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10 Principles of Economics

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Bridget O' Shaughnessy

10 Principles of EconomicsThursday January 05 2012804 PMHow People Make DecisionsPeople make tradeoffs when forced to do one thing forced to not do another Everything requires a 1costFirst 7 principles deal with micro 8 10 deal with macroThe cost of something is what you give up to get it Opportunity Cost What you give up to get 2something The thing you would do instead of doing something else Your next best alternative Rational people think at the margin Sometimes persons are not rational always have moments in our 3livestimes When people make a decision they think of the cost and the benefits of it People will choose an option if the benefits outweigh the costs Thinking on the margin means most individuals are forward thinking they look to the future Involves three thingsCosts vs BenefitsaConsider only additional costs and benefits do not consider sunk costsbInclude all relevant costs and benefitscPeople respond to incentives changes a persons behavior Incentives convince a person that something 4they might not think is good for them is actually good for themHow People InteractTrade can make everyone better off k
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