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principles of microeconomics

principles of microeconomics - Microeconomics Basic...

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Microeconomics Basic principles of Microeconomics Seven Principles of Microeconomics Life is a series of tradeoffs o Everyone faces choices in life. The fact that we have choices, means that the study of economics exists. The definition of economics is how one decides to allocate their scarce resources. E.g. Guns vs. Butter (national defense vs. consumer goods) A Government must decide whether to focus spending on consumer goods or national defense. Whereas investment in consumer goods leads to economic growth and can lead to prosperity, national defense ensures security and safety of a country’s citizens. The cost of something is what you give up to get it o Opportunity cost The opportunity cost is the benefit given up in the next best option foregone. E.g. If x has a job that pays $10 an hour, but gives up their 5 hour shift in order to have a movie/dinner night with friends…the opportunity cost of this action is the $50 they could have earned at their job.
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