Seven Principles of Economics
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- Hello! My name is Peter Finance and today, we'll be discussing the basics of economics, otherwise known as the 7 principles!
- These set the foundation for all types of economic thinking!
- What are the 7 principles? The 7 principles are : 1. Scarcity2. Cost-Benefit3. Principle of Unequal Costs4. Principle of Comparative Advantage5. Principle of Increasing Opportunity Cost6. Equilibriumand finally...7. Incentive
- If you're still confused, here are some examples for each:Scarcity - When demand for natural resources exceeds supply, the materials become scarce and prices increaseCost-Benefit - Deciding whether to purchase something; debating whether the travel cost exceeds the discountUnequal Costs - If two phone companies charged different amounts due to access of materialsComparative Advantage - If a country makes cheese and chocolate, they may decide how much labor is required for eachIncreasing Opportunity Cost- If a company's production rises from 100 to 200 units a day, the cost will Equilibrium - If a company sells mangos, during the summer, there is a great demand and = supply; the markets are equalIncentive - Payment for employment
- Thank you for hanging out with me today, and I hope this offered some clarity to the wide world of economics!
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