3. Substitute one product for another product if the new product is greater than the value of the replaced product and total cost is constant. This substitution can also be a complete replacement or a change in the mix of products.
These principles would be sufficient for all planning if the manager had unlimited resources, no concern about time, and perfect knowledge. Since this is not true, three additional economic principles must be introduced as aids to the decision-making process:
4. If resources are limited, use each unit of resource where it will give the greatest returns.
5. When choices involve different time periods the alternatives based on the present values of resulting cash flows.
6. When risk and uncertainty cloud predictions, different levels of prices, costs, and yields should be used to evaluate the potential variation in expected income and cash flow.