PRINCIPLES OF ECONOMICS

PRINCIPLES OF ECONOMICS:-

• PEOPLE FACE TRADE OFFS:-

The word Trade off is a situation that involves losing one aspect of something in return for getting another aspect.The word "people face trade off " means "There is no such thing as a free launch!" To get something we should give up another thing.

The things that deals with trade off is leisure time vs work time, efficiency vs work

• OPPORTUNITY COSTS:-

The value of something that must be given up to acquire something else is called as opportunity cost.

• RATIONAL PEOPLE THINK AT THE MARGIN:-

Economists assume that people are rational. People do not decide whether they will work all the day or spend all their money. Instead they rationally pick only one in order to balance things. This process is named as marginal change.

• PEOPLE RESPOND TO INCENTIVES:-

It is one of the most basic and widely accepted phrases of economics. It captures the idea that in order to affect the behaviour of people.

1. HUMAN BEHAVIOR:- The potential and expressed capacity for physical, mental and social activity during the phrases of human life is known as human behaviour.
2. DEMAND CURVE:- The demand curve is a graph showing the relationship between the price of a certain commodity and the amount of it that consumers are willingness and ability to purchase at a given price.
3. SUPPLY CURVE:- The supply curve is a graphical representation of the correlation between the cost of a good or a service and the quantity supplied for a given period.

CONCEPT OF ELASTICITY:-

1. ELASTICITY:- The percentage change that will occur in one variable in response to percentage change in another variable.
2. POINT ELASTICITY:- It is the price elasticity of demand at a specific point on the demand curve instead of over a range of it.
3. ARC ELASTICITY:- It is the elasticity of one variable with respect to another variable between two given points on a curve.