economic principles

Economic principles are about how people make choices and allocate limited resources to satisfy their needs and wants. Scarcity means resources like time, money, and materials are finite, so choices must be made. Supply and demand determine prices; when something is scarce and in high demand, its price rises. Incentives influence behavior—people respond to rewards or penalties. Marginal analysis involves comparing additional benefits and costs before making decisions. Overall, economics explains how individuals, businesses, and governments interact in markets to allocate resources efficiently and improve well-being.