7 Principles of Economic Thinking – Flashcards
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Scarcity forces tradeoffs
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Limited resources force people to make choices and face tradeoffs when they choose
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Costs vs. benefits
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People choose something when the benefits outweigh the cost
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Thinking at the margin
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Our decisions involve choices that demand slightly more. Of less of something instead of wholesale change
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Incentives matter
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People respond to incentives in generally predictable ways
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Trade makes People Better off
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Focusing on what we do well and trading with other leads to more/ better choices than doing everything by ourselves
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Markets coordinate trade
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Markets do better than anyone/ anything lose at coordinating exchanges better buyers and sellers
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Future consequences count
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Decisions have consequences now and in the future
