Answer: Please refer to Explanation.
Explanation:
1. The five (5) principles of Economics are,
a) Incentives
- Divided into 2, groups being positive and Negative, Incentives help in the decision process as they push a person to do something. An example of a negative incentive, is not commiting crime for fear of going to jail.
b) Tradeoffs
- This means that for everything we do, we had to give up something to do it. In other words there is no such thing as a free lunch.
c) Opportunity Cost
- This is what you would have gained had you picked the next best alternative to a decision. The trick therefore, is to pick a decision that has a lower Opportunity Cost than the decision picked.
d) Marginal Thinking.
- This rationalizes the decision making mechanism of people. It posits that humans evaluate courses of actions individually to ascertain if their costs outweigh their benefits before picking them.
e) Trade Creates Value
- Trade is the buying and selling of goods and services. It is a very basic principle at the heart of Economics that trade creates value because people are both able to get what they need to function better.
2. Arranging the events in chronological order.
- A certain area has a problem with cobras, which are poisonous.
- The government announces a reward for every captured cobra turned in.
- People begin breeding cobras to turn in, which is easier than hunting them.
- Some bred cobras escape.
- The area has more free cobras than before.
This shows that sometimes incentives may not work to the benefit of Society.
