The Seven Principles of Economic Thinking

Scarcity Forces Tradeoffs

Limited resources forces people to make choices and face tradeoffs when they choose.

Future Consequences Count

Decisions made today have future (and unintended) consequences.

Incentives Matter

People respond to incentives and generally predictable ways.

Cost vs. Benefit

People choose something when the benefits of doing so are greater than the cost. (The benefits outweigh the costs)

Thinking At The Margin

Most decisions involve choices that bring a little more or little less of something.

Trade Makes People Better Off

Focusing on what we do well and then trading with others, we will end up with better choices than by doing everything for yourself.

Markets Coordinate Trade

Markets usually do better than anyone else at coordinating exchanges between buyers and sellers.