By referencing events in the news or something from your personal experiences, describe one example of each of the five foundations of economics discussed in this chapter.
Five Foundations of Economics:
Incentives
Trade-offs
Opportunity cost
Marginal thinking
The principle that trade creates value
Answer:
In my home town people involving in the preparation of certain clothes having high cultural and traditional value, get incentives from state government as a concession to stimulate the business.
Trade off is the froces moving in opposite direction. The level of unemployment and the wage inflation in a economy is the best example of trade off.
Opportunity cost is the next best alternative. If i had not doing my current job, then what else i could do would have been my opportunity cost.if my father is producing Paddy but, would have produced wheat instead, the wheat is here opportunity cost.
Marginal concept is very common in daily life. If i am taking biscuits as my breakfast then the satisfaction derived from each additional biscuit is a marginal concept i.e. valuing things at marigin.
Trade creates value through increased specialization in the production of goods having absolute and comparative advantage and subsequently exporting it and fetching the things of its necessity. The resultant mutual benefit from trade is addition to the existing value.
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Assume that an employer discovers that the marginal revenue product of the last two workers that he has hired is less than the wage rate that he is paying them
He is operating in a purely competitive market in both the output that he sells and the labor that he hires. What would you advise this employer to do and why?
Which of the following groups would be classified as unemployed when calculating the unemployment rate?
A. The phantom unemployed. B. Underemployed workers. C. Individuals who are neither employed nor actively seeking a job. D. Discouraged workers.