MICROECONOMIC PRINCIPLES FOR MANAGEMENT
One major task for a manager is to allocate available between competing uses to meet the goals of the business. All problems of resource use involve one or more of three fundamental economic principles.
1. Increase the use of an input if the value of the added output (that is, income) is greater than the added cost.
2. Substitute one input for another input if the substituted input is less than the cost of the replaced input and production level is maintained. This substitution can be a complete replacement or simply a change in the mix of inputs.