Essential Principles of Economics and Market Dynamics
Student: Angel Argueta
Course: Eco 157 Final Cheat Sheet
Ten Principles of Economics
- People face trade-offs: To get something we like, we usually have to give up something else.
- The cost of something is what you give up to get it: This is known as opportunity cost.
- Rational people think at the margin: Decisions are made by comparing marginal benefits and marginal costs.
- People respond to incentives: Behavior changes when costs or benefits change.
- Trade can make everyone better off: It allows countries and individuals to specialize in what they do best.
- Markets are usually a good way to organize economic activity: The "invisible hand" guides households and firms.
- Governments can sometimes improve market outcomes: This occurs during market failures or
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