Various concepts of economics

The first one principle that we shall discuss is -the cost of something is what you give up to get it .This principle states that the cost of a product is not actually the price but the cost of the product that you have given up to buy that particular product. For example when you buy a mobile phone  the cost of the mobile phone is actually the cost of products that you could have brought instead of the mobile phone . Another example is when you join a particular college the cost of the college is the cost that would have been incurred when you  join another college .Another principle of Economics is  Rational people think at margin . This says that when you buy a particular product we always look at what is the marginal benefit .Marginal benefit is the additional benefit that you receive when you buy a particular product .Suppose there are two brands of coffee available when you choose one coffee over another it is basically due to that marginal profit or marginal benefit that you receive .Another example that can be given is when we choose our college we might choose one over another because of the  marginal benefit that the particular college offers . Next principle of Economics is that -people respond to incentives. incentives is one of the important factor that attract customers world wide when a product is  kept at sale the demand for the product is said to be usual as always. But when discount or any other offer is given to the product the demand tends to increase this indicates that people respond to incentives .One of the  example is the buy 2 get 1 offer that exist in most of the major brands to attract customers .Another example would be the discount given for the first order. Now when you say that discount for the first order we would definitely get attracted to it and would like to try it out even of we know nothing about the brand.   Law of diminishing marginal utility . Marginal utility is the additional benefit that is received from consuming an additional unit at a given time. Law of diminishing marginal utility states that the more of a product that you consume within a given period of time the less utility does it provide .For example if you buy an ice cream the utility that you derive first would be very high since you haven't had ice cream for a long time but consequently when you keep on eating ice cream you will get tired of the flavour and therefore the utility decreases . Similarly let us take the case ,you are very hungry and you went to buy  a burger .The first bite of burger would give you the maximum utility because you  you was really hungry and on the second bite of burger you would feel less utility because the hunger have been reduced .On subsequent bites you would feel the utility keeps on decreasing.
Consumer surplus is the price that a consumer is willing to pay and he actually pays .For example we will  be willing to pay 10000 for a phone but in actual   when you go to purchase a phone you  paid only 9500 .So 500 is a surplus Another example is   to buy a car the budget that you fix or that you are willing to pay is 10 lacs but as a Diwali offer you get the car for 850000 .Here 150000 is  the consumer surplus.