12 Basic Principles of Economics

#1

Choices are necessary because resources are scarce

#2

The opportunity cost of an item- what you must give up in order to get it- is its true cost

#3

"How Much" is a Decision at the Margin

#4

People usually respond to incentives, exploiting opportunities to make themselves better off

#5

There are gains from trade

#6

Markets move toward Equilibrium

#7

Resources should be used efficiently to achieve societies goals

#8

Markets usually lead to efficiency

#9

When markets don't achieve efficiency, Government intervention can improve Society's welfare

#10

One Person's Spending is Another Persons Income

#11

Overall spending sometimes gets out of line with the economy's productive capacity

#12

Government Policies can change spending