Answer to Question #308383 in Macroeconomics for Myls

Question

1. How can the five principles of economics help in decision making?

These are the five 5 principles; opportunity cost, marginal principle, law of diminishing returns, principle of voluntary returns and real/nominal principle.

2. Identify a real business scenario wherein your selected principle worked.

Answer 1

1.Economics itself is critical for an individual in terms decision making. Assist an individual to make a better and an informed decision. This can be perceived that a more informed person has a greater chance to make wise decisions and in fact it's true. Therefore, learning economics equips an individual with the best skills and competencies to know how supply and demand affect things such as price, wages, and the availability of goods. For instance, the principle of opportunity costs assists an individual to make a wise decision before settling on the type of business to settle on.

2.The opportunity cost

Before I entered into my business, first I considered the opportunity cost of venturing into that business. After a thorough consultation and considerations, I came to a conclusion that the cost of setting up my business are lower that the reward I'm going to earn if managed well. Therefore, I had no option other that commencing my business.