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The Law of Demand
- The Law of Demand states that people want more of something when it's cheaper.
- This applies to almost everyone and everything they buy.
Apply Core Economic Principles to Buying Decisions
- Break down buying decisions by considering one more unit (marginal principle).
- Evaluate the full costs and benefits, considering alternatives (cost-benefit and opportunity cost).
Rational Rule for Buyers
- The Rational Rule for Buyers states that you should only buy if the marginal benefit is greater than the price.
- Marginal benefits decrease with each additional unit, explaining why we buy less at higher prices.