4 PRINCIPLES OF ECONOMICS
.cost-benefits
evaluate costs and benefits
focus on cost/benefits not framing (could lead to poor decision making
)
opportunity cost
reflects scarcity
all choices require a trade off
ignore sunk costs (cost that cannot be reversed)
visualize opportunity costs using ppf curve
Interdependencies when making decisions
.between each of your choices
.between people/business
.between markets
.through time
Marginal principle ( additional output gained/benefit by making a decision)
cost-benefit principle ( compare marginal cost to marginal benfit)
opportuity cost principle ( compare benfits to next best alternative)
when marginal benefit = marginal cost , continue
WEEK 2 (2 Oct)
DEMAND CURVE SHIFTS
normal goods ( income increase = demand increases)
Inferior goods ( income increases = demand decreases)
prices of related goods (e.g. bread & butter , increase in price of butter = decrease in demand for
bread )
Expectation ( if you expect house prices will rise = buy a house now )
type/number of buyers ( more buyers= - increase in demand)
change in price causes movement along demand curve
Supply
