4P's of Economics

An economy is just a group of economic agents dealing with one another. And Economics is all about behaviour and interactions. So how people behave and make decisions, that is important. There are 4 principles, whis tell us how people make decisions. They're known as 4P's of Economics. These 4P's are -
1. People face trade offs.
2. The cost of something is what you gave up to get it.
3. Rational people think at margin.
4. People respond to incentives.

People face trade offs
Imagine 20 years ago, you used to went a shop to buy toothpaste and everytime you bought a particular toothpaste. Because at that time only few types of toothpaste were available in the market. But now a days when you go to market, you get confused that which toothpaste should you buy. Because various types of toothpaste are flooded in the market right now. So when the types of variety increase, sells should decrease.

The cost of something is what you gave up to get it
Imagine you get job offers from two different companies, Company A and Company B. They offer you ₹25K salary and ₹30K salary per month respectively. So you choose Company B. You give up the opportunity of Company A because of the extra 5K offer from Company B. So you've given up the cost of 25K to get the extra 5K.
This is also known as opportunity cost.

Rational people think at margin
The extra 5K which you will get from Company B can be described as margin. As you are a rational person, you think at margin.

People respond to incentives
In market, which shop give you maximum discount, you used to buy from that shop. When price of a product is same everywhere, then you search for best EMI schemes. So people always respond to incentives. Incentives are two types. Monetary and non-monetary.

This 4P's of economics can influence sells.