Economics: Principles and Tools

Product Enquiry

In keeping with the themes of relevance and student accessibility, we have once again organized our text around the five key principles of economics. Throughout the text, every point of theory is tied back to the five key principles and is indicated by the symbol.

  1. The Principle of Opportunity Cost. The opportunity cost of something is what you sacrifice to get it.
  2. The Marginal Principle. Pick the level of an activity at which the marginal benefit equals the marginal cost.
  3. The Principle of Diminishing Returns. If we increase one input while holding the other inputs fixed, output will increase, but at a decreasing rate.
  4. The Spillover Principle. In some circumstances, decision makers do not bear all the cost or experience all the benefits from their decision.
  5. The Reality Principle. What matters to people is the real value of money or income – its purchasing ower – not the face value of money or income.
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