Economic principles are fundamental concepts that help explain how economies function. They include ideas such as supply and demand, which describe how the availability of goods and services affects their prices. When demand for a product increases while supply remains constant, prices tend to rise. Conversely, if supply exceeds demand, prices usually fall. Another key principle is opportunity cost, which refers to the value of the next best alternative that is forgone when making a decision. For example, if a person chooses to spend money on a new smartphone instead of saving for a vacation, the opportunity cost is the enjoyment and experiences they miss out on during that trip.