PEOPLE FACE TRADE-OFFS
Earlier we don't have much varieties of products in particular division.we don't have choice so finally we buy what the price they give. But now, we have different varieties. so we decide whether to buy a particular product or not.we do cost benefit analysis.
THE COST OF SOMETHING IS WHAT YOU GIVE UP TO GET IT
It is the cost of next best alternative.making decisions requires comparing the costs and benefits.
suppose you have a scale of 100 for Christ university and 110 for Indus business academy. Because of 10 i rejected 100. this 10 is marginal benefits.
Opportunity cost of an item is what you give up to get that item.
RATIONAL PEOPLE THINK AT THE MARGIN
Rational people systematically and purposefully do the best to achieve their objectives.
For example in railway reservation up gradation system, they have sleeper class of 20 tickets which is wait listed and ac category have 10 availability tickets. so instead wasting the tickets railways allot 10 sleeper tickets to ac coach. its a marginal analysis. and expense is zero. here marginal benefit is positive.
PEOPLE RESPOND TO INCENTIVES
An incentive is something that induces a person to act, such as the prospect of a punishment or a reward. because rational people make decisions by comparing costs and benefits and they respond to incentives.
buyers and sellers incentives are price and quantity.
Earlier we don't have much varieties of products in particular division.we don't have choice so finally we buy what the price they give. But now, we have different varieties. so we decide whether to buy a particular product or not.we do cost benefit analysis.
THE COST OF SOMETHING IS WHAT YOU GIVE UP TO GET IT
It is the cost of next best alternative.making decisions requires comparing the costs and benefits.
suppose you have a scale of 100 for Christ university and 110 for Indus business academy. Because of 10 i rejected 100. this 10 is marginal benefits.
Opportunity cost of an item is what you give up to get that item.
RATIONAL PEOPLE THINK AT THE MARGIN
Rational people systematically and purposefully do the best to achieve their objectives.
For example in railway reservation up gradation system, they have sleeper class of 20 tickets which is wait listed and ac category have 10 availability tickets. so instead wasting the tickets railways allot 10 sleeper tickets to ac coach. its a marginal analysis. and expense is zero. here marginal benefit is positive.
PEOPLE RESPOND TO INCENTIVES
An incentive is something that induces a person to act, such as the prospect of a punishment or a reward. because rational people make decisions by comparing costs and benefits and they respond to incentives.
buyers and sellers incentives are price and quantity.
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