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Principles Of Economics

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Principles of economics
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The principles of economics are the laws that govern how people, businesses, or entire
economies make decisions. They include the theory of supply and demand, marginalism, market-
based models, and scarcity.
The principles of economics are:
Marginalism is a theory in economics that suggests that the income of an individual or
business has to be balanced by its expenditure. People will try to maximize their income without
having any effect on their expenditure if they have no constraints on what they can buy and sell
(Chindarkar & Thampapillai, 2018). For example, with an increase in the price of cars, the number
of cars a person buys will remain the same if he has no finances to buy more than two cars.
Scarcity is the condition of being scarce or in inadequate supply, inferiority or absence. In
economics, 'scarcity' refers to an inadequate supply or limited resources. It is connected with the
economic problem of choice - where there are only a limited number of leads to satisfying a
number of wants (Fetter, 2019). Scarcity exists because our wants exceed what we can gain in a
lifetime.
Supply and demand are key concepts for understanding economics, and any business
enterprise will use them as its guide for decision-making. The laws that govern their interaction
are key principles of economics.
A market-based model is an economic model based on the assumption that markets are
usually efficient and effective, and therefore any intervention should take into account the testing
effects on markets (Chindarkar & Thampapillai, 2018). The theory of market efficiency is: a well-
functioning market will operate without any monopolies, liquidity problems, imperfect
information or uncertainty.

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1 Principles of economics Authors Name Institutional Affiliation Course Number and Name Instructors Name and Title Assignment Due Dates 2 The principles of economics are the laws that govern how people, businesses, or entire economies make decisions. They include the theory of supply and demand, marginalism, marketbased models, and scarcity. The principles of economics are: Marginalism is a theory in economics that suggests that the income of an individual or business has to be balanced by its expenditure. People will try to maximize their income without having any effect on their expenditure if they have no constraints on what they can buy and sell (Chindarkar & Thampapillai, 2018). For example, with an increase in the price of cars, the number of cars a person buys will remain the same if he has no finances to buy more than two cars. Scarcity is the condition of being scarce or in inadequate supply, inferiority or absence. In economics, 'scarcity' refers to an inadequate supply or limited resources. It is connected with the economic problem of choice - where there are only a limited number of leads to satisfying a number of wants (Fetter, 2019). Scarcity exists because our w ...
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