People face trade-offs
It involves what to buy and what not to buy. Trade off means finding it difficult to make a choice.Exercising choices becomes difficult.
#1st principle
To get something you want, you have to give up something else you want as resources are scarce. Trade offs between consumer goods and public goods.
#2nd principle
The cost of something is what you give up to get it. For eg:- college education where benefits are job and opportunities and costs involves tution and books.
#3rd principle
Rational people think at margin. Additional units of satisfaction is termed as marginal. Here, marginal cost should be equal to marginal benefits.
#4th principle
People respond to incentives. Incentives offers additional benefits.
Terms of interaction- Price (drive between buyers and sellers)
Price of good and services- if gas becomes expensive, people tend to adjust their behavior.
Two major factors of incentives are:- Price (p) and Quantity (q). That is, when price of a good increases quantity demanded decreases.
It involves what to buy and what not to buy. Trade off means finding it difficult to make a choice.Exercising choices becomes difficult.
#1st principle
To get something you want, you have to give up something else you want as resources are scarce. Trade offs between consumer goods and public goods.
#2nd principle
The cost of something is what you give up to get it. For eg:- college education where benefits are job and opportunities and costs involves tution and books.
#3rd principle
Rational people think at margin. Additional units of satisfaction is termed as marginal. Here, marginal cost should be equal to marginal benefits.
#4th principle
People respond to incentives. Incentives offers additional benefits.
Terms of interaction- Price (drive between buyers and sellers)
Price of good and services- if gas becomes expensive, people tend to adjust their behavior.
Two major factors of incentives are:- Price (p) and Quantity (q). That is, when price of a good increases quantity demanded decreases.
No comments:
Post a Comment