12 Basic Principles of Economics – Flashcards
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Choices are necessary because resources are scarce
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#1
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The opportunity cost of an item- what you must give up in order to get it- is its true cost
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#2
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"How Much" is a Decision at the Margin
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People usually respond to incentives, exploiting opportunities to make themselves better off
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There are gains from trade
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Markets move toward Equilibrium
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Resources should be used efficiently to achieve societies goals
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Markets usually lead to efficiency
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When markets don't achieve efficiency, Government intervention can improve Society's welfare
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One Person's Spending is Another Persons Income
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Overall spending sometimes gets out of line with the economy's productive capacity
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Government Policies can change spending
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