rational People Think at the Margin: Rational people consistently and determined do the best they can easily to achieve their objectives. Making decisions to evaluating costs and benefits of marginal changes the incremental adjustment to an existing plan. Rational people know that decisions in life rarely black and white but usually involve the shades of…show more content…
When people respond to incentive the marginal changes of the cost and benefit to people response. Incentives analyze to market how markets work. As well they impact on the tings prices and buying behaviors. Because rational people making decisions by comparing costs and benefits they have response to incentives. You will see the incentives play a central role in the study of economics. Example: When a gas shortage and price increase when consumer buy a more hybrid cars. 5- Trade Can Make Everyone Better Off Trade allows each person to specialize in the activities he does best. By trading with others people can buy a greater variety of goods or services. Trade allows each country to specialize in the product which they can produce cheaper and efficiently, then trade with each other, in this way people can buy a greater variety of goods and services at lower cost Example: The batsman does not practice without bowler and the bowler does not can practice without batsman. Hence both the batsman and bowler would gain from trading their skills of specialization. 6- Markets Are Usually a Good Way to Organize Economic Activity A market is a group of buyers and

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