Opportunity cost is the concept that when you spend time and money on one thing, you cannot spend that time and money on something else. For example, the opportunity cost of spending $20 on a shirt is not being able to spend that $20 on a pair of pants. This concept states the cost of something removes the opportunity of using it for something else; it allows us to evaluate which products and goods we value more than others.
Supply and demand -- perhaps the central concept in economics -- involves calculating the demand, how much of a product consumers want, based on the supply, how available the product is. The concept is used in many business strategies to understand what the consumer wants and how much the market can offer consumers. For example, the cost of a product increases dramatically when the supply is low but the demand is high. Understanding relationships such as this helps businesses price their items according to the current value of the product in the market.
Interest is a percentage that lenders and banks charge on an annual basis for the service of lending money. When someone takes a loan from a bank he must pay the full amount plus interest. This is essentially a lender's fee and is primarily how lenders make money. When borrowing money, it is always in your best interest to have a low interest rate; this decreases the amount of extra money you will have to pay for borrowing money.
The Law of Diminishing Returns states that the resulting increases in output of some resource decreases after a certain point in investment increases. For example, when studying for an exam there may be huge increases in your resulting exam grade for studying five, 10, or 15 hours. But, when you reach 20 hours of studying your resulting exam grade begins to increase by a smaller and smaller percent. In this example, the diminishing returns could be due to not getting enough sleep or exhaustion from studying. Keep in mind how much you have invested to find the point where your resulting output begins to increase by smaller margins.