Question

Choose two of the Five Foundations of Economics and provide real-life original examples of these two principles (and perhaps even explain how they relate to your life). Please include original examples and include a detailed explanation. (Follow the instructions below carefully).

AND

Explain one situation in which you had to use marginal decision making.

Answer 1

The five major foundations of Economics are incentives, trade off, opportunity cost, marginal thinking and value from trade.
Opportunity cost: Opportunity cost is the next best alternative. For example, I went to market to buy some fruits. Different varieties of fruits are there. I wish to buy three varieties; orange, apple ad pomegranate. I have 200 rupees in my hand. One kilogram apple cost 70 rupees, orange is 130 per kg and pomegranate is 200 per kg. Orange is one of my favourite fruit. At the same time I loved the taste of pomegranate. With budget constrain I prefer orange than pomegranate. So I refuse pomegranate and apple to get more orange. So I bought orange for 200 rupees.
Incentives: As a government I got more salary than before. This is an incentive for me. So I add this increased salary for my savings. Then I get more interest rate from it.
As the manager of a company I wish to increase the production level. So I will hire more workers and fire the unproductive workers. Through this the additional benefit increased and the level of total output increased. Hiring give increasing production than before. So by considering this I will prefer the hiring of more workers instead of stand in the earlier stage. It will increase the profit level than before. Hiring is comparatively better than firing. Efficient and skilled workers can be selected trough this. This workers having high productivity than other workers.